Asset Management’s Most Undervalued Attribute

What causes private equity LPs to re-up in subsequent funds when performance is just ok?

What prevents LPs from redeeming when the performance of a hedge fund falters?

What prevents top employees from pursuing “opportunities” elsewhere?

Why do founders approach specific VC firms first?

Why do people working as institutional allocators invest in the same hedge funds and private equity funds when they move from one job to another?

Why does top operational talent work with one PE firm over another?

You would think that the industry would prioritize whatever it is that can accomplish all of the above? Interestingly, it doesn’t.

What is this mysterious elixir?

Loyalty.

One of the greatest mysteries of the asset management industry is the indifference towards building loyalty. (Honestly, this makes no sense at all.)

This, however, leads to a more pressing question, how do you build loyalty across an audience?

All circles back to building brand. Brand is nothing more than a positive, emotional connection between an individual and a company. Loyalty is a bi-product of brand. The stronger you brand, the more loyal your audience.

We talk about the importance of building brand a lot. More often than not, the industry stares back at us with a blank look on its face, as if we are speaking an entirely different language.

The definition of loyalty and the obvious benefits of building a loyal audience are straightforward and easy to conceptualize.

The next time someone is talking to you about “brand,” replace the word brand with loyalty. Pursuing a “brand strategy,” aka “loyalty strategy” may suddenly seem like a worthy idea.