Hedge Fund Book V4

The Hedge Fund E-Book by Richard Wilson http://HedgeFundTraining.
com
The Hedge Fund E-Book Version 5.2
By Richard Wilson
I truly believe that if you spend your time helping others get what they need and want the
relationships you build will bring you what you need. In this spirit Im offering the Hedge
Fund Blog Book for free To date more than 12!""" professionals have downloaded
and read this book.
# $i%hard &ilson
The Hedge Fund E-Book by Richard Wilson http://HedgeFundTraining.com
Brought To You By:
Richard Wilson is a marketing and capital raising expert who is founder
of the 46,000 person Hedge Fund Group (HFG) and the Certified
Hedge Fund rofessional (CH) designation program!
"ichard has written o#er $0 %ooks, his articles, presentations, and reports
ha#e %een used %& o#er ',000,000 professionals around the world!
"ichard has presented full da& workshops and at conferences in
do(ens of locations including )russels, *ew +ork, ,oscow, -ok&o,
Chicago, .ingapore, )oca "aton, Hong /ong, and )oston! 0earn
more a%out him at http122"ichardC3ilson!com or connect with him on 0inkedin!com
through the email address1 "ichard4HedgeFundGroup!org
The erti!ied Hedge Fund "ro!essional #H"$ designation is a
$005 online6%ased hedge fund training and certification program
that can %e completed in 66$7 months! -he CH program is the
industr& standard 8$ most popular and trusted certification
program %uilt exclusi#el& %& and for hedge fund professionals as a
continuing education and professional self impro#ement program! learn more a%out it at
htt%:&&HedgeFunderti!ication.co'
The Hedge Fund (rou% #HF($ is a network of o#er 46,000
hedge fund industr& professionals from o#er 90 countries who
acti#el& network, partner, and refer resources and leads to each
other! :ach &ear the Hedge Fund Group offers se#eral full da&
capital raising and hedge fund marketing workshops, and man&
hedge funds know us for our capital raising resources such as the
Famil& ;ffices <ata%ase! =oin the Hedge Fund Group for free at http122HedgeFundGroup!org
)n*estor ontact +etails1 >re &ou tr&ing to raise
capital for &our hedge fund? 3e pro#ide full contact
details on o#er @,000 different potential in#estor
sources of man& t&pes including wealth management firms, single and multi6famil& offices,
institutional in#estment consultants, and fund of hedge funds! >ll of our directories of in#estor
contact details are guaranteed to %e updated and accurate! +ou can learn more a%out our
ackages a#aila%le at http122Famil&;ffices!com
Hedge Fund Career
Hedge Fund Career
Hedge Fund ,o-s
Hedge fund Ao%s are in high demand, man& ,)> graduates and experienced financial
professionals now are looking for wa&s into the hedge fund industr&! Bf &ou are looking around
at hedge fund Ao%s let me know! B ha#e recei#ed a few notices from Hedge Funds looking to
fill open hedge fund Ao%s and B know of a few recruiters that &ou might want to %e speaking
with!
B often get email Cuestions a%out how to prepare a resume for a hedge fund Ao% inter#iew!
3hat is the perfect hedge fund resume for hedge fund Ao%s? -here isnDt one! 3hile not the
case, some hedge fund professionals ne#er graduate from high school %ut make o#er
E$m2&ear in their Ao% trading or selling for a hedge fund! -hat said, some of the %elow factors
are a few of what can help land &ou hedge fund Ao%s1
F Guantitati#e experience and a%ilities
F CF>, CH, or C>B> designation
F :ducation 6 B#& league, ,)>, Guant focused h<
F .igns of lo&alt&, passion, and %eing hum%le
F .omething :xtra such as " expertise, asset gathering a%ilit&, or Bnformation >d#antage
F High Cualit& names from &our last few hedge fund Ao%s 6 large wirehouse experience
F How much mone& did &ou personall& %ring in to the firm or make for the firm?
F > stomach for a high commission2%onus structure
;ne highl& successful hedge fund manager said that the& donDt ha#e an& hard and fast
experience reCuirements while filling their open hedge fund Ao%s, the& simpl& look for people
who are hungr&, hum%le, and smart!
+ou-le Your Hedge Fund o'%ensation
3e get lots of emails from hedge fund professionals (7k2week) who are looking to %oost their
career, their compensation and their o#erall progress in reaching their dream hedge fund Ao%!
)elow are some Cuick, practical ideas which take hard work %ut are pro#en to greatl&
increase &our chances of dou%ling &our income in the industr& regardless of where &ou are
currentl& at1
$! ,ap out where &ou want to go in the next $, @, ' and H &ears on paper within a career
or %usiness plan, dream %ig and work %ackwards from there!
7! .witch Ao%s! Bf &our current emplo&er is not gi#ing &ou opportunities or a#enues to grow
get out and mo#e on to a %igger opportunit&! Bf this is not an option create I3;3I proAects
within &our Ao%, if &ou donDt know what this means read -om eters %ooks for moti#ation and
instructions on this detail!
@! .topping thinking a%out putting in &our time and instead start positioning &our own
uniCue #alue and contri%ution!
4! )e pro6acti#e in %ecoming friends with those who are either hu%s for industr& contacts
or are the direct professionals who &ou want to work for in @6' &ears, friends hire friends!
'! Bn#est in &ourself, complete training or certification programs, seek out a mentor or hire a
coach!
6! Create ' drafts of &our resume %efore showing it to an&one, if possi%le create a pitch
%ook on &ourself and &our career as to wh& someone who hire &ou! ro#ide an estimated
";B, example trades, work samples that &ou ha#e permission to share, etc!
H! "ead at least @0 minutes of training materials or niche %ooks which directl& connect with
the skills needed to perform #er& well at &our dream position
9! =oin toastmasters, get comforta%le and good at speaking at e#ents, seminars, and
conferences it positions &ou as an authorit& and forces &ou to master some niche topics
J! 3ork hard! B heard a great Cuote somewhere, in life there are two groups those who take
credit and those who do hard work! )e in the group which does the hard work, there is far
less competition!
B hope these tips help, these are things B ha#e learned from tr&ing to grow m& career and
coaching mem%ers of the Certified Hedge Fund rofessional (CH) rogram! :ach
participant within the CH <esignation gets access to our career coaching, resume feed%ack,
resume template, and o#er H0 educational #ideos!
./0R +e*elo%'ent For'ula
-here is a formula that B ha#e used o#er the past H &ears to help me %uild m& resume, career,
and now m& own small %usiness, that is the ./>" Formula! -his is not a wa& to shortcut the
hard work it takes to %e successful, %ut rather a map as to where in#est &our energ& to
increase the results &ou get in return for &our in#estment!
.peciali(ed /nowledge K >uthorit& positioning K tangi%le "esults L huge growth opportunities
and faster de#elopment within &our career or %usiness!
+e!initions
.peciali(ed /nowledge L .pecific knowledge that is practical, functional and #er& niche
specific to the area within &ou work or the skill or a%ilit& &ou rel& on to perform well!
.peciali(ed knowledge exists whether &ou are an airplane pilot, hedge fund anal&st, or third
part& marketer! -he difference %etween ha#ing speciali(ed knowledge or not could mean the
difference %etween spending $9 months to complete a task or proAect or %eing a%le to
de#elopment strong client relationships and complete the same task in Aust @ months! Bt lets
&ou identif& more opportunities, mo#e more Cuickl& on them, and execute with efficienc&
when once multiplied o#er se#eral &ears puts &ou within a different league of competition!
.ome ideas on how &ou can further de#elop &our speciali(ed knowledge include1
$! "ead two %ooks2month for the next two &ears on the area of speciali(ed knowledge
which is going to %enefit &our %usiness or career most!
7! .u%scri%e to @ of the %est newsletters from %logs or experts in &our industr& which are
*;- re6hashed press releases and gar%age news! +ou learn close to nothing from reading
the news 6 read insights, anal&ses and white papers within these newsletters instead! -here
are at least 76@ #alua%le free newsletters in each industr&!
@! Complete a niche training and certification program specific to &our area of speciali(ed
knowledge! Ha#ing a third part& #erif& that &ou ha#e o%tained a certain le#el of speciali(ed
knowledge is >03>+. going to %e more credi%le than, B like to read %ooks and email
newsletters, here is what B ha#e read latel&! .eek out an online certification program and start
one within 6 months, this will force &ou to read and learn more within &our niche!
4! 3rite one article a week on &our thoughts, %est practices, and lessons learned within
&our niche area of practice! 3rite anon&mousl& %& creating a free %log at )logger!com and
start s&nthesi(ing what &ou are learning and com%ining other ideas to create &our own
original concepts (such as this %log post)!
0uthority "ositioning L Creating structures around &our firm or self so that &our knowledge
and a%ilities are communicated in a wa& that positions &ou as an authorit& in &our niche area!
Bdeall& this area lines up $6to6$ with &our area of speciali(ed knowledge and it can %e the
result of gathering this knowledge! -wo professionals can hold the same knowledge though,
while one write ' %ooks and completes o#er '0 press inter#iews a &ear the other ma& %e an
arm chair critic with a small group of '6H consulting clients! -he more well positioned
professional will reap rewards from new opportunities coming towards him instead of the
other wa& around! B was a competiti#e swimmer earlier in m& life and the %est %ook B read on
swimming was called I.wimming <ownhillI it was a wa& to swim so that &our %od& is tilted
forward and &ou literall& cut continuall& downwards into the water! Bf &ou get >uthorit&
ositioning right it will %e like &ou are swimming downhill! =effre& Gitomer is a great stud& of
authorit& positioning, he started writing 9 pages a da& when he was 46 &ears old, now in his
fifties he has o#er $0 %est selling %ooks, and charges more than Colin owell for speeches 6
the real important detail though is he *:M:" cold calls an&one and ne#er scram%les for new
%usiness! His phone literall& rings off the hook with new opportunities, clients, and Aoin
#enture partnerships due to his positioning, he is swimming down a steep hill!
$! u%lish &our own newsletter or %log 6 e#en if &ou onl& pu%lish something once e#er& 7
weeks, ha#ing it and %uilding it o#er time is what is important!
7! Bnter#iew one professional each month for &our own %log or newsletter, tell them that
&ou canDt compensate them %ut as &our we%site %ecomes more popular the& ma& get
some exposure and the& can ha#e a cop& of the recorded phone call transcript, ,p@
file or document which &ou t&pe up! Bnter#iewing experts is a shortcut to gaining
speciali(ed knowledge and authorit& positioning Cuick! .impl& telling others that &ou
ha#e inter#iewed 70 of the top experts in the industr& and o#erall &ou found > N ) and
most surprisingl& C is #er& powerful! *ote, the strong &ou ha#e fulfilled &our work in
%uilding speciali(ed knowledge the more willing these experts will %e to connect with
&ou and the more pointed and refined &our Cuestions will %e! :#er done an inter#iew
with a Aournalist who has ne#er worked in &our field? *ot alwa&s fun or fulfilling to
answer the %asics which can %e looked up on Google in @ seconds!
@! -ake what &ou ha#e written within &our own newsletter or %log and self6pu%lish a %ook,
with 60690 pages of single spaced text an&one can do this for E$' at 0ulu!com! Mer&
simple, no more excuses that &ou do not ha#e a %ook deal! B got m& second %ig
in#estment marketing contract partiall& %ecause B had a self6pu%lished %ook in hand
and someone ga#e me a chance %ased on m& dedication to the niche! -he %ook
positions &ou as an authorit&!
4! Create a $ page <F list of all of &our past clients! -his can show depth, experience,
and respect that others ha#e gi#en &ou %& pa&ing for &our ser#ices and time in the
past!
'! .peak at conferences! Bt is relati#el& eas& to land speaking spots at conference,
networking e#ents and seminars! 0ots of professionals are looking for others with
uniCue ideas and lessons to share, and again teaching what speciali(ed knowledge
&ou ha#e gained helps &ou connect and s&nthesi(e these ideas! Bf &ou are speaking to
a crowd &ou are within an authorit& position and when &ou mention &our speaking it
adds credi%ilit& %ecause others ha#e stopped their %usiness da&s and in#ested their
#alua%le time to listen to what &ou had to sa&!
Tangi-le Results: -he importance of showing real tangi%le results cannot %e o#er6stated!
Finding wa&s to do this within ser#ice %usinesses, the fund management industr&, or within
certain areas of extreme confidentialit& is challenging! .ome t&pes of tangi%le results that can
%e shared include1
>n actual printed out #ersion of part of the ser#ice or end result of the product or
ser#ice
Mideo or text (not as good) testimonials from past and current clients, the more
specific to the immediate need or concern of &our potential client or emplo&er the
%etter!!!the more numerous the testimonials the %etter!
-he first $'6705 of the product or &our ser#ice gi#en awa& for free on a trial %asis! E$
first month trial, 4 weeks of free work or time so we can pro#e our worth to &ou, etc!
<i#erse and numerous case studies of past clients or emplo&ers, this pro#es that &ou
work with firms with #arious needs and ha#e found solutions for them, it allows the
reader of these case studies to imagine &ou sol#ing their pro%lem
> little tip, Cuick take awa& or lesson within &our sales letter or we%site which pro#ides
the potential client with immediate %enefit! -his pro#es that &ou ha#e the goods, are an
authorit& and do ha#e their %est interests in mind!
>nother related topic that B donDt ha#e space to go into here is that underl&ing all three of
these items are ha#ing the right ha%its! Ha%its ha#e %een shown to form J65 of what we do
e#er& single da&! 3e tend to eat the same things, walk the same wa&, watch the same
shows, and read the same t&pes of %ooks! >s the Cuote goes, Ifirst &ou form &our ha%its, and
then &our ha%its form &ou!I 3hat %usiness ha%its are &ou forming? 3hat elements of the
./>" formula are &ou using each week? 3hen &ou read this t&pe of ad#ice are &ou thinking
IB alread& know this stuffI or Ihow good am B at that, and where could B impro#e?I
Hedge Fund .ales areers
)elow is a short guest post %& ,ark Goormastic of Goormastic :xecuti#e .earch! -his is
straight ad#ice from someone who works dail& with placing hedge fund professionals within
the industr&! -he onl& thing B would personall& add to this post is that &ou must ha#e multiple
forms of proof that &ou ha#e raised capital %efore in the form of current in#estor contacts,
referrals, or letters of recommendation!
B get a lot of inCuiries from sales professionals! -he Cuestion is usuall& IB would like to get a
salaried <irector of ,arketing position at a small hedge fund! Can &ou help?I
,a&%e! ,& clients tend to %e small hedge funds with in#estor assets under E$00,! 3hen
the& are willing to pa& a salar&, the& expect results Cuickl& 6 within six to nine months at the
#er& most!
-o %ring in, sa& E',, within this time frame &our %ook and career histor& should look like this,
from the perspecti#e of a small hedge fund that might consider hiring &ou1
6 +ouD#e successfull& raised mone& for another small (OE$00,) hedge fund and were
successful! 6 3eDll define IsuccessfulI to mean that &ou %rought in a meaningful #olume of
allocations, letDs sa& E$0,, in the first eighteen months! *ot commitments! >ctual checks in
the %ank!
6 -he hedge fund &ou successfull& raised capital for emplo&ed a strateg& such that the
in#estors who allocated to that fund would logicall& ha#e an interest in the fund that is
considering &ou!
Bf those conditions are true then &ou might %e a great fit for a small hedge fund looking for a
<irector of ,arketing!
1 areer Ti%s
Bf someone wanted to start a hedge fund career, what are 4 pieces of ad#ice &ou would gi#e
them?
$! -he da& &ou graduate from college start stud&ing for and earning &our Chartered
Financial >nal&st (CF>), Certified Hedge Fund rofessional (CH) or C>B> designation!
7! Figure out if &our passion is in trading, anal&tics or marketing N sales! Choosing
&our specialt& area earl& will help &ou more Cuickl& de#elop the experience and skill sets
needed to do well in that t&pe of position!
@! *e#er do an&thing un6ethical! Bf &ou are sharp and passionate &ou ha#e no need to
e#er cut corners! >#oid people that do at all costs!
4! <o &ou own compliance and due diligence research! 0ook up &our potential or
current %oss within the FB*"> or .:C records to see if the& ha#e marks against them! ,eet
with a compliance law&er &ourself to make sure &our acti#ities are all legal with securities
laws! <o &our own homework %ecause man& times no%od& is going to do it for &ou!
Hedge Fund 2et3orking E*ent Ti%s
Bf &ouDre looking to enter the hedge fund industr& either working directl& for a firm or as a
ser#ice pro#ider to one, networking e#ents and conferences are a great wa& to get &our foot
in the door!
,an& professionals fail to take ad#antage of these opportunities, e#en those who attend!
Here are ' tips that should prepare &ou for attending a networking e#ent or conference1
$! +on4t Be .hy: itDs a good start to attend a hedge fund e#ent %ut &ou do not gain an&thing if
&ou do not talk to other attendees, speakers and sponsors! -he e#ent is onl& #alua%le if &ou
make it #alua%le, so network and sociali(e with those around &ou!
7! +on4t .care "eo%le 5!!: >nother mistake is to %e too forward when approaching
managers or ser#ice pro#iders, especiall& those looking to land a Ao% in the hedge fund
industr&! Bnstead of sharing insights and thoughts on the industr&, man& &oung professionals
will focus entirel& on their own needs (a Ao%) and ignore those managers or executi#es that
are not currentl& hiring! -his is the wrong mentalit&! >ssuming &ou ha#e %een following the
industr& and paid good attention to the speaker, &ou will ha#e a good starting point for
initiating a con#ersation! >sk Cuestions when appropriate and listen when the other person is
speaking! Bf &ou are looking for a Ao%, donDt start a con#ersation with that pro%lem! -hose who
work in the industr& are not pa&ing to hear someone complain a%out not working in pri#ate
eCuit&! )ut &ou should mention it if the timing is appropriate!
@! (et Your 2a'e 5ut There: Bf &ou cannot find a hiring firm or no firms are interested in
&our product or ser#ice, donDt despair, get &our name out there! Bt ma& Aust %e an incon#enient
moment or the person &ou are talking with is not the right person at the firmP for example, if
&ou are marketing &our auditing ser#ice to a principle in charge of e#aluating deals, he ma&
not %e interested! Gi#e him &our %usiness card regardless, in a Cuarter the firm ma& %e
looking for a new auditor and still ha#e &our card! :#en if &ou do not directl& land a client
through this method, it %oosts &our firm or &our own name recognition! Bf &ouDre looking for a
Ao% (from anal&st to executi#es) gi#e &our card out, when the firm is e#entuall& hiring the& will
pro%a%l& ha#e &our name on file!
4! "re%are an Ele*ator "itch: Bt ma& not sound great, %ut &ou are a product that needs to %e
sold! -herefore &ou need to ha#e a great ele#ator pitch that comes out effortlessl&! 3hether
&ou are looking to network, marketing to in#estors or Ao% seeking, a solid ele#ator pitch is
necessar&! )e concise and include onl& essential information! -o learn more a%out crafting a
great ele#ator pitch see these articles, <e#eloping an :le#ator itch and :le#ator itch
:ssentials (also the title of a helpful %ook on the su%Aect)!
'! 6ook and 0ct like a "ro!essional: :#en though &ou are not at work when &ouDre attending
an e#ent or conference, act like &ou are! +ou are meeting potential clients and partners, so
&ou essentiall& are working! 3ear a suit and if itDs hot, as man& crowded e#ents are, at least
make the initial effort and take off &our coat once &ou sit down! .o, look &our %est (haircut,
sha#e and a suit) or no one will take &ou seriousl&! BtDs %etter to %e o#erdressed than
underdressed! "emem%er &our manners, especiall& if it is catered e#ent and use language
that &ou would %e comforta%le using in the office!
