Wednesday, May 25, 2016 Stamford, CT USA — A cyclical preference for passive strategies among a cautious base of institutional investors is contributing to a challenging year for asset management firms. A new Greenwich Report, Smarter Engagement Strategies: A Win-Win for Asset Managers and Their Clients advises asset managers to respond to these difficult market conditions by shifting to more targeted and even selective sales strategies based on persona-based client segmentation models.

The most recent U.S. Institutional Investors Study from Greenwich Associates shows that despite 3% growth in portfolio assets, funding levels for U.S. pension funds were flat from 2014–2015 at well below desirable levels.  This and a spike in market volatility have accentuated the formidable challenge facing institutions of all types: achieving the investment returns needed to fund liabilities and overall organizational needs while also managing risk.

To meet these challenges, institutions are asking their asset managers for advice and solutions beyond the limits of the traditional investment mandate.

“Given the fierce competition in today’s market, it’s understandable that many asset managers feel compelled to cast their nets as widely as possible when it comes to new business,” says Greenwich Associates Managing Director Andrew McCollum. “But when investors are looking for advisory relationships and solutions, any misalignment between managers and clients quickly becomes frustrating for the investor and expensive for firms trying to deliver stepped-up levels of service.”

The report concludes that both sides would be better served if managers adopted a more thoughtful, targeted and selective approach to sales and client engagements.

Delivering solutions tailored to specific clients is an expensive undertaking and asset managers should be refining client segmentation strategies to more precisely identify institutions with common behaviors and needs. This does not mean less marketing or distribution activity, and it certainly is not a call for slower growth. Quite the opposite—smarter engagement strategies driven by persona analysis will over time make sales efforts more effective and client relationships sticker and more profitable, while also delivering better outcomes for clients.