When Your Investors Face a Crisis (But You Don't): The 7 Step Communication Playbook
The most crucial question in crisis management isn't "Are we affected?" but rather "Are our investors concerned?"
In the alternatives space, where relationship capital is as valuable as financial capital, understanding when and how to communicate during market disruptions can transform potential redemptions into reinvestment opportunities.
Alternative investment managers face a critical choice: remain silent because you're unaffected, or proactively communicate to demonstrate awareness and preparedness.
The reality is that 'crisis' is a relative term. What constitutes business as usual for your strategy might represent significant anxiety for your investors, particularly those with diverse portfolios or complex stakeholder relationships. It makes good sense to think of these moments, not as distractions but as opportunities to differentiate through exceptional investor experience.
Communication - especially when you’re not affected - might be your most underutilised comparative advantage:
It:
Maintains investor trust and confidence
Demonstrates proactive risk management and transparency
Prevents misinformation and rumours from causing concern
Positions your firm as a responsible and well-governed entity within the industry.
A few examples of the type of scenario:
Market/Financial: Market crash, extreme volatility, liquidity crisis, counterparty failure
External/Environmental: Natural disaster, geopolitical events, public health emergencies
Technological: Major cyberattack, large-scale data breach
Industry issues: Regulatory investigations, major fund failures, viral misinformation, PR crises affecting peers
Luckily, the plan is the same for almost any scenario that might be a crisis for your investor, but not for you.
1.
Reassure your existing investors: Send out an unscheduled performance snapshot as soon as possible. Right now, that’s all they care about. It can be as brief as a single number or as in-depth as your monthly risk report. As for commentary, keep it short, focused on your portfolio and do not opine about other managers. If you comment on the incident, do so in relation to your firm and/or strategy and reassure your investors of your positioning rather than general commentary.
2.
Offer to increase reporting cadence or turnaround time (or both!) If your tech allows it, give them the option to opt in/out to updates. This helps them filter out noise and gives you more information about your investor’s behaviour and appetite. (Resend the offer to those who don’t respond within 48 hours.)
3.
In a third communication, offer 3-5 20-minute slots for group update calls - that week. Make sure the investors understand that the calls’ content will be largely the same and an opportunity to ask questions. As you are unaffected by the incident, you are unlikely to get many takers. However, you win points by offering transparency and demonstrating that you understand your investor’s needs.
4.
Expand your communication to potential investors in your pipeline. Repeat the three-step process above but with more polish (and less transparency, if that’s your policy). They will be busy focusing on their existing investments, so do not expect a high level of interaction from them. However, once they have time to look at repositioning their book, they will appreciate your proactive response.
5.
Depending on the length of the incident, scale back your sales outreach as investors not yet in your pipeline will be focused on their current and potential investments. Instead, use this opportunity to create educational content and thought leadership for your awareness channels that highlights your reliability, stability and transparency. When non-pipeline potential investors decide they need to address their potential investments, your material will be answering their current pain points.
6.
As dust settles, check back in with a call to existing and pipeline investors to let them know you are scaling back reporting to normal levels and solicit feedback on your crisis management. It will be good feedback and will cement you in their mind as a safe pair of hands. Ideally, you will also be able to gauge their appetite for your fund, firm and any new investments they may be making.
7.
Finally, move back to full promotion, activate your sales outreach and full awareness strategy. Incorporate case studies and lessons learned to complement your reliability messaging. This may be one of the rare occasions to be performance forward, particularly if the incident has affected your peers and you remain relatively unscathed. However, you should set a strong time limit on performance messaging as this should not become a USP by default.
The alternatives managers who consistently outperform in asset retention aren't necessarily those with the best absolute returns, but those who understand that the investor experience extends beyond performance metrics. When industry challenges arise, your response reveals your true commitment to partnership. In these moments, transparent communication doesn't just maintain investor trust—it compounds it.
When market conditions normalise and investors begin reallocating with fresh perspective, they'll remember which managers provided clarity amid confusion and partnership amid pressure. As in most relationships, it's how you communicate during challenging times that truly defines your value proposition. Don't miss these rare opportunities to differentiate when they present themselves.
Let’s talk about your communication strategy.
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