The To% 1 Best Hedge Fund 7a8ors
&hat is the best ma'or to %omplete in s%hool to work in the hedge fund industry(
$) Econo'ics: Qnderstanding how the econom& works and what triggers economic e#ents
and #aluation fluctuations is ke& to understanding hedge fund in#estment strategies!
.tud&ing economics also pro#ides the %enefit of %eing a%le to possi%l& complete an ,)> in
the future in Finance or ,arketing without repeating the same classes o#er again!
7) Finance: .imilar to economics understanding finance well and %eing a%le to anal&(e the
financial statements, annual reports, and stock market is ke& to the maAorit& of hedge fund
in#estment strategies! Bf &ou are looking to %e an anal&st or portfolio manager than
understanding %oth finance and economics is important!
@) 7arketing: -here is a huge need for more hard working, educated, and producti#e capital
raisers in the hedge fund industr&! B ha#e ne#er met an&one skilled at marketing in the hedge
fund industr& without far more opportunities than the& could e#er commit to! -hose with Aust a
few &ears of industr& experience and a marketing degree could work for a hedge fund startup,
third part& marketing firm, or capital introduction team at a prime %rokerage shop!
4) "rogra''ing: Financial models at %oth small and large hedge funds are %uilt %ased on
relati#el& simple programming languages or macros and %eing a%le to edit these or %uild them
from scratch is #alua%le skill to ha#e! Bf &ou com%ine real industr& experience and some
hedge fund industr& training this degree could help position &ourself as an asset to man&
managers!
H" 9 Financial +esignation hoices:
)elow is a Cuestion we recei#ed a%out the CH <esignation!
)uestion* How does the +H, designation %ompare with other finan%ial designation %hoi%es(
>nswer1 .ure, happ& to answer &our Cuestion1
-he CH <esignation costs E9JJ for %oth 0e#el $ and 0e#el 7 when tuition is paid
for %oth le#els at once and we ha#e pa&ment plans a#aila%le!
-he CH <esignation takes $ full &ear to complete %oth le#els of the program!
3e are uniCue in that we are the 8$ glo%all& recogni(ed hedge fund certification
program %uilt for and %& hedge fund professionals!
;ur program costs '05 less than most competing designations while pro#iding
more coaching and #ideo6%ased training modules than an&one else in the space!
Hedge7e Book Re*ie3
B found Hedge ,e to %e a great guide to %eginning a career in the hedge fund industr&! .ome
ha#e %ought Hedge ,e simpl& for the comprehensi#e list of hedge fund emplo&ers and
recruiters that is included in the %ook! -he hedge fund industr& is a #er& competiti#e place to
work and %& reading this guide &ou can increase &our chances of getting a Ao% as well as
possi%l& a#oiding the mistake of working in the wrong t&pe of hedge fund position!
For example this %ook pro#ides insights into the da&6to6da& acti#ities of hedge fund traders,
anal&sts and sales professionals! -his shows &ou what their schedules and responsi%ilities
look like and it can help paint a clearer picture that is sometimes hard to piece together
through reading articles online and conducting informational inter#iews!
Hedge ,e is also great for statistical references on what &ou can expect to get paid and how
large the industr& is! Bf nothing else &ou will ha#e hard num%ers to go off of and if &ou can
negotiate E@' more pa& than that alone has paid for the price of this %ook!
Hedge Fund Work - E'ail ;uestion
B Aust got this hedge fund work related email from a hedge fund recruiter who is a mem%er of
the Hedge Fund Group (HFG) and %ased in Hong /ong!
IHi "ichard 6 )een enAo&ing all of &our informati#e articles on hedge funds and through those
B can see &our passion and desire to make a difference! B am a recruiter %ased in Hong /ong
and man& in#estment %ankers and finance professionals are seeking hedge fund Ao%s here!
3ith so man& hedge fund managers out there in the industr& how do &ou Cualif& which t&pe of
hedge fund would %e good to work for?I
I-he eas& answer is, it depends! Bt depends on what &our short and long6term career goals
are within the hedge fund industr&! -he %etter short answer is that it would pro%a%l& %e most
%eneficial to work with a hedge fund with o#er E$00, in assets under management, ideall&
with offices in 0ondon and2or the Qnited .tates! ,uch of the hedge fund asset raising acti#it&
is going on within the :Q and >merica so Aoining a hedge fund large enough to compensate
&ou well for &our efforts while also growing Cuickl& in terms of assets might %e &our %est %et!
<o(ens of additional hedge funds will most likel& %e opening offices in Hong /ong o#er the
next @6' &ears, the trick will pro%a%l& %e de#eloping relationships with those firms while the&
are planning who to hire locall& to %e %ased in Hong /ong to represent their fund!I
Hedge Fund Recruit'ent - 0 listing o! Hedge Fund
Recruiters
B get emails each week from hedge fund professionals looking for new emplo&ment
opportunities, and man& of these are interested in contacting hedge fund recruiters who are
focused on hedge funds! )elow are m& efforts towards compiling a list of top hedge fund
recruiters that are dedicated to working with hedge fund professionals and alternati#e
in#estment clients in general! Bf &ou need a hedge fund recruiter please choose one from the
list %elow!
-op Hedge Fund Bndustr& "ecruiters1
,arc Goormastic (resident of Goormastic :xecuti#e .earch, Qnited .tates) 6 B recruit .ales,
)usiness <e#elopment, N Capital "aising (including -,) talent for pri#ate mone& firms,
pri#ate eCuit& firms, mutual funds, N hedge funds! "etainer6%asis with one &ear guarantee!
.,>00 FB", F"B:*<0+1 B will accept m& fee in up to twel#e monthl& installments to ease
cash flow impact! :xcellent industr& client references a#aila%le upon reCuest! Contact <etails
6 marcus4goormastic!com >lso see http122www!goormastic!com2
>nthon& .ola((o, of ,ason%oro artners is focused in on recruiting in the financial ser#ices
space world6wide (in#estment %anking2pri#ate eCuit&, and hedge fund opportunities)! +ou can
email him at1 anthon&4mason%oropartners!com or at 740!4H6!JH9'
Howard "oss is a leading hedge fund recruiter with );C .taffing .olutions! );C is a
specialt& pro#ider of permanent and consulting staffing to all le#els of positions within ,iddle
and )ack ;ffice ;perations and Front6;ffice -rade lifec&cle support! );C %rings a strength of
data%ase and staffing expertise gained o#er $'K&ears in pro#iding the talent sought, from the
hourl& worker pro#iding non6exempt support to senior executi#es managing
departments2di#isions! ;ur candidates ha#e expertise in such %usiness disciplines as1C.",
)ookrunners and .ales2-rader >ssistants, Confirmations2.ettlements2"econciliation
specialists, ,arket2Credit2;perations2Ma" "isk rofessionals, roduct Controllers,
>ccounting -ax and Compliance experts, )usiness >nal&sts, etc! Howard can %e contacted at
7$764J0677@@ or H"oss4);C.taffing!com
/en ,urra& 6 ,ercur& artners is a leading Hedge Fund :xecuti#e .earch firm %ased in
*+C! .ince 7000 we ha#e executed hundreds on searches for >nal&sts, ortfolio ,angers,
and -raders in 0ong2.hort, :#ent <ri#en :Cuities, <istressed2High +ield, and Guantiati#e
.trategies for %lue6chip and %outiCue hedge funds in the Qnited .tates and 0ondon! 3e also
pro#ide extensi#e marketplace statistics for and compensation data as well as hiring trends
and growth areas for our clients to %etter understand the marketplace! /en can %e contacted
at 7$7!69H!@J97 or kenmurra&4mercur&partner!com
.ameer Mishwanathan, artner, ,ark 0ewis, Bnc!, Chicago 66 we recruit exclusi#el& for hedge
funds and proprietar& trading firms across the Q.P a fair maAorit& of our clients utili(e high6
freCuenc&, %lack %ox, algorithmic trading strategies! 3e focus on Cuantitati#e and technolog&
placements of %oth experienced professionals and recent grads for roles in the front6office
and the middle6officeP if &ou are interested in working as a Guantitati#e rogrammer,
Guantitati#e >nal&st, -rader, ortfolio ,anager or a similar role, please email a cop& of &our
resume to sameer4marklewisinc!com or call us at 646!7'H!7'69 ! lease note that we will
ne#er share &our resume or an& other information unless we ha#e &our explicit permission!
+ou can also #isit us online at http122www!marklewisinc!com2!
Why Work at a Hedge Fund:
3hile recent market pro%lems mean man& in the financial sector will %e out of work or taking
home smaller %onuses, thereRs still wealth waiting for those in hedge funds! -hat wealth
attracts man& entrepreneurs, workers and students to hedge fund emplo&ment! 3h& work for
a hedge fund?
6 3orking at a hedge fund reCuires #aried skills and a%ilities! 3hether in#ol#ed in designing a
fund, it strategies or its sales, hedge fund work can %e challenging and in#igorating! *ot onl&
will &ou manage or o#ersee a portfolio, &ouRll ha#e to make sure &ouRre ser#ing the interests of
&ou clients while ensuring &our corporate practices are tight, legal and profita%le!
6 Hedge funds can cater to &our t&pe of experience! Funds reCuire people skilled in
accounting, in#estment %anking, economic anal&sis and %usiness! -hereRs room for e#er&one!
6 QniCue corporate cultures! -he smallest funds ma& %e run %& one or two %us& tradersP the
largest %& hundreds! .eek the one thatRs %est for &ou!
6 > %ase salar& will start around six figures!
6 >nd the %est is &et to come1 the real mone&Rs in the %onus, which can reach another six
figures!
-he downside? Bf &our fund doesnRt earn, &ouRll miss out on a large part of &our wages! )ut
that incenti#e is pro%a%l& the ideal thing for someone skilled in %usiness, dedicated to
performance and eagerl& seeking profit!
Hedge Fund .alary 6e*els
-here is much talk a%out astronomical hedge fund salar& le#els and cases e#er& &ear where
hedge fund managers reali(e E$)K in total earnings, %ut Aust how well are most hedge fund
professionals compensated? B Aust found some recent hedge fund salar& details online %&
>lpha ,aga(ine! Here are the figures1
.ingle 7anager Hedge Fund E5 .alary Figures
,unior
0nalyst
Hedge
Fund
.alary
Figures
.enior
Trader
Hedge
Fund
.alary
Figures
<ata
source1
>lpha
,aga(ine
Transitioning to Third "arty Hedge Fund 7arketing
;#er the weekend B got an email from a hedge fund professional working for a #er& well
known %ank in 0ondon! He was looking for ad#ice on getting into third part& marketing or
hedge fund sales! He specificall& asked if B knew of an& great %ooks on third part& marketing
or hedge fund sales and wanted details on t&pical fee structures2compensation, etc! ,&
response is pasted %elow as B thought it might answer some other peopleDs Cuestions while
looking for information on marketing hedge funds!
-hanks for the email! -here are no great %ooks on third part& marketing that B am aware of,
e#er&one is prett& close #ested within the industr&! B ha#enDt found a great %ook on in#estment
sales either, %ut B know there are a few of those if &ou look around on >ma(on! Bf &ou are
looking for great %ooks Aust on sales B reall& like =effre& GitomerDs @ %ooks1 -he .ales )i%le,
-he 0ittle "ed )ook of .ales >nswers, and +esS >ttitude! -hose %ooks ha#e changed m&
career!
Hedge fund marketing N sales fee structures #ar& depending on the t&pe, reputation, and
a%ilities of the third part& marketing firm (@, firm)! .ome retain onl& 76@ clients at a time and
charge retainers for this focus of their attention while others might work with $0 mone&
managers (clients) at once and onl& get paid on commissions! Qsuall& commissions is 705 of
%oth the %ase fee and performance fee when working with hedge funds!
Bf &ou work for a hedge fund &ou will %e restricted to their strateg&(s) so if their performance
dips or the strateg& goes out of fa#or &ou might not raise an& mone& and it wouldnDt %e &our
fault! Bf &ou work for a @, firm &ou would pro%a%l& get to market 76@ different mone&
managers in some capacit& across di#erse distri%ution channels such as endowments N
foundations, %roker dealers, and direct to high net worth indi#iduals! Bf a strateg& goes out of
fa#or &ou Aust find a new mone& manager to market as a firm, &ou a#oid that downside of
%eing a hedge fund sales professional! Common compensation for internal hedge fund sales
people is 90k6700k with some making 4006900k2&ear and ma&%e @6$0 commissions that
might trail off o#er time! Common compensation for a @, as B mentioned a%o#e is a retainer
of 60k6$'0k (if the& get one) and 705 of fees!
BDm not e#en @0 &ears old &et so BDm going the third part& marketing route %ecause B want to %e
a%le to ha#e knowledge of the <*> and powerful relationships in e#er& maAor distri%ution
channel and B want figure out where the real mone& and momentum is and %e a%le to shift m&
focus to that point! B %elie#e it is harder to get a @, Ao% %ecause most want &ou to ha#e a
%ook of %usiness or solid relationships, %ut it can %e done! -o work in m& first third part&
marketing position B worked for free for @ weeks to pro#e m&self and took a %ig cut in pa&
coming in the door, %ut now BDm in m& dream Ao% getting experience that B %elie#e will continue
to %e more #alua%le each &ear!
Hedge Fund Ethics
Bn the hedge fund industr& &ou ha#e one name and one reputation! Bf &ou ruin that &ou could
ha#e influential people in the industr& refusing to do %usiness with &ou for $'670 &ears after
their initial opinion is formed! Bn such a competiti#e close #ested industr& where large profits
can %e made the temptation to cut corners or look past fiduciar& duties is sometimes too
much!
-he F)B recentl& had agents posing as a Florida6%ased hedge fund manager to na% $0
indi#iduals in ' kick%ack schemes connected to securities sales! -he .:C charged $0
indi#iduals and the Q!.! >ttorne&s office charged six with criminal offenses!
Bn each case the posing hedge fund manager told the targets that their actions must %e kept
secret %ecause it #iolated his fiduciar& duties, making it explicitl& known that what was going
on was illegal and un6ethical! T-his case illustrates the CommissionRs a%ilit& to work together
with criminal authorities in creati#e wa&s to unco#er fraudulent schemes and to protect our
markets,U 0inda Chatman -homas, the head of the .:CRs enforcement di#ision, said!
)ottom 0ine1 Bf &ou are smart enough and hard working enough to %e successful then &ou
donDt need to e#er cut corners and %latantl& %reak securities laws! Bnno#ation and
relationships are the competiti#e ad#antage that should make &ou extremel& profita%le, not
cheating the s&stem!
(et a ,o- at a Hedge Fund
B recentl& wrote a hedge fund career related article for Bn#estopedia!com on how to get a Ao%
at a hedge fund! -he steps B suggest in this article include1
$! ,ake sure &ou reall& want to get a hedge fund Ao%
7! )ecome a student of the hedge fund industr&
@! Qse the @ circles strateg& for &our career decision making progress
4! Bdentif& se#eral mentors to help &ou secure a hedge fund Ao%
'! Complete multiple hedge fund internships
6! <e#elop &our uniCue #alue proposition
H! Hedge fund Ao% tips
9! 0and the unad#ertised hedge fund Ao%
J! Consider hedge fund ser#ice pro#ider Ao%s
$0! >ppl& to hedge fund Ao%s
Hedge Fund +esignation: Why o'%lete 0
"rogra':
What is a +esignation:: > designation or certification program is a educational course on a
niche professional skill or industr& in which a third part& confirms or #erifies knowledge and2or
experience of candidates looking to impro#e their career or %usiness within the field!
,an& hedge fund professionals complete the CH hedge fund designation program %ecause
it pro#ides a online6%ased learning s&stem to master the fundamentals of how hedge funds
operate and then allows &ou to speciali(e within one of three areas of work within the hedge
fund industr&1 Hedge Fund ,arketing N .ales, ortfolio >nal&tics or Hedge Fund <ue
<iligence!
Hedge Fund Capital "aising
Hedge Fund Capital "aising
7arketing Tactics
<ni=ue Fund 7arketing Tactics #> o! ?$
-his is part $ of a @ part series on uniCue hedge fund marketing tactics that managers should
in#estigate further while attempting to raise capital for their funds! )efore taking an& of these
actions please consult with &our compliance and legal counsel for confirmation that &ou are
a%le to use these methods to market &our specific fund!
u%lic "elations ,anagement 6 u%lic relations has to %e one of the most ignored marketing
tools of hedge fund managers toda&! B ha#e worked with o#er three do(en hedge funds on
their marketing plans and capital raising efforts! .o far, the most intense pu%lic relations effort
B ha#e seen set forth was a single press release o#er a four &ear period! -his is not to sa& that
an& hedge fund that is not pu%lishing at least 4 press releases per &ear is doing something
wrong! Howe#er, man& could %enefit %& simpl& making themsel#es more a#aila%le to the
press!
-he media is hungr& for real time opinions of hedge fund managers, traders and marketers!
-he& need comments on current market conditions, trends in hiring and firing of traders and
portfolio managers and what prospects la& ahead for the industr& as a whole!
,an& hedge fund managers sh& awa& from contri%uting to stories in the press! B would
strongl& encourage &ou to speak with &our legal counsel and see if the& would appro#e of
&our discussions with the media if &ou stick to industr& trends, general market trends and
long6term mo#ements &ou are seeing within the industr&!
-op 4 -ips for -aking >d#antage of u%lic "elations for &our Hedge Fund1
$! .peak to &our legal counsel to check on exactl& what &ou can sa& or not sa& to the
press!
7! <e#elop a list of $06$' targeted pu%lications which &ou would like to appear in! Bdentif&
the editor of financial columns within that pu%lication or news source and introduce
&ourself to them as a resource!
@! .peak at pu%lic e#ents, conferences, networking e#ents and other places in the
industr& where &ou will %e heard not onl& %& others in the industr& %ut pro%a%l& a few
mem%ers of the press as well!
4! Consider writing a %ook on &our insights and experience! ,an& professionals in the
hedge fund industr& are often inter#iewed on -M after the& ha#e pu%lished a %ook on a
specific topic in the hedge fund industr&, such as regulation or Cuantitati#e trading! +es,
writing a %ook sounds extreme to man& who are alread& working '0 hours a week %ut
that is also wh& it would %e so effecti#e to consider doing so! -hose with the time and
skills to write well are often not the same with those who ha#e the experience and
insight to write something uniCue and #alua%le!
7arketing Tactics
5 <ni=ue Hedge Fund 7arketing Tactics #2 o! ?$
-his is part 7 of @ within a series on uniCue hedge fund marketing tactics that managers
should in#estigate further while working to raise capital for their funds! )efore taking an& of
these actions please consult with &our compliance and legal counsel for confirmation that &ou
are a%le to use these methods to market &our specific fund!
:ducational ,arketing 6 ;ne of the most effecti#e wa&s &ou can market &our hedge fund is %&
%eing 4x more educational and eas& to understand than &our competition! B wrote here in m&
%log last &ear that a recent sur#e& showed that o#er H95 of institutional in#estors will not
in#est in something which the& cannot understand, B would imagine that for H*3 in#estors
this figure is e#en higher!
