Unfortunately, there’s a call involved.
Key Takeways
Most investors default to giving a single, non-controversial reason for not allocating, masking valuable feedback that could help improve your proposition
Getting meaningful feedback requires a carefully structured approach that makes investors feel safe sharing honest criticism without fear of confrontation
The key to successful feedback conversations is the immediate validation of every point raised, even when the criticism feels wrong or unfair
Categorising feedback insights makes it easier to determine the appropriate next actions
Understanding unexpressed emotional objections is crucial, as they often drive seemingly rational rejections but are rarely communicated directly
This is one of the hardest jobs in asset growth - no one likes giving bad news, and investors are no exception.
It’s even tougher to get genuine feedback. On the other end of the spectrum, sometimes you’re left to work out they’re not allocating by their continued lack of response - never mind discovering the reasons why!
If you do get a reason, in all likelihood, it will be a single reason that leaves you no room for argument. 99% of the time it won’t be about your offering or you. They’ll cite their portfolio construction, risk allocations, client appetite… yada, yada, yada.
This is not a discussion an investor wants to have. They don’t want to compound your disappointment by telling you they think your fund or strategy isn’t any good. Equally, they allocate to a fraction of a per cent of the teams they see. If they debriefed everyone it would be a large portion of their role, and frankly very depressing. They’d rather talk to the teams they’re allocating to!
But honesty, this last reason is probably the strongest: They don’t want the confrontation. If they open up, you might try to persuade them to reconsider or argue the points with them. There is nothing they can do. They’re rarely the sole arbiter of the decision and it’s very uncomfortable to repeatedly tell someone ‘We don’t think you’re any good.’ Especially when the person they’re telling is arguing that they are! And this confrontation is a real possibility, I’ve seen fund managers argue almost violently with investors who try to give genuine feedback. I feel for the investors, it’s traumatic and they have no resolution.
All of this leads them to shut down the conversation as quickly as possible. Hence the single non-you reason. If you want to open it up again, you’ll need some finesse.
How we write the email
I’m going to assume they sent you an email with their single non-you reason - they weren’t able to allocate because as much as they wanted to, from a top-down standpoint, your offering didn’t fit with the mix of their existing allocations. In your reply you have to go through a few hoops before you can get to the real conversation:
Firstly, you have to allay their biggest worry: “Obviously that’s disappointing, but I recognise the decision is final.” ie, there won’t be embarrassing or traumatic arguing.
Then you validate the reason they gave you. It doesn’t need to be deep, it just needs to be comforting: “I understand how difficult portfolio construction can be when there are so many good options available.” If you can wedge it in, it pays to be magnanimous. Now is not the time to bad-mouth competitors (there’s rarely a good time to bad-mouth competitors but now is not a good time x100.)
Next you make the soft ask: “Now that the decision has been made, are there any other reasons that could have contributed to it?”
Then validate their expertise and appeal for help. “As you’ve been through this process so many times, I would appreciate your guidance to help us improve.”
Then the hard ask: “Please can we have a 10-minute call this week?” The ask is timebound, but not too urgent, it’s not ‘now.’ Even though you both know ten minutes is a fiction, saying 10 minutes indicates your intention to be less than half an hour - perhaps significantly less. It also gives them an out at 10 minutes if the conversation is too much for them. Getting feedback is important but not at the expense of burning this bridge.
Finally the call-to-action: “If you have space, please send me a few time slots that you are available.” (Everyone has space for a fictional 10 minutes but you have to give the illusion of choice).
Here’s a shocking twist. It doesn’t matter if they reply with timeslots. It’s great if they do, but if they don’t, you’ve set the call parameters. They know the call will be short, you won’t be difficult, you appreciate their expertise and you’re asking for help.
Now when you call them, they’re more amenable.
The call-to-action (CTA) acts as a tiny guilt bubble. When they answer the phone (or hear your message) it triggers: “They asked me to do something simple that I haven’t done.” In their relationship with you, they have asked you for many things based on the understanding that there is likely to be a payoff. The payoff didn’t happen, and now they haven’t acted on your CTA.
How we handle the call
If they haven’t replied in two working days it’s time to call them. Their inboxes are insane, many investors have given up clearing them. If they haven’t replied in two days, you’re probably under multiple other to-dos that benefit them (which speaking to you does not). If they have given you timeslots, so much the better! The call is very similar in both instances.
