Five reasons why a liaison helps your investment organization grow
Two years ago, when I started out as an entrepreneur, I tried to pitch my ‘investment liaison’ idea within my network. I wasn’t able to convince them at all. In fact, I was repeatedly advised to take a job again. However, not being able to find my desired role within a company was the reason that I started working for myself in the first place.
After twenty meetings the belief in my proposition had reached a low point. And then I suddenly got my first project, and the opportunity to fulfill my liaison role.
For those who don’t know the word, a liaison is a facilitator of communication and cooperation between people and organizations.
I challenge every investment organization to add a liaison to the team and experience what happens within the team and the collaboration with the stakeholders around it.
What is my added value in a world of highly intelligent professionals who are in intense debate with each other? What are the benefits for my client when I win a discussion from a competing consultant or investment strategist during an investment committee meeting?
These were questions I dealt with during the first ten years of my career. And in my contemplation, I always came up with the role of liaison.
Now that we have built up a good client portfolio at Lestrade Investment Liaison in recent years, Stan Leistra and I are constantly refining the value proposition of the liaison. Below 5 reasons why the liaison adds value to your investment organization.
1. A liaison helps the organization navigate in a rapidly changing world
Pension funds, insurers, asset managers, consultants and supervisors form a system that is changing enormously. On the surface, the conversation is about price pressure and ‘winner takes all’ scenarios in the fiduciary asset management market. Below the surface I see an increasing awareness, among trustees and investment committees, of outsourced activities.
Institutional investors used to desire foremostly a strong partnership with a fiduciary manager and assumed to be completely unburdened. Today, at a much deeper level, assessments are made of the exact services that are required and its outsourcing to specific external providers.
Addition of stakeholders and more specific mandates mean that institutional investors themselves will have to become stronger in their external management. An independent liaison who knows many organizations inside out can be an excellent compass here.
2. Redefining countervailing power
Fortunately, trustees consider countervailing power less and less as the verbal and non-verbal counterattack on a fiduciary advisor or consultant. In my opinion, the only benefit of this pattern is a brief euphoria originating from the idea that there is a strong debater on their side. The big disadvantage is that after such an outburst the conversation will diverge towards a meta level where individuals are fighting over who will be the ultimate winner of the discussion.
A liaison can definitely provide a second opinion on advice given, but focuses its countervailing power much more on the process and on collaboration. The question of whether the ultimate goal of the organization as a whole is served is much more important than a personal opinion.
3. A liaison is not an advisor, but a sparring partner
Many institutional investors are surrounded by good advisors. But when the investment committee meeting is over, the executive employees stay behind to follow-up on the various action points and to manage all external service providers in following up on theirs.
The liaison is closer to the executive organization than the fiduciary manager or the advising consultant. With its broad experience in the market, the liaison is a valuable sparring partner in this process.
4. The liaison is goal-driven
It is often forgotten that asset management comes down to the efficient and consistent implementation of the investment strategy and its implementation. The fiduciary asset manager and advising consultants are mainly present during board meetings and investment committees. The collaboration with these parties is more characterized as intermittent. A liaison supports in a more continuous manner, whereby process goals are defined and pursued.
5. The liaison evaluates
Evaluate and redesign are the liaison’s improvement tactics. And not only because supervisors want to see evaluation reports. A liaison makes its findings by following the investment cycle counterclockwise and trying to better understand what happens, why this happens, and whether it is consistent with the investment beliefs and strategy. This is a very powerful mitigating measure against implementation risk; the risk that the implementation does not correspond with the intended strategy. A strong evaluation program has a huge positive effect on the risk and return profile of the operational implementation of the investment organization.