3hile some managers purposel& position their fund to appear I%lack %oxI and top secret &ou
could market &our fund as %eing more open, transparent and simple in how &ou approach
explaining &our in#estment process! -his does not meant that &ou ignore ad#anced methods
or models of trading and managing portfolios, %ut it would reCuire more of a $0,000 foot #iew
and explanation of &our in#estment process instead of the '00 foot #iews that B often see! -he
trick in doing this right is %alancing pro#iding enough detail and real meat that an institutional
in#estor or consultant will gain some granularit& while &ou donDt completel& o#erwhelming
H*3 in#estors or wealth managers who ma& %e less #ersed in common hedge fund
strategies of portfolio management techniCues!
Here is a list of 4 additional wa&s &ou ma& market &our hedge fund in a more educational or
simple wa&1
$! oweroint 6 <edicate 705 of &our oweroint presentation to educational content!
>sterisk all industr& terms and note that definitions are pro#ided within the %ack of the
presentation! :xplain &our in#estment process so that an&one could understand, at
least on a high le#el how &our fund operates! .tart with &our team, high le#el
in#estment process and how that all comes together %efore digging into trading
examples or risk management tools!
7! Folder 6 ,an& managers use a folder of marketing materials while meeting with clients!
-his often includes a one pager, oweroint presentation, and a recent Cuarterl&
market outlook newsletter written %& the ,! Bt is wise to alwa&s include some
additional reading within the folder as well! ro#ide 76@ white papers written %& experts
outside of &our firm that speak to the trends related to the assets &our firm in#ests in or
strateg& &our firm emplo&s!
@! .peaking N 3riting 6 -his also came up within the last post in this series on pu%lic
relations %ut B would highl& recommend writing and speaking e#er& week to help %uild
a presence, %rand and network within the industr&! .peaking at wealth management
conferences and H*3 related e#ents can %e highl& effecti#e!
4! 3ealth ,anagement N Financial lanners 6 ;ne of the most ignored sources of capital
for hedge fund managers are small to medium si(ed wealth management firms and
financial planning groups that ser#e H*3 professionals from time to time %ut donDt
manage E$)K in total assets! ,an& of these groups work as part of a %roker6dealer
network or "B> and the& ma& onl& meet in person with '6$0 hedge funds in an& on &ear
#s! larger institutions which ma& meet with se#eral each week! -hese relationships
take a long time to %uild into effecti#e sources of capital %ut B ha#e found that if &ou
approach them in a more educational fashion than &our institutional leads the& can pa&
off as #er& stick& long6term accounts!
5 <ni=ue Hedge Fund 7arketing Tactics #? o! ?$
-his is part @ of @ within a series on uniCue hedge fund marketing tactics that managers
should in#estigate further while working to raise capital for their funds! )efore taking an& of
these actions please consult with &our compliance and legal counsel for confirmation that &ou
are a%le to use these methods to market &our specific fund!
Forget a%out contacting more in#estors! +es, it ma& seem illogical to forget a%out contacting
new in#estors while attempting to raise capital, %ut this ma& %e what &ou need to do to meet
&our %usiness goals! ,an& of the hedge funds B speak to want to %e connected with in#estors,
the& want lists of famil& offices, seed capital pro#iders or H*3 wealth management firms!
3hile accessing more in#estor contact details ma& %e a useful resource and impro#e &our
marketing efforts it is often not the real constraint which is holding &our %usiness %ack!
*o %usiness is perfect, e#er& %usiness has some constraint which if remo#ed would help the
%usiness more than an&thing else! .ometimes this constraint is portfolio management
expertise, sometimes it is marketing materials, and man& times it is lack of institutionali(ed
processes and tools! Mer& seldom do B meet with hedge funds which if pro#ided with a long list
of $,000 in#estors would explode in assets under management!
,ost hedge funds do not take the time to write down all of their current %usiness pro%lems or
s&mptoms and ask the wh& Cuestions needed to identif& the root constraint within their
%usiness model! > good tool that B ha#e seen used %& half a do(en management consulting
gurus is the I4 3h& rocess!I Bf &ou ask wh& something is happening 4 times &ou will get to
the root cause of the pro%lem!
F Bnitial ro%lem2.&mptom1 3h& donDt we manage E$00, in assets &et? 3h&?
F otential >nswer1 3e are not raising capital from wealth management firms as &ou had
hoped! 3h&?
F otential >nswer1 ;ur marketing materials ha#e not %een %rought up to part with the
competitions, the& are light and our in#estment process is poorl& descri%ed! 3h&?
F otential >nswer1 3e know that &ou should %e pa&ing a consultant or in6house marketer
to help with %oth marketing materials and generating relationships %ut &ou ha#e not hired one!
3h&?
F otential >nswer1 3e do not ha#e the profits a#aila%le to hire a full time marketer %ut we
get around to creating a s&stem to share eCuit&, grow relationships with third part& marketers
or %uild a marketing related ad#isor& %oard!
-he point of this exercise is to identif& what the %ottleneck is that is slowing down &our
growth! > hedge fund can %e seen a 70 link chain, &ou must ha#e all 70 strong links in place
to keep the %usiness growing long6term! Bf $J links can carr& the weight of a E@00, fund %ut
one link is onl& up to par for a E$0, fund than &ou will limit &our growth and &ou ma& ne#er or
onl& #er& slowl& grow into a E@00, fund! -he %iggest return for &our in#estment of time and
mone& will %e to focus on that one %roken or su%6par link within &our operations, marketing,
trading or internal %usiness processes, an&thing else would %e a relati#e waste of mone& or
energ&!
-his is a uniCue marketing techniCue %ecause it is a reminder that the smartest thing &ou
could do for &our marketing and sales campaign ma& ha#e nothing to do with picking up a
phone or %u&ing a data%ase of in#estors! )efore spending more mone& or #alua%le time tr& to
consider the following 7 tips for impro#ing &our a%ilit& to attract in#estors1
Qse the I4 3h& -oolI to drill down deeper into the top ' pro%lems that &ou see &our fund
facing right now! ;ften times @6' pro%lems will often %e s&mptoms of a single root cause
which can %e directl& addressed!
>sk others including &our ad#isor& %oard, current in#estors, potential in#estors and co6
workers what is holding &our fund %ack! <o not settle with two word surface answers and tr&
to identif& what @6' action steps &our fund could take this Cuarter to impro#e how &ou are
positioned and address the 8$ limiting factor in &our %usiness!
Hedge Fund 7arketing Hurdles
3e recentl& held a $27 da& hedge fund marketing training seminar in *ew +ork Cit& as part of
our Hedge Fund ,arketing ,echanics series! Here we co#ered in6depth hedge fund
marketing tactics, strategies, competiti#e edges, tools, and inno#ati#e marketing materials!
<uring the e#ent B saw a common trend of what seemed to %e tripping up hedge fund
managers who were tr&ing to raise capital! ,ost of their challenges re#ol#ed around these
two marketing hurdles1
*ot enough time, staff, or interest from third part& marketers who ha#e an interest in
marketing their t&pe or hedge fund with their le#el of current >Q,
*ot enough checklists, training, internal processes, and %est practices de#eloped to
make sure the fund marketing process is consistent and will e#entuall& churn out new
in#estor and sources of capital
E'ail 7arketing Best "ractices
B worked as a risk consultant and capital raiser for H &ears %efore starting m& own firm!
<uring the last few &ears of those positions B was responsi%le for raising most assets on an
email and phone6%ased s&stem and B ha#e slowl& picked up some tips for capital raising since
then! B started m& own firm 7 &ears ago and since then B ha#e sent and recei#ed o#er
900,000 emails! ;ur %usiness is so email6%ased that we ha#e %een forced to stud& %est
practices within this space to impro#e our efficienc& at connecting with potential clients!
,ost C:;Ds donDt in#est their time or put much importance on managing email
communications! ;ne of m& fa#orite Cuotes %& )rian -rac& is that if &ou want what to ha#e
others donDt, &ou ha#e to do what otherDs donDt! Bf &ou in#est &our time in increasing &our
effecti#eness at email marketing &ou will ha#e an edge o#er others!
-onight BDm speaking on email marketing for capital raising! B will %e sharing %est practices in
reaching out to potential and current in#estors through writing cop& and using email marketing
%est practices! 3hile JJ5 of those reading this %log will not %e a%le to attend the e#ent we
will %e posting a recorded #ideo of this discussion to Hedge Fund remium and sharing some
of the tips %elow within this post1
:mail ,arketing )est ractices
$! Qnderstanding Bmportance of Cop&1 3hat is the difference %etween a E$ and a E$00
%ill? -he message on the paper! -he message on &our email, the message on &our
in#estor letters, the message on e#er&thing &ou write makes the difference %etween it
%eing worth E$,000 and E$00,000! B think that sales cop& writing is consistentl& under6
#alued and o#erlooked %& %usiness and in#estment professionals of all t&pes! ;ne of
m& %est tips for email marketing would %e to simpl& not o#erlook the power of a
carefull& constructed email marketing campaign or well written piece of
communication!
7! Qse the professionals first name within the su%Aect of emails to them 6 ,arketing
.herpa 7009 stud& showed this increased open rates %& @05, using %oth the first and
last name increased open rates %& 775!
@! Focus on the Headline1 -he most important part of an& piece of cop& is the headline!
;ften times o#er email the headline of the email is a slight #ariation of the su%Aect line,
perhaps the su%Aect line minus the personDs first name! Focus on fitting a %enefit and
then the chain reaction of that %enefit into the headline if possi%le! I<ou%le +our
Capital "aising "esources to Culti#ate ,ore Bn#estors :ach <a&I 3e ha#e found that
putting the %enefit after &our firm name is most effecti#e! =ust %e careful not to
promise %enefits that are odds with &our compliance department!

4! Focus on the .tart1 Hook the reader within the first paragraph! ,ake sure the first
paragraph is no longer than 7 sentences and pro#ides a #er& concise summar& as to
what will %e discussed within the following message! Bf possi%le tr& to fit in %oth what
the %enefits will %e of hearing this information and what the dangers are of not pa&ing
attention to this information! s&cholog& studies consistentl& show that professionals
are almost twice as likel& to listen more closel& and take action on information related
to a fear or some negati#e result rather than some potential %enefit or positi#e
outcome! -his does not mean &ou should scare clients into working with &ou, %ut &ou
should hook readers using framing which mentions the positi#e as well as negati#e
conseCuences of not taking action! -he recent use of email %rowsers which let &ou
pre#iew the first '06$'0 words of email messages make the start of &our email e#en
more important!
'! Qse rofessional :mail <istri%ution .er#ices1 Qse a professional email distri%ution
ser#ices such as >we%er, this costs E$02month or less to start using! )& using this
ser#ice &our emails will %e deli#ered more often, &our campaigns will %e more
organi(ed and the ser#ice will more than pa& for itself through sa#ing &ou and &our
time #alua%le time! ,ake sure that whate#er ser#ice &ou use, &ou consider opt6in
confirmation and ena%le an unsu%scription link at the %ottom of each email &ou send!
6! >utomate "elationship <e#elopment1 Qse automated follow up emails! 3rite a series
of 70 educational emails co#ering industr& white papers, industr& findings, commonl&
misunderstood terms, and information a%out &our fund! ;nce &ou ha#e Cualified an
in#estor, ask for their permission to opt into an email list which will automaticall& email
these professionals once a month for the next 70 months! Bf &ou deli#er #alue within
each of these 70 emails &our further inCuiries will %e well recei#ed! 3e currentl& use
>we%er to send out automated emails to o#er '0,000 professionals each month!
H! Qse .tories1 3hene#er &ou are writing an email or sales letter tr& to incorporate a
stor& of some t&pe! How was this product created? How did &our career and
experience e#ol#e and %ring &ourself to this point where &ou ha#e gained this
knowledge? Bf &ou scroll up to the %eginning of this post &ou will see that B ha#e a
short stor& a%out m& own experience with email marketing which led me to write this
article!
9! icture N .ignature1 :nd &our communication with a picture of the professional on
&our team which is held out as the communicator or leader! ,ake sure that a real
scanned signature and professional picture are included to help readers connect with
&our team!
Hope these tips help &ou impro#e &our email marketing campaigns!
+o This )! You Want to 25T Raise a%ital
:#er&one has ad#ice on how to raise capital, man& times the ad#ice the& gi#e naturall&
%enefits them financiall& through expenses ser#ices, turn6ke& ser#ices, or consulting
retainers! 3hile some who sell the following ser#ices or pro#ide consulting within these will
surel& disagree here is a short list of things which can stop &ou from raising capital!
$! -r&ing to outsource all of our marketing acti#ities to some third part& firm who will
Ihandle e#er&thing!I 3h& this is a waste1 -he& wonDt handle e#er&thing, and more
importantl& &our firm wonDt learn an&thing! Bt ma& %e wise at some point to outsource
capital raising to a third part& marketing firm %ut &ou still need to manage the process,
constantl& help impro#e the marketing materials, participate in due diligence calls, and
re#iew the ,aster <<G!
7! a&ing E@k6E$0k for IplacementI or IpromotionI on a popular we%site where &our firms
logo or %io is promoted more freCuentl& than other managers! 3h& this is a waste1
,ost of the time in#estors are seraching for something #er& specific and with this same
E@6E$0k &ou could meet with some high potential in#estors in person, de#elop a #ideo
o#er#iew of &our in#estment process, or reach out to hundreds of new potential
in#estors directl& instead of tr&ing to appear in front of them passi#el& on a we%site!
@! a&ing for a famil& office data%ase or hedge fund in#estor director& and then %lanket
emailing the whole list hoping that this shotgun approach will result in a handful of
promising responses that will %e eas& to close on in#esting in &our fund! 3h& this is a
waste1 *o%od& likes to %e spammed and e#er& famil& offices and in#estor is different!
-o raise capital &ou must approach each high potential in#estor indi#iduall& and learn
a%out how the& work, how managers get appro#ed %& their in#estment comittee, what
the& look for in managers, and their histor& of in#esting in the space! *e#er spam lists
of potential in#estors!
4! lanning on the I%uild it and the& will comeI model! ,an& mangaers %elie#e that if the&
%uild the track record the mone& will come pouring in, %ut in m& experience this onl&
happens in '6H5 of all fund manager %usinesses! ,ost that raise a lot of capital did so
consciousl& through constant effort and dail& action towards the cause! B was this
morning in a meeting what the real secret is to raising capital for hedge funds and m&
answer was, Iit is simple, work #er& hard e#er& da&!I Bf &ou ha#e read m& %log than
&ou know from past posts that B gi#e a lot of practical ad#ice on what to work hard at
each da&!!!%ut that is at the essence of success in hedge fund marketing!
To% >@ Hedge Fund 7arketing 7istakes
;ur team pro#ides o#er $,600 hedge funds a &ear with capital raising ad#ice, resources and
products! ;ur team has also helped raise hundreds of millions of dollars in capital as well!
-hrough these two sources of experience we see man& of the same fund marketing mistakes
made o#er and o#er again!
Bf &ou can a#oid these mistakes &ou will %e more effecti#e than 905 of &our competitors in the
marketplace!
-op $0 Fund ,arketing ,istakes1
$! ,istake 8$1 +ou ha#e a @ month capital raising goal! -his is un6realistic and the wrong
mindset to go out of the gates with! +ou need to plan, %uild relationships, educate potential
clients, and design high Cualit& marketing strategies and materials for the long term! Bt takes
time to raise lots of capital and usuall& the more #alua%le the in#estor, the longer the sales
c&cle! <onDt tr& to cram e#er&thing into a $6@ month capital raise!
7! ,istake 871 Counting on simpl& %uilding a track record and then hoping to outsource all
marketing to a great third part& marketing firm down the road! -his puts all of &our eggs into
the third part& marketing %asket! -hird part& marketers ha#e hundreds of potential clients
approach them each &ear, it is risk& to assume one will not onl& take &ou on as a client %ut
actuall& raise a sustaina%le le#el of capital for &ou!
@! ,istake 8@1 .pending E9,000 on graphic design and we%site design %ut E0 on hiring
someone who is an expert at sales letter construction, writing cop&, and creating headlines
and taglines for &our positioning in the marketplace that will %e effecti#e! ,an& times B see
fund managers that want to look #er& professional %ut there is no meat in what the& are
sa&ing, or hook to draw in the reader!
4! ,istake 841 *ot dedicating resources to capital raising is the most o%#ious mistake that B
see in the industr&! ,an& fund managers will act as the CB;, make 76@ phone calls a week or
sometimes per month and then wonder wh& the& ha#e not raised more capital! erformance
does *;- market itself, pedigree does *;- swing all doors wide open! +ou need to ha#e
dedicated resources, an internal marketing resource working at least 70 hours2week, in#estor
data%ases so &ou can spend &our time calling on real prospects instead of alwa&s ha#ing to
Cualif& them, and ha#e a growing internal C", or B", s&stem in place to track this
in#estment in in#estor relationships!
'! ,istake 8'1 .peaking at conferences full of &our closest competitors instead of &our
highest #alue potential in#estors!
6! ,istake 861 Qnder6estimating the #alue of a first name %asis relationship with &our top
in#estor prospects! .ome professionals, especiall& those with technical %ackgrounds think
that marketing is a num%ers game! +es, &ou ha#e to sometimes reach out to man& to de#elop
relationships with few %ut relationships is at the core of e#er&thing that gets done! 0ike
Gitomer sa&s, Iall things eCual people like to do %usiness with friends, all things %eing
uneCual people still like to do %usiness with friends!I
H! ,istake 8H1 >nother mistake B see in the hedge fund space is a lack of capital raising
training or fund marketing instruction! +ou do not ha#e to pa& to ha#e &our marketing staff
trained %ut at the #er& least &ou should document &our own %est practices, processes,
in#estor pipeline de#elopment plans so the& can %e easil& communicated to team mem%ers,
%oard mem%ers and then constantl& impro#ed each Cuarter!
9! ,istake 891 ,issing the %oat on authorit& positioning, educational forms of marketing,
and impro#ing their own pedigree standing within the industr&!
J! ,istake 8J1 3riting off "1 ,ost managers sh& awa& from or completel& ignore pu%lic
relations as an a#enue for helping create interest and positioning for experts on their team!
,an& funds ha#e now successfull& emplo&ed the media to spread messages a%out their fund!
$0! ,istake 8$01 > mistake that B see J05K funds doing toda& is using a %oring, run of the
milll QniCue .elling roposition (Q.), or worse &et, not ha#ing one at all!
"o3ers Words to Raise a%ital With
B was recentl& at an :%en agan training session on marketing and during a session at that
e#ent we focused in on power words to use in cop&writing!
Cop&writing <efinition1 -he use of powerful and persuasi#e writing in marketing to get &our
prospect to action!
<uring this session :%en shows us the results of a college stud& which showed that the
following words are some of the most powerful in the entire human language1
F +ou
F ,one&
F "esults
F .a#e
F *ew
F :as&
F 0o#e
F <isco#er&
F Health
F ro#en
F Guarantee
F Free
How man& of these words are rele#ant for hedge fund marketing acti#ities? ,an&! -he truth
is that cop&writing is an after6thought at %est within our industr& so if &ou can incorporate
some of these words within a wa& that doesnDt come off as I.ales&I than &ou could do #er&
well %& ha#ing far more engaging marketing materials than &our competitors! .ome practical
applications of power words in &our marketing could include1
F -eam %ios
F itch )ooks
F :mail su%Aect lines (%ig one)
F Moicemails
F ;ne pager headline or description pieces
F )ook N 3hitepaper titles
;%#iousl& throwing words randoml& into a title or su%Aect line is not going to increase the
response is &ou sound like e#er&one else in the industr& so as usual it is not a cure6all for
raising capital %ut it definitel& can help!
