What are the ‘jobs to be done of an investment manager?
Professor Clayton Christensen ending Harvard found that in many sectors, Lowend switches generally take at the bottom of the market, then work to satisfy the most demanding market segments. According to Amanda Tepper, CEO of Chestnut Advisory Group, investment performance alone does not determine asset flows.
Below we summarize all of the work that needs to be done by an investment manager in each category, including the technical, functional, and emotional benefits. For example, Vanguard Group offers not only the technical and functional advantages of low-cost investment but also the breadth of the emotional benefit of trusting, putting customers first, and not making an excessive profit.
The hierarchy of tasks to be accomplished by investment managers
Technique: what the product/experience does/is — “the offer”
Investment strategy: generate alpha; don’t waste (too much) money; combine liabilities and obligations; minimize expenses and taxes; exposure to targeted sectors; inherit/achieve political or social goals; and protection against queuing risks.
Make investments: seek/generate investment ideas; research / due diligence; make investment decisions; manage your wallet and get out.
Investment management: Administration; construction options; respect for law and religion; and transfer the wealth to the heirs.
Functional: what the product/experience offers to the customer — “runtime”
Simple and convenient user interface; Customer service; access to networks; education; self-discipline.
Emotional: how the product/experience makes the customer feel — “the tone”
Tranquility; social validation; exclusivity; Control; excitation.
Technical work to be done
A fund manager has to do all technical work to an acceptable level just to get into the game. Below we have listed the major technical work, in roughly decreasing importance level. We divide them into three sub-categories: (a) investment strategy; (b) make investments; © manage investments.
Investment Strategy
Alpha Generation
Some investors try to optimize to achieve the highest returns above all other goals. They can generally tolerate prolonged volatility.
Yield-oriented investors may want to invest in nascent asset classes, which have historically generated astronomical returns for early-stage investors. Historical examples include art, carbon credits, collection, encryption, miles of loyalty, Internet domain names, individual life income, financial litigation, mineral rights, patents, Even a family office that may not have a legal obligation to pay pensions should plan ahead when it will receive money from the other side of its illiquid investments.
Universal responsibility is inflation. Inflation-linked bonds are an innovative tool for dealing with this liability, as are traditional inflation hedges such as real estate and commodities. a significant portion of their gold wealth.
