I called my accountant the other day. I needed some advice and he gave me the guidance I needed. We were on the phone for about half an hour and he only charged me for those 30 minutes. I get advice, he gets paid. A perfectly fine exchange. My accountant is more generous than my lawyer who makes me buy at least one hour of his time! My doctor doesn't help me for free either, nor does the plumber or the yoga teacher.

In this world everyone gets paid in exchange for their expertise, well almost everyone because for some reason investment managers are expected to do most of their work for free!

The other day we were visiting prospective investors. During those meetings we share our latest insights and ideas. Just as a peacock unfurls its stunningly beautiful tail, we also have to lay it all out in an attempt to court prospects towards becoming investors.

But then a couple of prospects complained that we didn't come to see them often enough. So when I suggested that by becoming clients, they'd be seeing us much more often, they looked at me as if I had just blurted out something totally inappropriate.

I don't know about you, but I think this is absurd!

empire free hugs

For some reason, investment management is one of the few knowledge businesses where it has become standard practice to spend time and resources sharing what you know for free in exchange of the remote possibility of winning the business. Again, lawyers, accountants and consultants don't do any work for free even though they equally transact in knowledge that is supposed to generate returns.

Maybe I am missing something, but don't you think there is something fundamentally off with the way investment managers go about their business?

When you realise how much money small investment boutiques sink into acquiring clients, you'd be crazy not to want to build a business that benefits from helping them reduce this expenditure!

If you assume an optimistic conversion rate where only 1 in 10 prospects eventually decide to invest, it also implies that 9 times out if 10 you are systematically wasting your time on dud meetings. Then consider that converting that 10% of prospects takes between 12-18 months and at least 5-7 meetings with every one of them. The costs run up pretty high.

You may be wondering where I get these numbers from. I didn't dig up any research to point back to, but these figures feel about right after 20+ years of experience of attracting investors. In fact, I'm thinking that these numbers may actually be slightly optimistic.

The reality is that most boutique investment managers don't have large sales teams and the principals of the business are usually actively involved in the capital raising process. This also means that the bulk of the cost of client acquisition goes to extensive travelling expenses to meet with prospects.

In addition, most investment boutiques prefer to focus on investment management and often lack a 'commercial culture' so they won't be able to attract business development A-players simply because the overall opportunity is too small.

I have the feeling that most boutique investment managers don't even stop to think much about their customer acquisition cost because they just roll with the fact that 'this is just the way everyone else does goes after investors'.

And here's something else to think about: how can you possibly stand out if you do exactly what everybody else does? That is a huge topic in itself and worth fleshing out in separate essay. Stay tuned :-)

Anyway, this 'working for free at a high operational cost' culture has been nagging at me for some time. I used to just dismiss it thinking 'what do I know anyway'. But the more experience I acquire outside of the investment management niche, the louder this 'dissident voice' rises up inside of me.


It got especially loud during those moments when I was stuck in some airport wondering why on earth I even bother to go out to play this numbers game of just clocking as many meetings as I can with anyone who wants to see you. If you are in this line of business, maybe you know exactly how that feels.

But its not like you are going to change an entire culture of an industry overnight, but you can at least try to re-shape your little corner of the sandbox.

So I threw out everything I knew and set out to find a new way, not only to become more efficient in prospecting, but also to slash the cost of client acquisition. And to do that, I needed to go out and look beyond the horizons of investment management.


A couple of years ago I went out on a little 'journey' to learn more about how small businesses in other industries apply technology to grow their businesses and that is when I realised how much the investment industry can learn from other knowledge based businesses. I also felt a bit like a time traveller from the past!

I started experimenting with all the new things I learned. Some of it worked, other things didn't but after a while I started putting things together and getting pretty good results!

I think I now have a system that can help you streamline your capital raising process and I'd love to know what you think about it.

And if you haven't already signed up, I wanted to let you know that I've put together a free introduction course about building a more meaningful online presence that attracts and retains the attention of investors and then converts it all into a 'smart list' real prospects.

So in case you want to take a peek and see what this is all about,just click here to go to the Capital Attraction website.

I'd really love to hear your feedback, the good the bad and even the ugly!

Thanks very much for taking the time to read this!

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