)nstitutional )n*estors
.:B recentl& completed a sur#e& of institutional in#estors and their perspecti#e on hedge
funds! $00 institutions were sur#e&ed and 4H were currentl& in#ested in hedge funds! :#en
the ones who were in#esting in hedge funds had extra due diligence steps to ensure that
each allocation to a hedge fund manager is done in a deli%erate and cautious fashion!
-he pro%lem B ha#e with this is often selecting hedge funds in a Ideli%erate and cautious
fashionI often %oils down to a "F or due diligence checklist where &ou are %asicall& looking
for those @0 hedge funds that can check e#er& %ox on &our list! -his is not a %ad thing to ha#e
in itself %ut often it %ecomes the real life and center if not whole process in selecting a hedge
fund manager!
IHeadline riskI was named %& @H5 of sur#e& respondents as their %iggest worr&, followed %&
lack of transparenc& ($J5) and poor performance ($'5)! Bnstitutions also remain cautious in
selecting hedge funds, the sur#e& found, de#oting an a#erage of se#en months to due
diligence and $7 additional weeks to appro#al!
Bnter#iewees ranked Iconsistent, sta%le returns,I Iuncorrelated returns,I and Ihigh risk6
adAusted returnsI as more important o%Aecti#es than Ihigh a%solute returns!I .e#ent&6two
percent of inter#iewees said the in#estment strateg&, rather than performance, is their starting
point for hedge fund selection!
aul .chaeffer, managing director of strateg& and inno#ation for .:BRs in#estment manager
ser#ices di#ision sa&s, T-o maintain that growth traAector&, the hedge fund industr& will need to
%ranch out from its traditional high6net6worth, foundation and endowment clientele to ser#e
the %roader institutional market!U He adds1 T)ut to compete for those assets, the industr& must
recogni(e that large institutions ha#e a distinct set of demands!U
-op 4 Factors Bnstitutional Bn#estors 0ook For Bn Hedge Funds
$! "eporting N -ransparenc& (9'5 of institutional in#estors reported that the& would not
in#est in a strateg& the& did not understand)
7! Bnstitutional Gualit& Bnfrastructure and ;perations ('45 of institutional in#estors pointed
out that %etter managed firms return higher performance)
@! eople! )uild sta%le hedge fund management teams >t all le#els the hedge fund
compan&
4! .hift awa& from focusing exclusi#el& on performance to in#estment disciplines
-he white paper concludes %& stating1
-he take6awa& message is that institutions clearl& prefer to do %usiness with institutional6st&le
organi(ations,I concluded .chaeffer! IFor hedge funds, the challenge will %e to fit the profile
of an institutional6Cualit& fund while preser#ing the performance attri%utes that attracted maAor
in#estors in the first place!I
Hedge Fund 7arketing 7aterials Ti%s
)elow is a list of m& top $0 tips to those professionals who are looking to create a pitch %ook
for their hedge fund! ,& ad#ise to %oth E@0, and E$, hedge funds is that &ou can ne#er start
this process earl& enough, it is an iterati#e constantl& e#ol#ing proAect which will ne#er %e
complete! Here are the top $0 tips for creating &our hedge fund marketing materials!
$! -hink long6term! Bn#est in creating a ro%ust institutional Cualit& pitch %ook the first time
around and complete ' drafts of it internall& %efore showing it to a single in#estor!
7! .tress &our team, in#estment process and risk management controls and how the& all
interact inside the operations of &our hedge fund!
@! ,ake &our competiti#e ad#antage clear and do not rel& upon canned phrases such as
Tpositi#e returns within %ull or %ear marketsU an&one who re#iews hedge fund materials
for a li#ing see these %& the hour! +our ad#antage must %e uniCue!
4! .tress the importance and indi#idual functions of &our team, &our experiences and
pedigree! -his should %e the foundation upon which e#er&thing else is %uilt!
'! <o not send an& pitch%ook or marketing material out %efore speaking with a Cualified
compliance or legal counsel on &our team!
6! Create a one page marketing sheet, full $@670K page oweroint presentation and one
page newsletter which would %e released monthl& pro#iding &our #iew of the markets
within &our niche area of expertise!
H! 3ork with high cali%er ser#ice pro#iders so that &ou donRt %ring extra skepticism upon a
relati#el& new fund which ma& alread& %e scrutini(ed %& potential in#estors and
ad#isors!
9! Qse &our whole team and prime %rokerage %usiness partners and other ser#ice
pro#iders to impro#e &our marketing materials! rofessionals who work in prime
%rokerage or administration see man& t&pes of marketing materials and can help
pro#ide #alua%le feed%ack at no additional cost to &our fund!
J! <o not create a oweroint presentation that is longer than @0 pages! -here are some
institutional mone& managers who run @ similar funds and will sometimes co#er each
of these within a single presentation, %ut this is the exception! J'5 of the people who
&ou will send the oweroint presentation to will not read& more than $' pages of the
material unless &ou are walking them through it o#er the phone or in person!
$0! urchase the rights to graphics, choose a uniCue, simple and professional la&out for
the presentation and use the new 3indows Mista diagramming tools to create
institutional Cualit& presentation! Coming into a meeting with a word document or 7'
pages of %ullet points is not #er& effecti#e! Bt is hard enough to catch an in#estorsR
attention and %ring them to the ta%le to discuss &our fund, &ou donRt want to lose them
due to the aesthetics of &our oweroint!
o'-atting a Battered )'age o! Hedge Funds
3hile G70 leaders meet and among other things discuss the glo%al regulation of hedge funds
it is important to consider what we as hedge fund professionals can do to help impro#e the
o#erall image and collecti#e actions of the hedge fund industr&! >t some point it is in the %est
interest of e#er&one within the industr& to not onl& act with the %est intentions %ut to also take
it one step further and pro6acti#el& communicate a consistent message of transparenc& and
trust to fellow emplo&ees, in#estors and the general pu%lic!
-here are concretre things which hedge fund managers can take action on toda& to help
impro#e their a%ilit& to manage their image and their share of the hedge fund industr&Ds image
through their in#estors, press inCuiries and the conferences and networking e#ents the&
attend! > few steps which can %e taken could include1
$! Creating a Formal )oard of >d#isors1 B ha#e seen some hedge funds grow not %ecause
the& ha#e hired the most third part& marketing firms or spent the most on face6to6face
paid introductions %ut %ecause the& sought ad#ice and ad#isor& from a di#erse and
experienced group of industr& professionals! )uilding a %oard of ad#isors of 46$7
professionals with experience in running the portfolio management, marketing and
operations of a fund can make the difference %etween making it to the E$00, and E$)
marks or sta&ing off the radar of most in#estors fore#er!
7! ,anaging +our u%lic "elations1 *o, &ou do not need to spend E$7,000 a month on a
pu%lic relations consultant %ut at the #er& least &ou should speak with other managers
on hwo the& handle inCuiries, speak with &our compliance ad#isor a%out what &ou can
sa& and not sa& and decide as a fund what clear messages &ou will %e tr&ing to send
when there are opportunities to speak with the press or at an e#ent or conference!
-hese opportunities are numerous for those who seek them and are read& to execute
when the time is right!
@! Creating an :thics olic&1 :#er& fund, from the three person startup to the @00
emplo&ee multi6%illion dollar funds should ha#e an ethics polic&! -his polic& should %e
pu%lic, followed and principles6%ased as much possi%le since new situations arise dail&
which ma& not fit a rigid lists of rules and commands!
4! Bncrease or :mphasi(e +our .kin in the Game1 ,an& in#estors, press professionals
and consultants B speak with often forget that a good num%er of hedge fund managers
ha#e in#ested within their own portfolios! Bf &ou ha#e H06$005 of &our net worth or
liCuid net worth in#ested within &our fund, explain this to &our in#estors it is surprising
how seldom this is mentioned within current industr& marketing materials! +ou need to
ha#e something to lose if clients lose, in man& cases in#estors want a group which is
moti#ated to Cuickl& cut potential losses and protect the portfolio a%o#e all else!
Hedge Fund 6ogo A Branding Hel%
Bf &ou are looking to impro#e the %randing for &our hedge fund or setup a new hedge fund B
would strongl& recommend using <esignJJ!com for the work! Here is how it works!
+ou go to <esignJJ!com and start a new contest for E@00, &ou get do(ens if not hundreds of
logo proposals from designers all o#er the world! +ou pro#ide them feed%ack as the& compete
with each other for the E@00 pa&ment! Bf &ou like one of the logos enough after a week &ou
choose them as the winner and that one designer gets paid E@00! Bt is a #er& inexpensi#e wa&
to re#iew do(ens of ideas and then pa& onl& for what &ou like!
B am not an affiliate of <esignJJ, B do not get paid in an& wa& for writing this post! B simpl&
ha#e found this such a #alua%le resource that B %elie#e this will help man& hedge fund
managers impro#e their marketing and %randing efforts! Hope this helps!
Hedge Fund 7arketing Best "ractice - /ick Your
53n 0ss
0atel& B ha#e %een meeting with and speaking to man& experts in capital raising that
collecti#el& ha#e raised o#er E$00) within the hedge fund industr&! ;ne thing keeps coming
up again and again while we complete these inter#iews for the upcoming Hedge Fund
,arketing ,echanics product!
-hat is that while there are %est practices, time sa#ing strategies, costl& mistakes to a#oid,
and %la(ed paths to follow part of the winning solution for hedge fund marketing is simpl&
working &our face off!
+ou ha#e to make mistakes, take action, implement what &ou learn, and tr& what is %eing
taught! +ou cannot outsource e#er&thing, &ou ha#e to in#est &our personal time in doing
these things and as 3&att 3oodsmall sa&s knowing plus doing is when learning occurs!
.impl& knowing something leads to 0 growth and 0 progress, &ou can know e#er&thing in the
world %ut without taking action &ou are not going to raise a single dollar! =effre& Gitomer was
one of the first Isales gurusI that B was trained %& and he alwa&s talked a%out waking up
e#er& morning and kicking &our own ass! Bf &ou do this dail&, and with focus &ou are 70x
more likel& to e#entuall& succeed and raise the capital &ou need!
B hope this post is reassuring to those who are reaching out to potential in#estors dail& and
constantl& impro#ing their marketing materials and a source of moti#ation for those who ha#e
%een putting it off for too man& months or &ears without serious attention!
1 .te%s to )n*estor "i%eline +e*elo%'ent
B was making m& wa& through some marketing training materials last night from ,r! Frank
/ern and came across a marketing process which ma& seem somewhat like common sense,
%ut helps to think a%out to ensure that &ou are presenting a complete marketing message to
&our potential fund in#estors! 3ithin the marketing training program /ern suggests &ou follow
this process while mo#ing &our prospects through different phases of engaging &our firm1
$! Bnterest and <esire1 ro#ide a white paper, speech, update &our perspecti#e of the
markets which catches the attention of &our potential in#estor
7! -rust1 <e#elop a relationship with the potential in#estor, %uild trust %& pro#iding client
Cuotes, industr& recommendations, and comparison anal&tics %etween &our fund and others!
@! roof1 .how proof that &our fund has a high degree team, detailed consistent in#estment
processes in place, and an ad#antage of some t&pe which can %e tangi%l& displa&ed or
confirmed!
4! .ample1 >llow the in#estor to start with a small minimum in#estment, pro#ide examples of
what other in#estors like them ha#e done in the past, or present case studies on three
different t&pes of t&pical in#estors that &ou ser#e so the& can imagine then %eing in that
position!
-he descriptions next to each %old word a%o#e is less important than the process itself! Bf &ou
can gra% the attention of the in#estor, %uild a relationship with them, pro#ide proof of &our
a%ilities and performance, and then com%ine that with a sample &ou will %e se#eral steps
ahead of much of &our competition!
This is Bad 2e3s: There is 25 7agic Bullet
-he %ad news is there is no magic %ullet to raising capital! B spoke with at least a do(en
managers this past week at our Hedge Fund remium networking e#ent in Chicago! ,ost
were looking for capital raising help of some t&pe and we discussed man& road%locks that
managers are seeing %etween them and the >Q, le#els the& are tr&ing to achie#e!
;ur firm pro#ides some capital raising tools, %ut B %elie#e that dail& action and discipline is the
%est thing that a fund can do to raise capital! -he& must take responsi%ilit& for marketing their
fund and ha#e someone reaching out to new in#estors on a dail& %asis, if the& do not the& will
fore#er remain in the %ottom 705 of the industr& in terms of assets! Mer& few funds gain their
initial assets through a super powerful third part& marketing firms, third part& marketers like to
t&picall& work with managers which ha#e some >Q, momentum or foundation underneath
them!
-o raise capital B %elie#e that managers need to ha#e superior tools and processes when
compared to their competitors! -his means superior in#estor culti#ation processes in place,
superior in#estor relationships management, superior marketing materials, superior outreach
efforts, superior email marketing, and superior focus on in#estors which actuall& ha#e the
potential of making an in#estment! :ach of those topics mentioned a%o#e could %e discussed
for a whole conference and all of these mo#ing parts need to %e in place to compete in
toda&Rs industr&! 3hile this does not mean &ou need to out6spend others &ou do need to
strategicall& plan &our marketing campaign!
-here is a good Cuote that B heard which goes something like TBf &ou want to ha#e what others
donRt &ou ha#e to do what others wonRtU Bn other words if &ou want to grow assets &ou must
put in the extra work, planning, and strateg& that others skip o#er!
:#er& morning B tr& to listen to a 4' minute custom ,@ audio session of %usiness lessons,
marketing tips and positi#e thinking notes! ;ne great Cuote B hear e#er& morning %& our friend
)rian -rac&, T.uccessful people dislike to do the same things that unsuccessful people dislike
to do, %ut successful people get them done an&wa&s %ecause that is what the& know is the
price of success!U -his is connected to an inter#iew )rian conducts in which a multi6millionaire
sa&s that success is eas&, T&ou must decide exactl& what it is &ou want, and then pa& the
price to get to that point!U
>ll of this ma& sound wish& wash& or non6exact %ut B think it is #er& important to reali(e that
there is no one single magic %ullet for raising capital! Bt takes hard work, trial and a superior
effort on all fronts to stand out from &our competition!
Best "ractices o! 6arge Hedge Funds
)elow is a %ullet point list of some %est practices that B ha#e seen E$)K hedge funds
emplo&ing that are more often than not missing within small teams of hedge fund
professionals!
Giant well run hedge funds often ha#e1
$! )etter research processes in place and these are constantl& %eing impro#ed in man&
wa&s e#er& Cuarter! -he& focus on /a(ien 6 constant impro#ement!!
7! <ocumentation, their compliance processes, operational procedures,compliance
checks, internal controls, hiring processes, and risk management techniCues are all
documented in great detail to help ensure consistent Cualit& and impro#e what is %eing
carried out
@! Bnternational marketing and sales teams which co#er institutional in#estors and
consultants in at least :urope and the Qnited .tates if not also in >ustralia, .outh
>frica, .outh >merica and >sia!
4! <eep edigree, with larger pocket%ooks the largest of hedge funds are a%le to retain
the most experienced experts not onl& as adAunct ad#isors to the fund %ut full time
emplo&ees or consultants which pro#ide dail& or weekl& insights on upcoming
in#estment opportunities!
'! Human "esources strategies, man& small hedge funds do not ha#e an& long6term
talent de#elopment, or .tar :mplo&ee hiring practices in place! 0arger hedge funds
do and must to keep their organi(ation mo#ing forward and growing o#er the long6term!
6! ,aster <<Gs, e#er& large hedge fund B know of has a #er& thorough master due
diligence Cuestionnaire that is constantl& updated! -he larger the hedge fund the more
likel& it is that their in#estors will %e asking for a #er& thorough <<G during the due
diligence phase!
H! .uperior ,arketing, larger hedge funds ha#e mo#ed to the top of the learning cur#e
when it comes to figuring out how to raise capital! -he& use multi6modalit& marketing
channels and materials and the& ha#e relationship de#elopment processes and goals
in place which match up with the long6term growth growth goals of the fund! -he& are
also more than willing to in#est in the %est graphic designers and sales cop& writers
who can pro#ide another edge o#er those who skimp on their image and marketing
presence!
9! ,ore Bn6House Functions, while large hedge funds still use ser#ice pro#iders and rel&
upon %usiness partners man& of them ha#e large enough staffs and uniCue enough
processes that some work such as some in#estment research, operations, accounting,
or marketing ma& %e done in6house instead of %eing outsourced to ser#ice pro#iders
such as administrators or third part& marketers!
J! ,ore Merification oints, the largest of hedge funds ha#e %een asked '00 times for
their holdings, and @,000 times for their oweroint presentation! -he& ha#e
completed hundreds of due diligence processes and are use to working with
consultants who need to check e#er& fact, assertion and claim! -he& are use to
operating within the world of pro#iding e#idence for e#er&thing said, and %ecause of
this ma& Cuickl& meet the reCuests of in#estors who ask for such e#idence!
$0! 0ong6-erm .trategies N Goals, most large hedge funds B know of plan for the next @6'
or '6H &ears strategicall& in who the& hire, market their fund to, and where the& open
offices! Bn contrast most smaller hedge funds are #er& focused on da&6to6da& or
month6to6month operations and most think in terms of $6@ &ear plans! 3hen in#estors
see the fund planning for, in#esting in the long haul it shows and that is part of wh&
some larger hedge funds recei#e more allocations than small ones 6 the& ha#e the
infrastructure and mindset more in common with an institutional in#estor!
"resu%%ositions: Ho3 to <se a "resu%%osition
-oda& we are going to talk a%out presupposition, this is something tha ma& %e used to help
write a newsletter, email, or ele#ator pitch!!!and it is from the world of *eural 0inguistic
rogramming (*0) and it is #er& applica%le to da& to da& %usiness marketing and sales
acti#ities!
resupposition can %e defined as the wa& of marketing in which &ou assume that the
audience is going to %e %u&ing into &our ideas! For example we are coming out with a Capital
"aising <M< -raining program next &ear which we ha#enRt named &et, %elow is a marketing
pitch for this using the presupposition approachU
:xample1 -he Capital "aising <M< product consists of 6 <M<s, a work%ook, a cheat sheet, 7
audio C<s and flash cards! >fter &ou ha#e purchased the product we will email &ou &our
mem%ership details and &ou ma& %egin using our training materials online! Bt will then take
approximatel& 6 da&s to recei#e &our %ox of training materials in the mail! ;nce these
materials are recei#ed &ou will ha#e the option of using the hard cop& materials or the digital
copies a#aila%le online!
*ote1 ,an& times in the paragraph B referred to actions the person Twould take,U B did not
refer to actions that the person might take or Tmight take if the& decide to purchase!U -he
importance here is assuming the& will %e purchasing &our product, if &ou ha#e something trul&
#alua%le then &ou will %e speaking directl& to indi#iduals who will in fact %u& &our product! -he
power of this thinking is that it helps %uild momentum towards making the sale, it mo#es them
closer to completing the order form!
3arning1 Bf &ou do not ha#e a good relationship with &our list or are &ou %rand new to the
industr& the o#er6use of this tactic can come off as cheap and look like hucksterism, use it
lightl&! >lso, this tactic is not a magic %ullet which when used means &ou can ignore standard
cop&writing, risk remo#al, product samples, and testimonials! -his is one of 706@0 tactics
which when all used together raises the response &ou ma& recei#e from traffic on a we%site or
mailings sent to a list!