Before the call, remind yourself of the areas they most focused on during their consideration process. Equally, jot down the general areas you covered with them - investment strategy, performance, risk, operations, team etc. Don’t forget to add the process itself.
The Opener and Ask
After a quick hello, dive into reassuring them that you’re not going to be difficult:
Thank you for letting me know that you weren’t able to allocate. Of course, it’s disappointing, but I know how hard you worked on our offering and I appreciate that the decision is final.
You don’t have to say that you “know how hard they worked,” but you do have to say something that shows you appreciate them. You can say you appreciated that they advocated for you, or that you understand how much work it is to put funds forward for investment. Say something nice, then crucially say “I appreciate the decision is final.”
Then stop talking. Make it long enough for them to think you expect a response. They will then probably reiterate their single non-you reason, or say how disappointing it was etc. Either way, you’re initiating a reciprocal conversation where they have input. This will stand you in good stead for the next phase where you expect them to give significantly more input.
If they make you wait in silence for an awkward amount of time. that’s a good indicator that they’re not engaged. They may be reading or thinking about something else, or aren’t going to play this game. You may as well plough on without the reciprocation, at least for another few minutes, as you may be able to capture their interest.
You now go in for the ask:
Now that the decision has been made, are there other reasons that could have contributed? For example, was there anything in…
Call Cheat Sheet
I know it may seem overkill, but I have found that having an actual cheat sheet has saved me on many occasions. It’s helped me remain focused and allowed me to manage my natural reactions to negative feedback.
Opener
Thank you. Disappointing. Appreciation of effort/time/advocacy/other. “I appreciate the decision is final.”
-Stop talking-
Ask
“Now that the decision has been made, are there other reasons that could have contributed? for example…”
Areas of focus
Investment strategy, risk, operations, team, process etc (Fill out before the call)
Validation Phrases
Thank you, that’s insightful. That’s giving me a lot to work with. This is extremely helpful. You make a good point. I’ll look into that. Thank you for sharing this. (You need to write your own.)
Tell-me-more Phrases
Can you tell me more about that? I’d love to hear your perspective on… Do you have any additional details about …? Can you elaborate a bit more on why you saw it that way? So I can understand it better, can you give me an example of …? (You need to write your own.)
End
Thank you. Appreciate call. Appreciation of effort/time/advocacy/other.
* Follow up email.
The hard work
This is where your pre-call prep comes in handy, you walk them through the areas you’ve jotted down. Methodically taking them through every area you covered gives you as full a picture as possible. Let’s not forget, they might have taken up to 10 funds to the committee and reviewed or received updates from maybe 100 more in the past few weeks. Without the prompt, they’re likely to forget a few points.
To make this process a success, you need to validate every reason they give you, immediately after they tell you. This reduces their stress about giving negative feedback and encourages them to give more. It doesn’t need to be a long mea culpa. I’ve found it’s useful to have a few stock phrases at the ready: Thank you, that’s insightful: That’s giving me a lot I can work with: This is extremely helpful: You make a good point: I’ll look into that: Thank you for sharing this… You get the idea.
It’s also useful to get some ‘tell me more’ phrases at the ready: Can you tell me more about that? I’d love to hear your perspective on … Do you have any additional details about… This insight is valuable, can you elaborate a bit more about why you saw it that way? So I can understand better, can you give me an example of….
At face value, preparing some stock phrases seems unnecessary but I’m going to level with you, doing this isn’t easy. It’s emotionally tough. You need to absorb all of the criticism and not push back. Some things they say might be illogical or just plain wrong, but you have to take it and say something validating. Every time.
You can’t come back with a ‘but’ or a ‘I think you’ll find…’ because that’s not what this process is about. It’s about collecting negative feedback so you can improve for the next investor. But it can be brutal. Especially when a part of you is wrapped up in your fund, firm and team (me with every fund I work with!) Having the right things to say without thinking lets me deal with my emotions internally while appearing collected externally! Few people get a kick out of hurting or annoying others. If they can tell this is affecting you, they will start pulling their punches, and that’s no help.
The end
Pffft… deep breath… You’ve got to the end of your list of areas. All that remains is an effusive thank you and a reiteration of how much you appreciate their effort/time/advocacy. And of course, the follow-up email saying the same.
Now it’s time to go over your notes to find the actionable insights. I like to take a walk before I do that!