Willia' Ed3ards +e'ing
;ne person who has affected me in %usiness has %een 3illiam :dward <eming! He has a
Cuote that sa&s IBf &ou canDt descri%e what &ou are doing as a process, &ou donDt know what
&ou are doingI
B think this also goes along with another popular %usiness Cuotes I3hat gets documented
gets impro#edI
,ost in#estment funds and famil& offices that B ha#e worked with do not ha#e an in#estor
culti#ation process or pipeline drawn out as a process! -he& do not ha#e their ongoing
in#estor communication strateg& documented, and in man& places the onl& documentation of
their in#estment process is at a #er& high le#el within their marketing materials! B think man&
hedge funds, portfolio managers and capital raisers could %enefit from using oweroint or a
free program such as )u%%l to document their processes!
-his documenting of critical processes takes little time and costs nothing to do %ut allows &ou
to step %ack from the process and e#aluate it, impro#e it, or delegate where appropriate! ;ur
firm recentl& used )u%%l and oweroint together to descri%e a %usiness process we were
completing oursel#es and we were a%le to not onl& use this internall& %ut also externall& as
we trained a third part& that we decided to outsource some of this work to!
-he processes B ha#e found to %e #alua%le to document are1
F Bn#estor >cCuisition rocess
F Current Bn#estor Communication .trateg&
F Hiring *ew :mplo&ees
,anaging &our portfolio on an ongoing %asis
E'ulating a%ital Raising Best "ractices
0ast week B completed a presentation on capital raising in ,oscow for the )ankConference
e#ent on pri#ate %anking! 3hile there B heard Graham Har#e& from the .corpio artnership
speak on wealth management and famil& offices! .ome interesting points from his
presentation1
$! -he financial recession reall& resulted in 7 le#els of losses for H*3 wealth managers1
-he $st round was real portfolio losses, the 7nd round is reduced 5 of inflows and slightl&
lower margins, at this same time there is some inflow opportunit& from other pri#ate %anks
and famil& offices
7! "ight now man& pri#ate %anks are focusing on de#eloping a higher relationship
management focus
@! H'5 of the top 70 %anks ha#e %een associated with %ailouts or capitali(ation efforts
4! -he wealth management market is large with an estimated si(e of E$4!'- in >Q,
'! )est practices outside the %anking industr& are #er& #alua%le to %anks!!!B see this with
hedge funds and famil& offices!
B think point num%er ' a%o#e is the most important to take awa& here! Graham has consulted
with some of the fastest growing and largest %anks in the industr& and one of his top
suggestions is to take lessons learned from other markets such as luxur& goods or fast
mo#ing consumer goods and appl& those lessons to the pri#ate %anking or hedge fund
industries! B think that this is an area where hedge funds could take note and pick up some
new %est practices in terms of marketing and capital raising! B will soon write up a whole
series on how this can %e done with real life practical examples!
0lternati*e )n*est'ent 7arketing 9 .ales
+esterda& morning B completed m& speech on T' )est ractices for Hedge Fund ,arketingU at
the ,arcus :#ans Fund of Hedge Fund .ummit in )oca "aton, Florida! B got connected with
some great funds that B ha#e ne#er heard of %efore and also ran into a few followers of
HedgeFund)logger!com and Famil&;fficesGroup!com as well!
)elow please find some of the most useful practical tips which B mentioned during m& speech,
the full #ideo recording of the speech along with the oweroint will %e a#aila%le as part of
the training materials within the Hedge Fund Group (HFG) hedge fund certification program
within the 0e#el 7 ,odule on ,arketing N .ales!
$! Focus on )uilding >uthorit&1 -he power of true authorit& within an industr& trickles down
and puts other influential factors into motion which help &ou de#elop #alua%le relationships
7! ,o#e the Free 0ine1 Gi#e awa& &our %est ideas within press inCuiries, %ooks, inter#iews,
articles, white papers and #ideos
@! <i#erse Bn#estor Case .tudies1 Ha#e at least two case studies of in#estors choosing to
place capital with &our firm for each of the maAor distri%ution channels &ou are focusing on
raising capital from! For example ha#e six total case studies if J05 of &our efforts are focused
on famil& offices, wealth management firms, and H*3 indi#idual selling!
4! -he 4 Rs of ,arketing ,aterials1 Focus on edigree, rocess (Q.), ortfolio "isk,
and resentation Gualit&
o%y3riting !or a%ital Raising
)efore starting this article B want to Cuickl& define what cop&writing is! Cop&writing is the use
of words to promote a person, %usiness, opinion or idea!
Cop&writing is the most under#alued and o#erlooked tool that a marketer or sales
professional can de#elop! ,an& professionals #alue cold calling skills, networking, %randing,
or pu%lic relations skills %ut B think that cop&writing skills are the most #alua%le!
-op ' "easons Cop&writing for Capital "aising is Bmportant1
$! -he headline of &our letters, su%Aect line of &our emails, and first few words of &our
speeches are the most important! Crafting a great headline can take hours to complete, %ut
make the difference %etween %eing shown to others and ne#er %eing noticed!
7! ,an& hedge funds, famil& offices, and pri#ate eCuit& groups spend o#er E70,000 worth of
their and mone& on their marketing materials e#er &ear, &et J'5 are decisions are %ased on
whatDs alwa&s %een done or what sounds good instead of >2) testing results to find what is
effecti#e!
@! :#er& in#estment fund markets itself using emails and in#estor letters! 3ithout
cop&writing skills &ou ma& not onl& %e failing to connect with &our audience %ut &ou could
actuall& %e turning them off and pushing clients awa&!
4! Bn#estment funds of all t&pes are started %& successful traders and portfolio managers,
#er& few are started onl& %& marketers! )& this nature of how the %usiness if founded and
grown niche marketing practices such as cop&writing are often o#erlooked or seen as
something that the& are a%o#e!
'! JJ5 of &our competitors are not using cop&writing %est practices
Fund 7arketing 6icense Re=uire'ents
)elow is a recent Cuestion that B ha#e recei#ed often #ia email1
3hat licenses should a hedge fund marketer hold? B ha#e heard that one should ha#e their
series H and series 66, is this true? >lso, what licenses should B hold if B am going to %e
marketing m& firms separate account %usiness and mutual fund as well as their hedge fund?
-hanks!
,& response %elow1
Hello VVV,
B donDt think &ou will find man& responses to &our Cuestion online 6 most professionals are
afraid of %eing seen as pro#iders of legal or license6%ased ad#ice o#er the internet! B would
check with a %roker6dealer, securit& law&er or compliance officer in the industr& for &our exact
situation!
-hat said, in the past B ha#e had one emplo&er swear up and down that &ou hardl& e#er need
a securities license to market the in#estment funds he worked with!!!%ut most professionals
that B work with agree that &ou do need to %e licensed for most t&pes of work! -he more
professional and esta%lished a group is, the more likel& the& will %e licensed! 3h& loose an
account or client o#er not %eing licensed?
Hope this helps 6 good luck and lets keep in touch!
Hedge Fund .eed a%ital
Hedge Fund .eed capital is the mone& a hedge fund tries to raise to launch or within itDs first
&ear of operating to tr& to Iget it off the groundI and hopefull& raise enough assets to appear
respecta%le to initial in#estors and pro#ide initial momentum towards %reaking e#en as a
%usiness! Hedge fund seed capital is in high demand, there are literall& hundreds of
in#estment groups looking for it right now and onl& three or four handfuls will recei#e an&
significant amount of it! .ome hedge funds are seeded with as little as E'00,00 while others
recei#e up to E@'0,! From m& experience B would guess that 695 of first &ear hedge fund
seed capital le#els range from E@, to E7',!
Hedge Fund .eed Capital .ources
F Hedge Fund .eed Capital .ource 8$1 High *et 3orth indi#iduals (accredited in#estors)
who are familiar with &our trading skills, past portfolio management experience, or clearl&
understand &our competiti#e ad#antage in the marketplace!
F Hedge Fund .eed Capital .ource 871 Famil& N Friends who are accredited in#estors!
F Hedge Fund .eed Capital .ource 8@1 ri#ate :Cuit& Firms! ,an& pri#ate eCuit& funds
ha#e Aumped into the space of seeding hedge funds and man& will in turn work on raising
assets for &our fund once it will %enefit %oth &our fund and themsel#es!
F Hedge Fund .eed Capital .ource 8@1 Hedge Funds! .ome hedge funds ha#e huge
amounts of free cash flow and are looking for wa&s to re6in#est it within strategies the&
understand and do not directl& compete with products that the& plan to create on their own!
F Hedge Fund .eed Capital .ource 841 >ssociated %anks or in#estment networks will often
seed new hedge fund products the& are launching with significant le#els of capital!
Hedge Fund .eed Capital6"elated -rends
Bf &ou read hedge fund news e#er& da& &ou will notice se#eral trends emerging in the area of
hedge fund seed capital! -he most prominent is as mentioned a%o#e man& pri#ate eCuit&
firms are aggressi#el& placing seed capital with emerging hedge fund managers! -he second
is that most of hedge fund seed capital is coming from esta%lished hedge funds and pri#ate
eCuit& groups or in#estment %anks! B %elie#e that the %anks are succeeding in con#incing a
small fund to gi#e up 706405 of eCuit& in return for the funds %ecause the& also come with
marketing and distri%ution resources that will make the total pie of a#aila%le fees much higher!
,an& hedge fund managers ha#e %ecome millionaires after accepting outside seed mone& or
an eCuit& in#estment!
7arketing Hedge Funds to Financial 0d*isors
>lmost e#er& hedge fund manager has asset6raising goals and am%itions! B often get emails
from hedge fund managers looking for someone who can help them raise capital! Bn general,
hedge funds can raise assets through either1
$! Bncreasing their effecti#eness within current channels of distri%ution, or
7! ursuing new channels of distri%ution
<ue to the difficult& in recruiting experienced hedge fund marketing professionals, most
hedge funds stick to where the& ha#e raised assets in the past, in the areas the& are are most
comforta%le with and ha#e seen some success either %& others or their own firm in the past!
,an& arenDt aware of all the new channels a#aila%le to them, or how to capitali(e on each
one!
a%ital Raising 7ethods and Focus
)elow is a paragraph excerpt from a %ook B am writing on hedge funds, which will %e
pu%lished through 3ile& in 70$0! Bt shares some ad#ice on targeting different t&pes of
in#estors! 3hile other consultants in the industr& charge E7'06E4002hr to pro#ide this ad#ice
to hedge fund managers B gi#e it awa& here on m& %log for free and soon in m& %ook %ecause
m& %usiness is %ased on %eing a source of genuine education and #alua%le resources instead
of Aust press releases and news re6runs!
The method by whi%h Tassini +apital -anagement was raising %apital was not effe%tive. In
addition to not using an Investor $elationship -anagement .ystem the team had somewhat
randomly been approa%hing many different types of investors from large /uropean banks to
small seed %apital providers. The third party marketing firm %onsulted +hris and Brian Tassini
and found that they were both un#willing to part with e0uity ownership in the management
%ompany of the fund in e1%hange for %apital. They also reviewed past notes and %onfirmed
that all efforts to work through institutional investment %onsultants had been stalled due to
sub 21""- 34- levels.
The result was a mu%h more fo%used method of systemati%ally approa%hing a mi1 of
investors whi%h in%luded 1"5 institutional investment %onsultants! "5 wealth management
firms! 2"5 multi#family offi%es! and 2"5 high net worth individuals. &hile institutional
investment %onsultants were not going to invest any time soon they were kept in the mi1 so
that the team %ould %ontinue to re%eive valuable institutionali6ation feedba%k from the
%onsultants.
"o3er o! Focus
)elow is a Cuote B used while speaking with an in#estment fund manager last week that was
looking to raise capital, the& were doing so %& approaching e#er& in#estor the& could possi%l&
speak to! -he& were explaining how their firm has so little resources compared to their E$)
competitors!
78ou %an take a 2 disposable %amera and take it out of the bo1! stand 1" feet from a building
and take a great pi%ture that will be developed and look good if not great. 8ou %ould stand in
that same position with a 21"!""" %amera with every gadget! lens! and a tripod and it will not
take as good of a pi%ture if you do not do one thing! fo%us.9
# Brian Tra%y
-he oint1 +ou can %eat &our competition with a smaller staff, with less financial resources,
and less experience if &ou Aust learn to focus! Focus on &our top prospect in#estors, focus on
local potential in#estors, and focus exclusi#el& on the t&pes of in#estors which are most likel&
to make allocations to &our fund! Bf &ou can dial6in on these three areas &our hot prospect list,
local in#estors and the right in#estor mix (famil& offices, wealth management, pension funds,
etc!), than &ou can reall& co#er a lot of ground Cuickl&!
Hedge Fund 7edia EB%osure 9 "R
Hedge funds are %ared from ad#ertising or marketing themsel#es to the general pu%lic %ut
the& are often turning up in news stories! > report %& 3alek N >ssociates claimed that hedge
funds are mentioned in news articles o#er $00 times da&, and o#er @J,000 times2&ear! -his
anal&sis was using data from 700' and it does not include electronic newsletters or %logs!
3ith 7009 num%ers and the inclusion of %logs B would guess that hedge funds are mentioned
in close to $,700 articles each da&!
>rmel 0eslie from 3alek N >ssociates recommends that hedge funds heed the following
ad#ice when it comes to managing their " exposure1
6 Qnderstand what the press wants and how the& operate
6 Ha#e &our own agenda and message e#er& time &ou talk to a reporter
6 )uild and maintain relationships with ke& media
6 -r& to a#oid Tno commentU
6 >ssume e#er&thing is Ton the recordU
,ost of that seems prett& ,icke& ,ouse %ut it is good ad#ice as most hedge fund
professionals ha#e no " training or experience and it can %e an introduction to new
in#estors or emplo&ees if managed right! .ome people think that hedge funds are now
choosing strategies in part which ha#e a natural a%ilit& to gain a lot of attention from the
media, it helps them %uild a %rand and find new in#estors! 3ho hasnDt heard of Citadel?
-hird part& marketing firms, hedge fund sales professionals and " consultants who ha#e
real pro#en expertise in hedge fund media relations are worth more than the& are usuall&
paid! B would like to start a discussion around hedge fund pr strategies, trends and research!
<o &ou ha#e a few great or painful experiences that others can learn from? Bf an&one has a
comment or Cuestion please share it %& emailing me!
)n*estor +ue +iligence 9 E'erging 7anagers
,& %ackground is in marketing and B know one of the %ig challenges of raising capital for %oth
emerging and medium si(ed hedge funds is that e#er&one wants their @, $' or $7'
check%oxes to %e complete! -here are so man& in#estment managers competing for capital
that in#estors must limit who the& seriousl& consider and complete expensi#e due diligence
on to those which ha#e top percentile performance, risk management tools, track records and
>Q, figures! -his can %e #er& frustrating and an ongoing challenge for man& managers tr&ing
to grow their %usiness and assets under management!
B got this email earlier toda& from a hedge fund manager1
:It would be interesting for you to post an arti%le on how hedge funds that are doing well in
2""; are not ne%essarily the ones who will get %apital given stri%ter due diligen%e
re0uirements. For e1ample! our fund! the <<<< <<<<< Fund was up over "5 through -ay
and is up something in the range of ="5 as an estimate through >une yet it is still very
diffi%ult to raise %apital be%ause nobody wants to allo%ate to smaller funds.:
and a follow up email from this same fund later in the da&1
I have %ome a%ross your page a bun%h of times and I figured I would make the suggestion.
&hen you think ba%k to when hedge funds first be%ame popular! having the best of the best
portfolio managers manage money for the e1tremely wealthy was more of a status symbol
than anything else. 3lternative investments have obviously evolved over time. But the idea
was that these investors would take some risk in order to enable their personal portfolio
managers to generate outsi6ed returns. ,eople seem to lose sight of the fa%t that there is still
a tremendous amount of talented! brilliant managers out there who have been through many
%y%les and have the %apa%ity to do e1tremely in months and years to %ome. ?ow is a time
when people who take risk will get ri%her. 8et people are so gun shy that they run the risk of
overlooking the best talent and missing opportunities that may! in some %ases! only be
available to the 2""mm or @""mm bouti0ue shops. They lose sight of what the business is
about! of what they invested with hedge funds for in the first pla%e. 4nfortunately! it has boiled
down to investors being more %on%erned with %he%king bo1es and analysts at institutional
investment firms being more %on%erned with keeping their 'obs than truly finding the best
talent.
3hile B donDt agree $005 with the statement a%o#e, the manger makes a few good points and
B would %e interested in more feed%ack that other managers ha#e a%out o#ercoming the
Icheck%ox mentalit&!I
Hedge Fund 0d*ertising 9 7arketing )deas
-here are man& restrictions on hedge fund ad#ertising and marketing! <ue to the %road
mandates and relati#el& lenient registration and disclosure rules hedge funds in the Qnited
.tates are onl& allowed to accept in#estments from accredited in#estors and institutions!
3hile this means hedge funds cannot take out -M or radio commercials there are man& more
gra& areas where man& hedge funds are now TpromotingU or T%randingU themsel#es! B ne#er
pro#ide financial ad#ice on HedgeFund)logger!com and this is surel& not a recommended or
list of TsafeU wa&s to market &our fund! *o matter what &ou hear from a consultant or at a
conference alwa&s check with &our own compliance officer or legal counsel %efore taking an&
action! Here is a list of wa&s in which funds are currentl& marketing their strategies1
W 3e%sites X ,an& funds ha#e we%sites descri%ing their firm and in#estment strateg&! .ome
go as far as to explain what their strateg& is in detail along with their current assets under
management and who is on their portfolio management team! -hese we%sites ma& cost
%etween E$,000 and E7',000 to create and generall& E@06'002month to maintain! > few
hedge fund managers e#en run %logs!
W u%lic "elations rofessionals X ,an& hedge funds acti#el& engage pu%lic relations firms to
help increase the num%er of Cuotes or in6stor& mentions their fundRs executi#es get placed
within mainstream media outlets! -hese consultants ma& work on some one6off crisis
management proAects for a premium %ut generall& prefer E76$7k2month retainers instead!
W )ook u%lishing X ;ne of the man& wa&s which hedge fund managers are promoting their
%usinesses is through pu%lishing %ooks on the topic of hedge funds! -hese %ooks ma& %e on
industr& trends, portfolio management theories or oneRs experience in the industr&! ,an&
professionals within the wealth management space are hungr& to learn more a%out hedge
funds and %ooks which %ridge the gap %etween what can %e learned within editorial articles
#ersus an educational %ook! .ome niche pu%lishers will pu%lish %ooks %& hedge fund
managers %ut most a#oid pu%lishing an&one who doesnRt ha#e a marketing network or a real
Tmedia %randU %ehind their name which has %een %uilt up for se#eral &ears! <ue to this fact
some hedge fund managers self6pu%lish their own %ooks through programs such as
0ulu!com!
W Conferences X ;ne of the wa&s in which hedge fund managers market themsel#es each
week is %& speaking at conferences and e#ents within the industr&! -hese e#ents could
discuss marketing and sales, hedge funds in general or %e on niche su%Aects related to famil&
offices or acti#ist in#esting! -his strateg& can %e highl& effecti#e %ecause it can support and
ser#e as a direct marketing arm for the strategies mentioned a%o#e! ,ost speaking
engagements do not pa&, %ut man& firms will at least co#er &our expenses and displa& &our
logo and name prominentl& at the e#ent! )roker dealer conferences can also %e producti#e
e#ents for hedge fund managers to attend! Bf &ou can gain a distri%ution agreement with
H*36focused %roker6dealer and o%tain a speaking engagement or %ooth at their e#ent it can
%e a great wa& to get &our foot in the door with some new face6to6face relationships with
H*3 ad#isors with the specific %roker6deal group holding the conference!
W :xternal Consultants X 3hile not technicall& ad#ertising, thousands of funds choose to use
the help of external consultants to help market their hedge funds! -hese consultants could %e
experts within raising capital within a specific channel, creating marketing materials or
creating a marketing message! -hose consultants who take on whole or partial responsi%ilit&
for raising assets on %ehalf of the hedge fund manager are often referred to as third part&
marketers!
*aturall&, it is important to complete thorough due diligence upon an& groups which &ou ask
to represent &ou in the market for %oth effecti#eness and compliance reasons! <o not simpl&
sign6up with someone to represent &our hedge fund simpl& %ecause the& promise that the&
can raise the assets which &ou ha#e %een looking to raise!
-here are man& other wa&s to market and grow &our hedge fund which are not related to
ad#ertising or traditional marketing %ut most of these fall under more traditional means or
external consultants! Bf &ou ha#e an& uniCue ideas or ha#e heard of an& other effecti#e
methods that fast growing hedge funds ha#e used, please send them in %& email or simpl&
lea#e a comment %elow!
Hedge Fund 7arketing "lan A Tenacity ; 9 0
;uestion1 "ichard, from a capital raising perspecti#e, what would &ou sa& is the time frame
to raise mone& (sa& E$0K million) for a small, start6up hedge fund with no name recognition
and with principals who ha#e no name recognition and no pedigree in the alternati#e
in#estment world? B would sa& $7 months at %est! 3hat do &ou think?
0ns3er1 Great Cuestion! B would sa& $6 6 70 months would %e realistic if the& keep their
heads down, ha#e a great team and solid in#estment process! -hose are %ig ifDs though 6 it is
eas& to get distracted or discouraged! -he first fund B marketed took J months straight of cold
calling, emails and conferences to raise a single dollar %ut after $9 months we were raising
E$,2week in new assets!
Hedge Fund 7arketing in 2@@C
-he right pedigree, strateg& and track record is no longer a guaranteed recipe for success in
raising or retaining of assets! ,ore so than e#er %oth hedge fund startups and esta%lished
hedge funds are distinguishing themsel#es from similar strategies %& marketing not onl& their
track record and pedigree %ut also their operational, portfolio and regulator& infrastructure!
Funds that fail to address the growing concern o#er fraud, mismanagement, operational and
regulator& risk ma& miss out on the opportunit& to attract the %illions of dollars of capital that
has left the industr& and ma& well %e reallocated in 700J! 0ike it or not the perception of the
new world in#estor is that infrastructure and performance are directl& connected!
-o %e well positioned in 700J, hedge funds must address an in#estorRs growing concern o#er
operational and regulator& risk! -his new le#el of scrutin& will increase the importance of
effecti#e and documented operational and regulator& risk management! "esponding to a
potential in#estorRs increasing desire for full transparenc& will %e paramount!
:#en if a fundRs >Q, is small it can still impro#e its marketing position with in#estors in a cost
effecti#e manner %& communicating a clear, transparent and customi(ed plan to strategicall&
mitigate risk as assets grow! *oted %elow are Aust some of the minimum Thigh riskU areas a
successful hedge fund should focus on no matter its si(e or strateg&1
F ortfolio management, in#estment guidelines, trade allocation, trade errors, %est
executionP
F independent and #erifia%le #aluation policies and procedures, and for illiCuid securities,
strong consideration to the creation of a #aluation committeeP
F personal trading policies and procedures, processes and controlsP and
F contingenc& planning and %usiness continuit&!
-he tangi%le %enefits of a ro%ust operational and regulator& infrastructure for %oth start6up
and esta%lished hedge funds1
F ,arketing edgeP
F increase in#estorRs perception of #alue in managementP
F disco#er unknown risks to mitigate lossesP
F maximi(e a%solute returnsP
F streamline in#estorsR due diligence processP and
F increase the likelihood of success in retaining and raising new assets!
Gar& ,air is rincipal of Fund >d#isor, 00C! > former General Counsel, CC; and :xecuti#e
to two leading alternati#e asset management firms! ,r! ,air ad#ises startXup and esta%lished
hedge funds on operational and securities law matters relating to fund formation, pre6launch
marketing, due diligence, infrastructure, %est practices or %enchmark operational and
regulator& processes and controls! For more information a%out us, please #isit our we% site a
www!hfundad#isor!com or contact ,r! ,air directl& at 70@66'@6H$'J!
"sychology o! .ales all Reluctance Ti%s
Bt would %e interesting to learn more a%out the ps&cholog& of sales call reluctance! -here are
some da&s where B am Aust IonI and B can make '0 calls and initiate some great relationships
and then there are da&s where B make a decent amount of calls %ut B find m&self drifting
towards less producti#it& acti#ities like cleaning out m& emails or organi(ing m& past prospect
research!
-he four tips B can suggest to minimi(e sales call reluctance are1
$! Ha#e a winning positi#e attitude as descri%ed in m& post on positi#e ps&cholog&
7! 3rite out all of &our goals on paper! /eep a running list of all $0, '0, or '00 of these on
&our computer re#iewing and adding to them each month!
@! "eali(e that most people do know what the& want and e#en more do not want to pa& the
price of earning what the& want e#en if the& do know what it is! Bf &our Ao% includes %uilding
relationships chances are &ou need to %e pa&ing the price dail& %& Aumping on the phone for a
few hours!
4! Choose a moment of time where &ou felt completel& confident, successful, and rewarded
for something that &ou accomplished and reall& earned! icture this moment in &our mind and
re6li#e it as if it were happening again right now, repla& it in &our mind! *ow tr& %ringing this
picture to the forefront of &our thinking each morning %efore &ou start on &our calls or
whene#er &ou are not moti#ated to Aump on &our next call instead of searching for a pair of
"ed .ox tickets on Google!
*ote1 Bt has %een %rought to m& attention that m& title for this %log is also the title of a great
%ook on the topic written %& George <udle&! -his connection was not intended %ut B thought it
was onl& fair to cite this %ook as a resource for those how want more information!
Hedge Fund .eeding a%ital
> recent stud& showed that hedge funds recei#ing seeding and operational assistance
outperform %road hedge fund indexes and a#erage hedge fund performance figures! -his
stud& was completed %& George ,artin and =oseph escatore from the Qni#ersit& of
,assachusetts and =efferies >sset ,anagement!
escatore makes the point that in the past there was a somewhat negati#e connotation to
discussing how a hedge fund ma& ha#e recei#ed seed capital or operational support during
their firs @6' &ears of operation! .pecificall& he said, T-he Cuestion in#estors asked a hedge
fund manager, Yif &ou are an& good, wh& do &ou need these gu&s?R B think not onl& has it
changed, B think that has completel& re#ersed!U Bt seems that escatore now %elie#e that if
&ou are Tthat goodU &ou should ha#e mone& %eing thrown at &ou from multiple hedge fund
seeders!
3hile some people ma& not %e as positi#e as escatore on seed capital %eing a good thing, B
%elie#e the general feeling is if &ou arenRt tied down %& stringent terms or pressure that impact
&our in#estment process as the result of the seed capital or support than it is a positi#e thing
and onl& %olsters &our %usiness showing a #ote of confidence %& an outside firm!
(uest 0rticle: Financial "u-lic Relations
)elow is a guest article pro#ided %& <ukas u%lic "elations! Bt focuses on financial pu%lic
relations and how some hedge funds are using " experts to help them na#igate the waters
of mainstream media outlets!
3hile it is illegal to promote hedge funds, there are wa&s to indirectl& do so! >nd the .:C is
considering new rules that could allow financial " groups more room to maneu#er!
Hedge funds, one of the fastest6growing corners of the financial industr& 6 one insider calls
them the new dot6coms 6 remain an elusi#e domain for u%lic "elations experts! Maguel&
understood %& the pu%lic, largel& unregulated %& the .ecurities and :xchange Commission
(.:C), and da%%led in %& onl& wealth& or institutional in#estors, the E9'0 %illion hedge fund
world does not lend itself easil& to pu%licit&!
For one thing, promoting hedge funds is illegal1 ;nl& in#estors accredited %& the hedge funds
are allowed to get information a%out them! Bf a fund is promoted %e&ond accredited in#estors,
the .:C can halt mone& going into it and e#en le#el sanctions!
Hedge funds are the pur#iew of large financial in#estors, like in#estment %anks, and the well6
connected wealth& who can stomach sharp windfalls! 0ike mutual funds, their regulated
cousins for the common man, hedge funds pool in#estorsD mone& and then in#est in generall&
high6&ield instruments!
3ithout much o#ersight, prett& much an&thing goes 6 financiall& speaking 6 when it comes to
this in#esting, according to the .:C, including speculati#e practices like le#eraging that can
amp up the risk of %ig losses! >ll such funds ha#e high in#estment minimums 6 at least E$
million in man& cases 6 that keep them within the domain of accredited in#estors legall&
allowed to pla& their in#estments close to the chest! ,an& now are %ecoming part of
retirement funds!
-he .:C estimates that hedge fund assets ha#e exploded $'6fold since $JJ@! > Facti#a
search of Ihedge fundsI turned up @0,H70 media mentions in the @6 months from =anuar&
7000 through <ecem%er 7007, %ut @4,70$ mentions in Aust the last $J months! .till, hedge
funds seem secreti#e to the pu%lic, sa&s one financial expert, and e#en to the %usiness
media!
IB think thereDs a perception %& the general pu%lic that hedge funds are opaCue, secreti#e, and
m&sterious,I sa&s George 0ucaci, ,< of capital markets at hedgefund!net, a we% source for
hedge fund news and performance data! I>nd unfortunatel&, the media has propagated that
m&th!I
I-here are rules to how much &ou can sa& and when, so the& ha#e not traditionall& done
Zu%lic "elations[,I sa&s Howard \ar, B" partner at orter *o#elli, of hedge fund managers!
How, then, do the funds promote themsel#es? -he& do, in fact, find wa&s to use u%lic
"elations 6 though sta&ing within the %ounds of the law is trick&! >nd if proposed rules %& the
.:C are passed, the& might %e using financial pu%lic relations firms e#en more!
romotional tactics
-he promotion of hedge funds is different from other financial pu%lic relations efforts and it
demands one rule of thum%, reall&1 -he& canDt ad#ertise or engage in general solicitation!
)ecause onl& accredited in#estors can come on %oard, usuall& hedge fund managers seek
out in#estors among people the& know 6 famil&, friends, colleagues 6 and wealth& people, as
well as institutional in#estors!
.till, hedge funds can take two approaches to, in a rounda%out wa&, promoting themsel#es!
Hedge funds can pu%lici(e the expertise of their portfolio managers if the& also manage other
registered products! -hose managers can talk up the compan& and the registered products 6
the& Aust canDt talk a%out an& hedge funds the compan& maintains! I;ne of the things &ou
often find in hedge funds is people who ha#e a lot of expertise,I sa&s \ar! I.o the& can speak
as experts and gain exposure for themsel#es!I
> compan& also can promote registered products that are similar in management to the
hedge funds 6 %ut, again, it is not allowed to talk a%out the hedge funds themsel#es!
"ichard <ukas, resident of "ichard <ukas Communications, a financial pu%lic relations firm
that ad#ises hedge funds, gi#es an example of these promotional approaches in action! >
hedge fund manager his firm counsels, /eller <i0eo Cohen N Co!, has a%out E'00 million
under management! Bt also handles ,N> ar%itrage, and its CB; is an expert in ,N>! 3hen
speculation o#er a merger %etween <isne& and Comcast swirled in =une, <ukasD " firm
touted the CB; to the media for his expertise in ,N>! ,edia reports in#ol#ing the CB; noted
that he worked for a hedge fund manager, and the reports named the firm!
)ut the ke&, as <ukas and others point out, is that the hedge fund itself, such as its strateg&
and performance, was ne#er promoted 6 onl& the expertise of its CB;!
-his promotion has a two6fold effect! -he managerDs name is out there, raising #isi%ilit& and
credi%ilit& for the hedge fund, <ukas sa&s, and it also %olsters the fundDs reputation with
existing and potential in#estors!
)ut one pro%lem with this approach is the su%Aecti#e nature of whether a compan& slides into
promoting the hedge fund! romotion, in this case, is like the classic definition of o%scenit&1
eople know it when the& see it! -he .:C does not define what it means %& Igeneral
solicitationI or Iad#ertising!I >nd what those terms mean to different hedge fund professionals
seems to #ar&!
I-hereDs no prohi%ition1 -hou shalt not %e Cuoted,I sa&s ,ichael "o%inson, director of 0e#ick
.trategic Communications in 3ashington, <C, and a former pu%lic affairs director at the .:C!
I)ut &ou ha#e to %e careful what &ou sa&!I
3ithout clear guidelines, hedge funds must make their wa& carefull&! I-hereDs not a uniformit&
of opinion here, %ut as a general rule, all of these interests and funds are pri#atel& placed,I
sa&s :liot "affkind, a partner at >kin Gump .trauss Hauer N Feld, a law firm %ased in <allas
and *ew +ork that works with hedge funds! I-here are no sort of %lack6line tests here under
existing laws! .o the Cuestion is, at what point are &ou gi#ing so much information to a
reporter that &ouDre engaging in general solicitation or ad#ertising? ,& #iew is &ou shouldnDt
%e mentioning the name of &our fundP &ou shouldnDt gi#e an& of the specifics of the fund!I
Financial u%lic "elations, Financial ", Financial .er#ices "-o contact "ichard <ukas
regarding financial pu%lic relations or hedge fund " ser#ices or to answer an& Cuestions &ou
ma& ha#e &ou ma& email him at "ichard4<ukas"!com or #isit his we%site at
http122<ukas"!com! -his article was first pu%lished here %& -om >citelli!
Financial 0d*isor 7arketing +i!!erences ; 9 0
Today I re%eived this 0uestion from a ?ew 8ork based hedge fund marketer.
;uestion:3hen marketing to financial ad#isors for &our hedge fund, what necessar& steps do
&ou need to take dealing with these gu&s? Bs it an& different that dealing with famil& offices?
0ns3er: ,arketing to financial ad#isors is much different than marketing to single and multi6
famil& offices! Here are the main differences %etween the two that B ha#e noticed1
F Famil& ffices ha#e more esta%lished due diligence procedures, often in#ol#ing consultants
or internal anal&sts which do nothing %ut look at hedge funds or alternati#e in#estment
products!
F Financial ad#isors ha#e lower minimum asset le#els for what the& will consider in#esting!
J05 of famil& offices onl& seriousl& consider in#esting in hedge funds with at least EH',6
E$00,, and man& reCuire E7'06E@00, or e#en E$) in assets under management!
F Famil& offices are more tight lipped! Bt will take more effort to de#elop a relationship, meet
in person and get clear feed%ack on wh& or wh& a hedge fund is a good fit for what the& are
looking for!
F Famil& offices are harder to identif& in the first place! Financial ad#isors are easier to find,
there are more of them and the& ad#ertise more openl&! .ome famil& offices ad#ertise %ut
man& sta& %elow the radar and some purposefull& donDt e#en ha#e a we%site!
F 3hile famil& offices ser#ice to high net worth in#estors almost exclusi#el& man& financial
ad#isors work with a %road spectrum of client t&pes 6 this might reCuire more caution %& them
and &our fund in marketing products to them! Bt might also mean sorting through more
financial ad#isors to find one with se#eral H*3 clients!
F Bn m& experience financial ad#isors seem much more sensiti#e and moti#ated %& how
the& will earn a commission or income from the transaction whereas man& famil& offices
charge rich enough fees that this is less of an issue!
F 3hile some financial ad#isors ma& take $6674 months to reall& get Ion %oardI with a
rele#ant hedge fund manager, understand &our in#estment process and possi%l& in#est most
will come to terms a %it %efore then! Famil& offices on the other hand often take $9674 months
Aust to complete their due diligence and committee meetings, it is a #er& long sales process!
F )oth famil& offices and financial ad#isors reCuire genuine relationship6%uilding efforts and
tenacit&
F From a legal standpoint there ma& %e other precautions &our fund should take %ut B am
not a legal expert so B canDt pro#ide an& guidance within that space!
Raising a%ital - lues !or .uccess
> recent article in the Bn#estment ,anagement 3eekl& discussed what hedge funds need to
do to continue raising capital from institutional in#estors! -he general #iew of the whitepaper
the& produced suggested that hedge funds will need to continue to adapt their %usiness
models and approach to communicating their in#estment process to the interests and concern
of institutional in#estors if their strong growth in raising capital is to continue! aul .chaeffer,
the managing director& of strateg& and inno#ation for .:B was Cuoted as sa&ing, T-he hedge
fund industr& must recogni(e that the large institutions ha#e a distinct set of demands
concerning issues such as the Cualit& of infrastructure, transparenc& and risk!U
.ome of the stated differences in raising capital from institutional in#estors instead of high net
worth in#estors
included1
F ,ore attention is sometimes initiall& paid to strateg& offered than the indi#idual hedge
fund managers
F 0onger hedge fund due diligence processes and in#estment hori(on
F ,ore hea#& utili(ation of outside consultants to help e#aluate hedge fund managers
F Growing concern o#er hedge fund risk management and Theadline riskU
F .trong preferences for transparenc& of the hedge funds in#estment process and tools
applied to it
F ,ore likel& to in#est in E$00,K or E'00,K hedge funds #s! smaller %outiCue shops
B think the most interesting part of this article was the fact that it reported that o#er 9'5 of
those inter#iewed said the& would not in#est in a strateg& that the& donRt full understand, and
905 said it was critical for managers to focus on the fundRs original strategies!
Third "arty 7arketing #?"7$ +e!inition
-hird part& marketing is a t&pe of consulting ser#ice offered %& consultants to hedge fund
managers! -hese consultants help hedge funds raise their assets under management %&
introducing them to new in#estors! -he t&pes of ser#ices that hedge fund third part& marketing
firms offer can include1
F Full& outsourced marketing and sales ser#ices
F Channel or geographicall& specific marketing efforts
F Creation of marketing materials including a full oweroint presentation, one page
marketing piece
F >ssistance in de#eloping a standard "F and populating maAor hedge fund data%ase
F "epresentation at industr& social e#ents, conferences and pri#ate dinner parties
F >d#ice on how to %est mo#e forward within a di#erse range of capital raising channels
F u%lic "elations N ,edia consultation as needed
-here are as man& t&pes of third part& marketing agreements in the hedge fund industr& as
there are third part& marketers, %ut most of the #alue pro#ided to hedge fund clients is
through one of the acti#ities listed a%o#e!
.tart 0 Hedge Fund Related 2e3sletter
:#en though almost e#er&one uses email now not man& firms in the hedge fund industr&
pro#ide a consistent weekl&, monthl& or e#en Cuarterl& email newsletter! 3h&? )ecause it
takes a little %it of trial and error and some consistent work to produce the fresh content for
each new issue!
ro#iding an email newsletter can pro#ide a competiti#e ad#antage for &our firm as &ou are
a%le to keep on top of minds of prospects, %e seen as a thought leader in &our space, ha#e
&our newsletter forwarded on to other prospects and show &our le#el of niche expertise! B
ha#e found email newsletter %& the %est wa& to keep in touch with e#er&one that B ha#e met
through this hedge fund %log, m& Hedge Fund )log )ook downloads and Hedge Fund Group
(HFG)!