How we process feedback
I like to group feedback into a few categories. It helps me understand the motivation for it and what I can do about it:
Process: This covers anything difficult for them when doing the basic job of reviewing your offering. For example, they couldn’t get access to the data sets they wanted. You weren’t as transparent as they needed for investment. You couldn’t guarantee reporting by a certain date. You wouldn’t negotiate on fees. It can be as small as your response time wasn’t what they were expecting.
Some of these won’t be fundamental to their lack of investment but contribute to the feeling that investing with you won’t be the experience they are looking for. However, process feedback is valuable as the majority of fixes are solely decisions you need to make. “I’m happy to lose investment for x reason because I don’t want to compromise our information edge.” or “We need to implement a 24-hour response time, even if it’s just to say we’re working on it.”
Cosmetic: These are a collection of misunderstandings. I call them cosmetic because they’re not real, but it indicates there is something wrong with your messaging. Even after spending many hours on your offering, they may still not fully grasp your USPs (unique selling points). Or they may still misunderstand how you manage risk. Alternatively, they may think you’re pushing things they don’t think are true!
Fixing these is a question of changing your marketing wrapper. Choosing the right angle to view a fund is as much an art as science and a gentle tweak to the angle can reap rewards and still remain true. However, don’t rush to change it! This single piece of feedback is not enough. Validate these misunderstandings with your current investor base and your friendly Primary Connectors (capintro, TPMs, placement agents etc). Once you’ve understood the cosmetic issues pose them as an either/or: “Would you say we do x or y?” As tempting as it is to send out a survey, don’t. You get better feedback from human interaction. You also get to use all those lovely validating and ‘tell me more’ phrases to a whole new set of people whilst swallowing all your objections! Fun! [vomit emoji]
Concrete: These are genuine pieces of feedback based on what you perceive as rational responses to things you’re doing. Maybe you don’t comply with SOC2 or ISO27001. Perhaps you could document your risk policies more completely. Or alternatively, you think their opinion is wrong on a topic but it’s something to look out for when getting further feedback. If it becomes the prevailing response, it might be time to change or address it by remodelling your marketing wrapper. You can always canvas your friendly investors and Primary Connectors (but do it subtly, you don’t want to plant reasons to redeem!)
Emotional: This is the hardest. There’s not much you can do about someone ‘not liking’ something or someone! Sometimes it’s difficult to unpack the emotional feedback from the other three. Investors are professionals and we all like to collude in believing that professionals make rational decisions. They may say they disagree on a topic when actually, they don’t like the person saying it. It’s rare to find someone who will both recognise and then admit it - it’s human! This brings me to my next section…
The unfair kicker
You’re unlikely to get genuine feedback about people, their attitudes or behaviour. It’s very uncommon. Admitting that someone feels creepy or weird is massively embarrassing. Equally, saying that you felt disrespected because people were late to every meeting, is humiliating or worse could be seen as petty. But guess what? Those emotional reasons could be the catalyst for creating socially acceptable rational reasons. This is the downside of our collective collusion that all reasons are rational. But, that’s not something I can change. Equally, it’s not something unique to alternative investments! If it were, marketing wouldn’t exist.
If you are persistently losing anticipated investment and acting on all the feedback you can, it’s likely to be caused by unexpressed emotional objections. It’s painful to admit. We’ve all seen teams with stalled asset-raising fire salesperson after salesperson in an effort to remedy the problem, not realising that the salesperson isn’t the issue. For some groups, this lack of reflection is understandable, but terminal.
Naturally, my solution for a larger firm is to hire a Fractional Chief Growth Officer with After Yellow. As you can tell by this article, we’ve done the ‘exit interview’ with investors many times. We’ve worked on implementing and tweaking hundreds of small changes from investor feedback that maximise reach at the investor’s awareness stage, optimise marketing and sales funnels and increase retention and reinvestment rates.
However, that’s not a solution for smaller teams. Instead, get a third party to interview them for you. It might be the best money you ever spend. We know a few people who do this, so reach out for their contact details: hello@afteryellow.com (we use them when we can’t get the unfiltered truth). Alternatively, lean on your capintro, TPMs or placement agents, but don't forget their vested interest in keeping you happy.
So there you have it! A quick guide to getting feedback from someone who is not incentivised to give it to you. At points, I mentioned ‘primary connectors - you can find out more about them and the other channels for communicating with your investors in our ‘raising awareness’ series.
Explore how a Fractional CGO could transform your asset growth.
Have a look at our other articles on communication