;ne of the leading email newsletter management firms is >we%er! >we%er is used %& o#er
$,000 firms worldwide and B ha#e %een satisfied with their eas&6to6use ser#ice and Cuick
online customer ser#ice! Bt is relati#el& eas& to get started! >fter pla&ing around with settings
for 706@0 minutes most people would %e read& to test sending out their own email newsletter
using one of their graphical templates or Aust using traditional plain text formatting1
*ote1 Certain restrictions appl& to email ad#ertisements or newsletters if &ou are a hedge fund
manager or offer certain t&pes of in#estment ad#ice, recommendations, etc! lease consult a
legal expert or in6house compliance counsel for ad#ice %efore starting &our email campaign!
Third "arty 7arketing +ue +iligence
Hedge funds conducting due diligence on a third part& marketing firm should alwa&s ask
Cuestions a%out the firm and their emplo&ees! :#aluating a potential marketer should %e as
rigorous as completing a "F for an institutional consultant! > partnership is %eing formed,
and in#esting time and mone& with the wrong professionals can %e expensi#e in terms of real
dollars and opportunit& costs! >reas to co#er while conducting due diligence on a third part&
marketer include1
F ast work experience
F Current licensing and %roker check
F >sset6raising histor& throughout their careers
F asset6raising track record while working together within the firm
F "eferrals from past hedge fund clients
F *um%er of &ears experience
F .cope of their distri%ution channel expertise
F *um%er of total current clients
F otential commitment of time in terms of hours per week and duration of the contract, and
F ersonalit& and culture of the third part& marketing group
>t the same time, third part& marketers need to perform due diligence on a potential client! Bf
a hedge fund manager has a poor reputation, it could reflect poorl& on the marketer that is
doing the promoting!
7arketing Hedge Funds
;#er the weekend B got an email from a hedge fund professional working for a #er& well
known %ank in 0ondon! He was looking for ad#ice on getting into third part& marketing or
hedge fund sales! He specificall& asked if B knew of an& great %ooks on third part& marketing
or hedge fund sales and wanted details on t&pical fee structures2compensation, etc! ,&
response is pasted %elow as B thought it might answer some other peopleDs Cuestions while
looking for information on marketing hedge funds!
-hanks for the email! -here are no great %ooks on third part& marketing that B am aware of,
e#er&one is prett& close #ested within the industr&! B ha#enDt found a great %ook on in#estment
sales either, %ut B know there are a few of those if &ou look around on >ma(on! Bf &ou are
looking for great %ooks Aust on sales B reall& like =effre& GitomerDs @ %ooks1 -he .ales )i%le,
-he 0ittle "ed )ook of .ales >nswers, and +esS >ttitude! -hose %ooks ha#e changed m&
career!
Hedge fund marketing N sales fee structures #ar& depending on the t&pe, reputation, and
a%ilities of the third part& marketing firm (@, firm)! .ome retain onl& 76@ clients at a time and
charge retainers for this focus of their attention while others might work with $0 mone&
managers (clients) at once and onl& get paid on commissions! Qsuall& commissions is 705 of
%oth the %ase fee and performance fee when working with hedge funds!
Bf &ou work for a hedge fund &ou will %e restricted to their strateg&(s) so if their performance
dips or the strateg& goes out of fa#or &ou might not raise an& mone& and it wouldnDt %e &our
fault! Bf &ou work for a @, firm &ou would pro%a%l& get to market 76@ different mone&
managers in some capacit& across di#erse distri%ution channels such as endowments N
foundations, %roker dealers, and direct to high net worth indi#iduals! Bf a strateg& goes out of
fa#or &ou Aust find a new mone& manager to market as a firm, &ou a#oid that downside of
%eing a hedge fund sales professional! Common compensation for internal hedge fund sales
people is 90k6700k with some making 4006900k2&ear and ma&%e @6$0 commissions that
might trail off o#er time! Common compensation for a @, as B mentioned a%o#e is a retainer
of 60k6$'0k (if the& get one) and 705 of fees!
BDm not e#en @0 &ears old &et so BDm going the third part& marketing route %ecause B want to %e
a%le to ha#e knowledge of the <*> and powerful relationships in e#er& maAor distri%ution
channel and B want figure out where the real mone& and momentum is and %e a%le to shift m&
focus to that point! B %elie#e it is harder to get a @, Ao% %ecause most want &ou to ha#e a
%ook of %usiness or solid relationships, %ut it can %e done! -o work in m& first third part&
marketing position B worked for free for @ weeks to pro#e m&self and took a %ig cut in pa&
coming in the door, %ut now BDm in m& dream Ao% getting experience that B %elie#e will continue
to %e more #alua%le each &ear!
"ress Release ontacts
;ne &ear ago B knew nothing a%out press releases! "ealisticall& toda& B still couldnDt hold a
candle to the knowledge of a pu%lic relations professional %ut B ha#e learned a lot! ;ne thing B
learned was that it costs a lot of mone& to o%tain contact details for maga(ines, newspapers,
and radio stations! B guess B should sa& it C>* cost a lot of mone&, or &ou can get them for
free! +ou can spreadsheets stuff with media contact details posted on pu%lic we%sites all o#er
the internet!
+ou can find these %& searching for :xcel spreadsheets using Google! -r& t&ping in Ipr media
contacts filet&pe1xls I within the Google search field! +our first result should %e a list of media
contacts for the state of 3ashington!
B performed o#er @00 of these Google searches and compiled a data%ase of o#er 70,000
potential press release contacts at maAor newspapers, maga(ines, radio stations, and
tele#ision stations!
Bs this ethical? B alwa&s ask m&self two Cuestions to figure out if m& actions are ethical or not!
$! 3ould B mind if m& actions were put on displa& in the *+ -imes?
7! 3ould B mind if B was on the recei#ing end of the action B am a%out to take
Bn this case B would not mind if the *+ -imes wrote up an article on this tactic and B onl&
intend to contact these media stations and outlets if B ha#e a rele#ant press release for them!
3h& am B sharing this knowledge? BsnDt ha#ing this list of 70,000 media contacts #alua%le to
keep to m&self? /nowing how to do something is much different than going through the do(en
hours of work it would take to re6create this process! B hope B can help out a compan& B work
for or a friend with a " campaign some da& with the work B did to create the list! 0et me
know if &ou are potentiall& that person!
F For the %asics on writing a press release please see1
http122www!pu%licit&insider!com2release!asp
F For press release newswire ser#ices see http122www!"*ews3ire!com
F -o search for other filet&pes simpl& add Ifilet&pe1txtI or Ifilet&pe1pptI etc! into the search
field on Google!
Hedge Fund Relationshi% Building
-he %est part a%out writing in this %log is getting @06'0 emails a da& from hedge fund
professionals, in#estors and students in finance! ;ne of the most freCuent Cuestions B get is
Ican &ou help our hedge fund raise capital from new in#estors?I B usuall& refer these people
on to others as the firm B am with alread& has our hands full in raising capital right now for a
set num%er of funds! ;ne piece of ad#ice rele#ant to e#er&one though is mentioned here at
,aAorGiftsGuru!com!
-om Cuotes 3ood& >llenDs great Cuote1 I905 of success in life is simpl& showing up!I .how
up at &our local CF> and hedge fund association meetings! ,eet face6to6face with local
financial ad#isors, institutional consultants and foundations! 3e are looking for something
more out of our Ao%s than a simple pa&check and if &our fund offers something within the
parameters of what the& are allowed to choose the& might choose &our product simpl&
%ecause of &our relationship! ,& fa#orite sales author =effre& Gitomer alwa&s sa&s, Ithat all
things eCual people like to do %usiness with their friends!!!!and all things *;- %eing eCual
people still like to do %usiness with their friends!I ,& Cuick ad#ice to most funds is to make
sure &our compliance details are in order and then start Ishowing upI e#er&where &ou can to
start %uilding long6term multi6&ear relationships in the industr&!
.ales "hone all Ti%s
B make an a#erage of 7' sales phone calls e#er& da&! B often call 40660 people %ut on other
da&s B might onl& reach out to a%out $0! 3hat is interesting a%out making all of these phone
calls is listening to how differentl& people sound and react during these con#ersations!
B am writing this %log entr& %ecause toda& B called someone who was unCualified, it turned out
that their compan& didnDt e#en pro#ide the t&pe of ser#ice B was hoping to discuss! B made a
Aoke a%out sending him a personal check or pa&pal pa&ment to pro#ide me with the t&pe of
contact B needed to connect with and it worked! B was not tr&ing to %e manipulati#e %& forcing
m&self to %e funn& to get information, B Aust made a dum% Aoke! :#en after this was o%#ious
this indi#idual asked me what B needed and ended up connecting me with a #er& #alua%le
contact! He also asked where B li#ed, where B grew up, and if B had a wife or an& kids! B was
shocked, not while talking to him %ut after B hung up! Bn 9 months of making o#er 600 phone
calls B ha#e ne#er once had someone %e so friendl& and upfront like that! Bt was a refreshing
change from the monotone %urnt out tone of #oice B usuall& end up listening to! 3hat is
important is not what happened during this phone %ut after B reali(ed how #alua%le of a
contact he had gi#en me! B felt strongl& o%ligated to thank him or re6pa& him in some wa&!
-his has taught me to alwa&s see the humor in situations and gi#e #alue awa& freel& to those
in need of help!
;ne un6related sales phone call lesson B ha#e learned is that if &ou ha#e highl& Cualified the
:*< person that &ou are tr&ing to reach the& will %e happ& to talk to &ou %ecause &our ser#ice
is rele#ant to them and necessar& for their success!
C Fund o! Hedge Fund +ata-ase Ti%s
urchasing a fund of hedge fund data%ase is not as simple as &ou might think! Bf &ou need a
list of hedge fund of funds or are thinking of purchasing a fund of hedge fund director& or
data%ase B ha#e a good deal of experience in this area! -he following are m& top J tips for
finding hedge fund of funds and directories! 1
$! -ake the time to call or at least email the firm who offers a fund of hedge fund
data%ase, these will sometimes %e referred to as fund of hedge fund or fof directories!
7! ;nl& work with well known, reputa%le firms that speciali(e in pro#iding hedge fund
data%ases or hedge fund of fund data%ases! >#oid small shop fl&6%&6nighters at all
costs!
@! -ake the time to reall& get familiar with the information pro#ided within the data%ase,
ask for a sample of what the information will look like! Bt reall& is an in#estment that
could sa#e &ou literall& thousands of hours BF &ou pick the right hedge fund data%ase
for &our %usiness model! .ee a Hedge Fund of Fund of Hedge Fund <ata%ase
.ample!
4! :nsure that the data%ase is updated at least once a Cuarter, contact details and firm
information gets old #er& Cuickl&!
'! :xpect to pa& EH'06E@,000 for a high Cualit& hedge fund data%ase, man& cost around
E$,900 while others can cost up to E@0,0002&ear! )e sure and know the trade6offs of
%u&ing a ph&sical data%ase #ersus su%scri%ing to one online! Bf &ou donDt ha#e a hard
cop& of the data in :xcel or >ccess format &ou ma& not %e a%le to use it once a time6
%ased su%scription expires! For some firms this is fine, for others it would %e a costl&
mistake!
6! ,ake sure the hedge fund data%ase &ou use is compati%le with &our s&stems! <o &ou
use .alesForce? >ct? Goldmine? :xcel? 3ord?(lord help &ou)
H! 3hile &ou are kicking the tires of &our potential new hedge fund data%ase make sure it
has complete information on a firm! +ou donRt want to call a firm asking if &ou can send
o#er &our oweroint presentation onl& to find out the& are reall& a competitor or a
di#ision within another firm &ou called that same da&!
9! <onRt steal a data%ase! -his ma& sound o%#ious, %ut it is common for emplo&ees to
cop& parts of a data%ase for later use or use some other un6ethical means of o%taining
data%ase details! <onRt, it is not worth it! >lwa&s take the high road and &ou can stand
%ehind e#er& action &ou ha#e e#er taken!
J! -his list onl& contains J tips instead of $0 %ecause this one is worth more than the rest
com%ined! >sk hard Cuestions when &ou are %u&ing fund of hedge fund data%ase! >sk
how often &our data%ase details will %e updated! >sk exactl& how man& hedge funds
are updating their information! .ome data%ases will sa& that the& ha#e details on J,000
hedge funds while the realit& is that some of them ha#enDt updated their information in
4 &ears!!!make sure all of the data is %eing updated at least once a &ear!
7oti*ational .ales ;uotes
B am creating this %log entr& to capture all of the %est sales Cuotes that B hear while reading
%ooks and ha#ing discussions with other sales professionals! B will %e updating this %log at
least once a month with new entries!!!let me know if &ou ha#e an& great ones! +ou might see
a lot of Cuotes from =effre& Gitomer! He was m& inspiration in writing m& first %ook and B will
get to meet him this .eptem%er when he comes to )oston for a seminar workshop!
I-he Harder B work the 0uckier B getI
T:#er& morning in >frica a ga(elle wakes up! Bt knows it must run faster than the fastest lion or
it will %e killed! :#er& morning a lion wakes up! Bt knows it must outrun the slowest ga(elle or it
will star#e to death! Bt doesnDt matter whether &ou are a lion or a ga(elle 66 when the sun
comes up, &ou had %etter %e running!U
-he ke& is not to Icall the decision maker!I -he ke& is to Iha#e the decision maker call &ou!I
6 =effre& Gitomer
,aster the we% and &ou will master &our uni#erse 6 and &our (on6line) %ank account!I
6 =effre& Gitomer
3hen &ou %egin to gi#e #alue to the world, somehow the people &ou affect will find a wa& to
tell &ou! :#en if it takes a couple of &ears!
6 =effre& Gitomer
I3riting is a ke& differentiator! BD#e used it for $4 &ears! 3riting will not Aust lead to
differentiation! 3riting is the credi%ilit& &ou need to create %u&er confidenceI
6 =effre& Gitomer
I+our Ao% is to meet the right people and read the right %ooksI
6 =effre& Gitomer
<sing White "a%ers in .ales
,an& sales %ooks and prospects alike sa& that white papers can help engage potential
customers and pro#ide #alue first while also positioning &ourself as an expert in &our field! Bf
this is true wh& arenDt there more white papers on &our industr&?
$! ,ost people arenDt great writers
7! ,ost people donDt see the #alue in writing and sharing expertise!
@! ,ost people donDt %elie#e the& ha#e time to write!
4! .ome people who are technicall& Cualified on writing white papers arenDt experts in
marketing and sales so the& ma& not get their work widel& distri%uted!
'! ,a&%e there are man& white papers out there and &ou ha#enDt seen them &et! <o some
niche specific searches on Google to check what &our competitors ha#e written first! <e#elop
uniCue content and insights for &our white paper %ut steal the non6trademarked or cop&righted
st&ling and organi(ational %est practices of the white papers &ou find for &our own use!
-his is great news for &ou! Bf &ou are willing to do the hard work &ou can stand out as an
expert and &ou will in fact %ecome an expert learning more a%out specific niche topics than
man& of &our competitors!
3hat is a 3hite aper?
3hite papers are opinion pieces that educate, state a position, suggest a solution to a
pro%lem, or introduce a new technolog& or process!
arts ;f a 3hite aper
F >%stract
F ro%lem <escription (76@ paragraphs)
F *ew class of products
F roductDs use in sol#ing the pro%lem
F Conclusion
3hite aper 3riting -ips
F Bf &ou donDt engage the reader within the first paragraph the& will ne#er read the rest of
&our white paper!
F Focus on pains of the reader, descri%e those pains and explain the further conseCuences
of the current state of %usiness! -his will help &ou connect with the Cualified prospects who
&ou are targeting!
F Focus on education and not self6ser#ing press release information
F 3rite o%Aecti#el& use facts, Cuotes, statistics, and sur#e&s where possi%le
F /eep &our white paper to %etween @64,000 words! 7,000 words seems too skimp&
sometimes and an&thing longer most people wonDt read!
Financial "R Ti%s !or Hedge Funds
B read a recent article %& )ill )las] within the :merging ,anager ,onthl& *ewsletter! Here
are the tips that B gleaned from this article1
F -M #iewers and inter#iewers lo#e contrarians, conflicting #iews make for interesting
tele#ision
F -ake a pass on issues where &ou are not an expert and donRt ha#e an& #alue6added
insight on the issue
F ,edia appearances might not %ring in a windfall of new %usiness %ut a well coordinated
" plan com%ined with grass roots relationship de#elop and an online presence can %e #er&
effecti#e
F ,ichael )arron who is the C:; of /nott Capital ,anagement commented in the article,
T:#er&one knows the Fidelit&s, the utnams and the rest of the larger firms in our industr&!
For some of the smaller firms, this is awa& &ou can %uild recognition and credi%ilit&
F Bgnore the monitor and the audience, imagine speaking to a single #iewer
F ,aintain e&e contact with the inter#iewer and not the camera
F .peak slowl& and match the inter#iewers tone and pace
.hort %rief @0 second sound %ites are ideal for -M appearances
7arketing D reati*ity
Bntroduction
-his chapter presents concise practical methods to help &ou %ecome more creati#e! Bt will
co#er the creati#e process and while also suggesting 6!7 practical tools to increase &our
creati#e a%ilities! -his chapter uses scientific research studies and direct knowledge from
marketing and sales professionals to help &ou differentiate &ourself and &our product or
ser#ice!
3h& .tud& Creati#it&?
s&cholog& experts, inno#ation consultants, and sales professionals all agree on one thing,
&ou can learn to %e creati#e! ,ost people would agree on a scale of $6$0 that the #alue of
creati#it& would %e rated as an 9, J, or $0! Bf asked how creati#e &ou are how would &ou rate
&ourself? How would &our co6workers rate &ou? (Gitomer, 7004)! "esearch studies ha#e
noted that in a group of 70 people onl& 76@ participants will sa& the& are a creati#e person &et
this is a learna%le skill that #irtuall& e#er&one #alues! >round $05 of us see oursel#es are
creati#e and e#en those few indi#iduals report a general ina%ilit& to %e highl& creati#e during
the J6' workda& (,ostert, 700H)! art of this pro%lem might %e that the extrinsic demands and
pace of work does not allow &our %rain time to look at the %ig picture and ponder on large
challenges at work! -his chapter will help &ou come up with more creati#e ideas and ena%le
&ou to disco#er and refine those ideas faster than &ou could %efore!
s&chologists distinguish %etween two t&pes of thinking, di#ergent and con#ergent! <i#ergent
thinking is generall& thought of as %eing closel& related to creati#it& with thoughts di#erging
into a wide #ariet& of topics or associations! Con#ergent thinking %rings together information
focusing on a pro%lem that usuall& has onl& one correct solution! -he stages of creati#it&
include preparation, incu%ation, illumination, e#aluation, and ela%oration! +ou can see in -a%le
$ that the a%ilit& to think in %oth con#ergent and di#ergent fashions is reCuired to maximi(e
the #alue of &our new ideas (Carson, 700H)! .witching %etween con#ergent and di#ergent
modes of thinking is not eas& for most people, %ut creati#e aides such as the creati#e tools
suggested %elow can make the process easier (arnes, $JH')!
Creati#it& -ools
Highl& creati#e people make more remote associations and come up with more uniCue
solutions that the a#erage person (Grus(ka, 7007)! -hese creati#it& tools can help increase
the num%er of remote associations &ou make, direct &our thinking, sa#e &ou time, and add
#alue to the final solution &ou choose to address a challenge! -his list of tools is not original or
exhausti#e %ut it is #alua%le as a starting point for increasing &our creati#e a%ilities as an
in#estment marketing professional!
-he tools in this chapter include1
$! Hiring and ,anaging for Creati#it&
7! :nhancing Creati#it&
@! .C>,:"
4! Bdea Guota
'! ,ind ,apping
6! Future Fruit
6!7 .harpen +our .aw
Creati#it& -ool 8$1 Hiring and ,anaging for Creati#it&
;ne wa& to enhance creati#it& at &our firm is hiring creati#e people! Common traits among
highl& creati#e people include intelligence, intellectual curiosit& and preference for complexit&,
no#elt&6seeking, uncon#entionalit&, a%sorption in work, asserti#eness, dri#e, self6
assuredness, and perse#erance! -his list of traits can %e used to either identif& people who
are more likel& to %e creati#e than the a#erage person!
;nce hired, the most effecti#e wa& to increase each emplo&eeRs creati#it& is to let them work
on something the& lo#e! "esearch has shown that intrinsic moti#ation seem to %e highl&
correlated with a high creati#it& output (Carson, 700H)! art of their Ao% description should %e
written %& the emplo&ee it go#erns and directs! >llow them to seek out solutions to compan&
or industr& challenges that are intrinsicall& rewarding (.tern%erg, $JJ9)! > great example of
this idea in practice is Google! -his firm allows each and e#er& emplo& spend 705 of their
work week on inno#ati#e product, customer ser#ice, and sales ideas! -his has pro#ided the
compan& with a hard to replicated competiti#e ad#antage!
Creati#it& -ool 871 :nhancing Creati#it&
-here are J scientificall& grounded factors in enhancing creati#e achie#ement! -hese include1
$) urpose
7) )asic skills
@) <omain6specific6knowledge
4) Curiosit&
') ,oti#ation
6) .elf6confidence
H) 3illingness to take risks
9) .elf competition
J) Creati#it& aides
*ot all of these must %e present and the& are not of eCual importance %ut each usuall& pla&s
a role and can contri%ute to creati#e results (.tern%erg, $JJ9)
=effre& Gitomer is an internationall& recogni(ed sales expert and author! His research and
feed%ack does not come from controlled scientific studies %ut from trial and error while toiling
as a low le#el sales associate for &ears %efore his hard work and creati#e selling techniCues
earned him millions of dollars as a sales executi#e and e#entuall& C:;! He has trained
thousands of sales professionals on implementing his creati#e methods of selling and
%elie#es the following $@!' elements are important factors in &our creati#e successF1
$) )rains
7) ositi#e >ttitude
@) ;%ser#ing
4) Collecting Bdeas
') .elf )elief
6) .upport .&stems
H) Creati#e :n#ironments
9) Creati#e ,entors and >ssociations
J) .tud&ing Creati#it&
$0) .tud&ing the Histor& of Creati#it& in &our Bndustr&
$$) Qsing Creati#e ,odels
$7) ;pen to "isking Failure
$@) .eeing +our Creati#it& in >ction
$@!') -he "idicule Factor
F(Gitomer, 7004)
>ll $@!' of these elements directl& tie into at least one of the J scientificall& researched
methods of creati#it& enhancementP confirming that the scientific research on this su%Aect is
#er& rele#ant to in#estment marketing and sales professionals in the field! ,an& of these
factors of creati#it& mentioned %& %oth .tern%erg and Gitomer can %e changed and
addressed indi#iduall& to increase &our creati#e potential!
:Cuall& as important as enhancing creati#it& is identif&ing feelings or processes that ma& limit
creati#e results! "esearch shows that the following can %lock creati#it&1 fear of failure, fear of
success, guilt, shame, o#ercoming fantasies, stu%%ornness, fear of loneliness, and identif&
issues ()ernard Golden, 700H as referenced %& Carson, 700H)!
T.eeing a great idea is one thing X H>MB*G a great idea is another! )ig difference %etween
the gu& that in#ented a pet rock and the gu& that %ought one! ;ne (the in#entor) is a lot more
fulfilled (wealthier) than the purchaser!U
=effre& Gitomer
Creati#it& -ool 8@1 .C>,:"
;ne of the most widel& used creati#it& aides is .C>,:"! .C>,:" stands for
.u%stitution, Com%ination, >daptation, ,odification, utting to other uses, :limination, and
"earrangement! -his is a list of different wa&s &ou can think a%out a challenging pro%lem in
order to come up with new possi%le solutions! -o use this tool identif& a significant pro%lem
that &ou are facing and appl& .C>,:" Cuestions to each step or small module of the
pro%lem to see what new ideas &ou can come up with (,ichalko, 7006)!
,ichael ,ichalko in his %est selling %ook, T-hinkerto&s,U pro#ides a list of Cuestions for
in#estment marketing professionals who want to use this techniCue! Consider the task for
re#amping &our o#erall selling techniCues! First, &ou should %reak up the topic of selling
techniCues into '66 parts, one of which might %e focused exclusi#el& on prospecting! .ome
.C>,:" Cuestions that might help &ou come up with new prospecting methods could
includeF1
^ 3hat procedure can B .u%stitute for m& current one?
^ How can B Com%ine prospecting with some other procedure?
^ 3hat can B >dapt or cop& from someone elseRs prospecting methods?
^ 3hat can B ,odif& or alter the wa& B prospect?
^ How can B put m& rospecting to other uses?
^ 3hat can B :liminate from the wa& B prospect?
^ 3hat is the "e#erse of prospecting?
^ 3hat "earrangement of prospecting procedures might %e %etter?
F (,ichalko, 7006)
Creati#it& -ool 841 Bdea Guota
Qse this tool to tackle &our challenges and gi#e &our %rain a workout e#er& da&! -homas
:dison and his emplo&ees were alwa&s working with Cuotas! -homas :dison held o#er $,000
patents, his Cuota was to register a new minor patent e#er& $0 da&s and maAor patent e#er&
six months! Bdentif& the one pro%lem that &ou would like to ha#e sol#ed in the next @ weeks!
*ext, set a Cuota of writing down a minimum of three new potential solutions to this challenge
each da&! -his forces &ou to do three things! First it concentrates &ou on what is most
important on a dail& %asis! .econd it forces &ou to come up with possi%le solutions while &ou
are in different moods, thought patterns, and possi%l& en#ironments! -hird, if &ou allow
&ourself to freel& write down ideas as the& come it should produce potential solutions that
%uild on pre#ious ideas and would ha#e %een difficult to disco#er without a structured process
(,ichalko, 7006)!
Creati#it& -ool 8'1 ,ind ,apping
,ind ,apping is a graphical techniCue that represents how &our mind organi(es information
that relates to pro%lem sol#ing! >s a creati#it& tool it ma& allow &ou to see the where possi%le
gaps or possi%le new associations exist! -he ,indmap is Aust for &ou so it doesnRt matter if the
relationships %etween items are confusing to others who #iew it! >s long as &ou can make
sense of it than it ser#es it purpose!
' .teps to ,ind ,apping1
$! Bdentif& a pro%lem &ou are facing and are ha#ing trou%le sol#ing!
7! ,ap out &our thoughts and current insights on the pro%lem! Focus onl& on ke&words that
will help &ou remem%er the main ideas that &our mind focuses on!
@! -ake the point of a critic, anal&(e and stud& &our map! Bf no ideas come to mind put it
awa& for two da&s and come %ack to it! Bf &ou do this a couple of times &ou will usuall&
experience a moment of insight!
4! Focus on that piece of insight until it de#elops into a complete idea (,ichalko, 7006)
)elow is an example of a mind map that a Mice resident of a light %ul% compan& drew! He
diagrammed the s&stem of 4,000 distri%utors that his firm worked with as it appeared in his
head!
-his map showed him where more information might %e needed and also where opportunities
might exist! -his led him to think a%out his %usiness in man& new wa&s and helped him form
his %reakthrough idea1 energ& management! > new di#ision of the compan& was created
around this theme and it led to a huge increase in sales! -he Mice resident later remarked,
T-he map led to a cascade of ideas that moti#ated us to act and create a whole new di#ision
(,ichalko, 7006)!U
Creati#it& -ool 861 Future Fruit
TBn peace prepare for war, in war prepare for peace!U
.un -su
Bn -hinkerto&s ,ichalko suggests thinking of future profits as future fruit! +ou should ha#e
se#eral alternati#e plans for the future %ased on a num%er of pro%a%le and impro%a%le
e#ents! Ha#ing onl& one possi%le outcome of e#ents planned for is like planting onl& one
straw%err&! -he weather could get too hot, someone could come eat &our straw%err&, or &our
straw%err& could %ecome diseased! Bf &ou plant multiple fields of straw%erries &ou will reap a
har#est!
6 .teps to Future Fruit1
$! Bdentif& a particular pro%lem in &our in#estment marketing %usiness
7! .tate a specific decision that &ou will ha#e to make
@! )reak down what forces will ha#e an impact on the decision! -hese could include
economic, technological, product lines, competition, regulator&, etc!
4! )uild fi#e scenarios with drasticall& different outcomes %& #ar&ing the effects of each of
the maAor forces of influence!
'! identif& %usiness opportunities within each scenario &ou create and explore the links of
opportunities &ou identif& across different scenarios! (,ichalko, 7006)
Creati#it& -ool 86!71 .harpen +our .aw
Creati#it& can %e learned, %ecome a student of it! Create a one page cheat sheet for creati#it&
tools and other process impro#ement tips that descri%es each lesson in $67 sentences! -his
will help &ou integrate %est practices and new methods of thinking and acting into &our dail&
life! 0aminate ' copies of this piece of paper for &our desk, %athroom mirror, shower, and
an&where else &ou consistentl& spend time so &ou will %e reminded of them!
.ummar&
TBmagination is more important than /nowledgeU
>l%ert :instein
-he tools listed a%o#e attempt to maximi(e &our creati#e a%ilities through sparking di#ergent
thinking and re#ealing remote associations that might lead to new #alua%le in#estment
marketing ideas! -o %ecome more creati#e identif& which areas of creati#it& enhancement &ou
should %e working on, identif& current %locks to &our creati#it&, tr& using a few of the tools and
see which ones work well for &ou, and %ecome a student of creati#it&!
"eferences
>llocca, ,! >!, N /essler, :! H! (7006)! Bnno#ation speed in small and medium6si(ed
enterprises! Creati#it& N Bnno#ation ,anagement, $'(@), 7HJ67J'!
Carson, .! ! (700H)! s&cholog& of creati#it& professorHar#ard :xtension .chool!
Gitomer, =! (7004)! Creati#it& and selling! -he little red %ook of selling ($st :dition ed!, pp!
$'0)! >ustin, -V1 )ard ress!
Grus(ka, >!, N *ecka, :! (7007)! riming and acceptance of close and remote associations
%& creati#e and less creati#e people! Creati#it& "esearch =ournal,
,ichalko, ,! (:d!)! (7006)! -hinkerto&s! )erkele&, C>1 -en .peed ress!
,ostert, *! ,! (700H)! <i#ersit& of the mind as the ke& to successful creati#it& at unile#er!
Creati#it& N Bnno#ation ,anagement, $6($), J@6$00!
*apier, *! /!, N *ilsson, ,! (7006)! -he de#elopment of creati#e capa%ilities in and out of
creati#e organi(ations1 -hree case studies! Creati#it& N Bnno#ation ,anagement, $'(@), 7696
7H9!
*apier, *! /!, N *ilsson, ,! (7006)! -he de#elopment of creati#e capa%ilities in and out of
creati#e organi(ations1 -hree case studies! Creati#it& N Bnno#ation ,anagement, $'(@), 7696
7H9!
arnes, .!, N )ondi, >! ($JH')! Creati#e %eha#ior1 > delicate %alance! =ournal of Creati#e
)eha#ior, J, $4J6$'9!
"ickards, -!, N ,oger, .! (7006)! Creati#e leaders1 > decade of contri%utions from creati#it&
and inno#ation management Aournal! Creati#it& N Bnno#ation ,anagement, $'($), 46$9!
.tern%erg, =! "! (:d!)! ($JJ9)! Hand%ook of creati#it&
-assoul, ,!, N )uiAs, =! (700H)! Clustering1 >n essential step from di#erging to con#erging!
Creati#it& N Bnno#ation ,anagement, $6($), $6676!
Hedge Fund a%ital )ntroduction
Capital introduction is usuall& the phrase that refers to the introductions that prime %rokerage
houses will make on %ehalf of their mone& managers to help raise their assets under
management! .ome prime %rokerage houses will ha#e se#eral capital introduction
professionals in house or a whole team dedicated to the work! -he prime %roker gets paid
through trades made %& the manager so the more assets the& ha#e under management the
more the& will get paid each Cuarter on those larger trades!
,ost capital introduction professionals are paid on salar& and %onus on o#erall trading acti#it&
and not on earning a percentage of fees from assets raised like a third part& marketer! Capital
introduction ser#ices ha#e came under some scrutin& latel& and there are talks of it going
awa& completel& due to a conflict of interests! )elow are three links to help &ou learn more
a%out capital introduction ser#ices in general!
Bf &ou are looking for a prime %roker, capital introduction, or third part& marketing ser#ices let
me know and B can help &ou network and find a group that might work well for &our situation!
Hedge Fund )n*estor Ty%es
.ometimes B get to speak with other third part& marketers and hedge fund marketing
professionals a%out their experiences in working with hedge fund in#estors! 3hat B find is that
o#erall most marketers experiences are #er& similar while each in#estor is different Aust as
each due diligence process within different firms #ar&! Hedge fund in#estors t&picall& fall into
one of these four categories1
-he TFollow ,eU Hedge Fund Bn#estor
,ost of these in#estors make up &our pool of famil&, friends, co6workers, and people &ou
interact with regularl&! Qsuall&, these people donRt understand how to perform the necessar&
due diligence in making a decision to in#est! -his group also tends to make assumptions! For
example, if a manager holds a degree from Har#ard or has experience from a top financial
firm, this aspect alone would persuade in#estors to follow suit ignoring the pro%a%ilit& of fraud!
Bn addition, the& hea#il& rel& on personal acCuaintance and recommendations from either &ou
or someone &ou ma& know! Bf &ou ask for a check, and the& trust &ou, this group will most
likel& gi#e one to &ou!
-he T.end ,e a rospectusU Hedge Fund Bn#estor
-his group is a %it more sophisticated %& conducting a minimum amount of due diligence into
the managerRs performance! ;nce the& are satisfied with the performance on paper, the& will
meet with and usuall& shower the manager with Cuestions regarding e#er& aspect of the fund,
including returns, performance, strategies, and risks! 3hat is written and spoken %& the
manager is taken into faith and the information is not properl& #erified %& the in#estor!
-he TBn#estigatingU Hedge Fund Bn#estor
-his t&pe of in#estor is sometimes considered a nuisance %& %us& professionals who might
caught off6guard %& their Cuestions! *ot onl& will the in#estor keep the managerRs num%er on
speed dial, the in#estor will perform the due diligence a%o#e and %e&ond the t&pe mentioned
a%o#e and also go far as to understanding the entire operation of the fund as if he or she
were the manager! -his t&pe would also inter#iew mem%ers of the managerRs staff! -he
in#estor would also look into the %alance sheet, cash controls, reporting, and other functions,
not directl& related to performance! *uisance?
-he TBndependentU Hedge Fund Bn#estor
-he due diligence collected %& this in#estor is thoroughl& re#iewed independentl&! Bn#estors in
this categor& know that independent opinions are extremel& important! -he& will contact the
auditor, custodian and administrator in addition to the .:C and2or state securities agenc&!
-he& wonRt sign on the dotted line until the& are satisfied independentl& #erif&ing e#er&thing
that matters, including, assets under management, returns, and e#en a &ear end audit! -he&
full& understand the risks that are in#ol#ed!
*o%od& likes to %e put in a %ox, %ut it is important to reali(e that the t&pes of in#estors can
#ar& widel& so the arra& of marketing materials &ou ha#e should include %rief one pagers to
#er& detailed institutional6Cualit& oweroint presentations and third part& anal&sis for those
most scrutini(ing parties! ,& experience has %een that marketing material first %uilt to the
highest standard and then summari(ed into smaller Idum%ed downI pieces later can %e #er&
effecti#e and #ersatile!
Raising a%ital With Tenacity
3h& do most salespeople fail in hedge fund sales? HereDs one take1
F 445 of all salespeople Cuit tr&ing after the first call
F 745 Cuit after the second call
F $45 Cuit after the third call
F $75 Cuit tr&ing to sell their prospect after the fourth callF
-his means J45 of salespeople Cuit %efore the fifth phone call while 605 of all sales are
made after the fourth call! -his means that the o#erwhelming maAorit& of hedge fund
salespeople pro%a%l& donDt e#en gi#e themsel#es a shot at selling their products!
F<ata from Her%ert -rue, a marketing researcher at *otre <ame Qni#ersit&
,id6da& Qpdate1 Funn& stor&, B wrote this post at 6>, this morning! B Aust got %ack from lunch
and caught a call %ack from a financial ad#isor B ha#e emailed once and left ' #oicemails for
o#er the past 6 months! B had heard nothing and now he is interested in in#esting in one of
our products! -enacit& paid off this time around!
old alling Ti%s and 0d*ice
$! <onDt ask the prospect IHow are &ou doing!I +ou donDt care how the& are doing! Bf &ou
cared &ou would ha#e done some research on the compan& first and &ou would ha#e
something more intelligent to ask them! ,ight sound harsh %ut it is true! <o &our homework
first!
7! /eep in mind that thousands of people cold call and se#eral people are pro%a%l& calling the
same or #er& similar prospects as the ones &ou are approaching! :#er&one pla&s the num%er
game and it is natural to not ha#e &our calls or emails returned! -he goal is to de#elop
enough percei#ed #alue so the& will take &our call the next time or call &ou when the& are
read& to %u& &our product or ser#ice!
@! .hoot for @0690 phone calls a da&! ,ore is not alwa&s %etter %ut tr&ing to do 66$0 calls an
hour will keep &ou on &our toes and alwa&s dialing more prospects! Create a game out of the
process!
4! .mile while &ou dial! -he tone of &our #oice and word choice %oth change %ased on &our
own feelings and facial expressions! )e happ& and lo#e &our Ao% and the people on the other
end of the phone will take notice!
'! Call the C:;! >lwa&s call the C:;! -he& are the masters of e#er& other department and if
a call or email gets forwarded from them down to a M or <ept! manager it is much more
likel& to get responded to then coming in through an anal&st or associate with the firm!
6! .et the ta%le! -his is a point )rian -rac& makes in the %ook, I:at -hat Frog!I .it down
e#er& night and take 70 minutes to plan out &our work for the next da&! )reak the da& into @0
minute sessions of complete focus completing &our most important tasks %efore most people
e#en get to work in the morning!
H! repare a standard email that &ou send out %efore &ou call! >n&one can send a great
follow up email to a phone call, the trick is getting the prospect on the phone in the first
place! <onDt ha#e them not take &our call %ecause the& do not know who &ou are!
:mail the prospect introducing &ourself and wh& &ou would like to ha#e a ' minute
con#ersation in @6' sentences or less and call $0 minutes after sending the email out!
Ho3 to Ha*e a "ositi*e 0ttitude
-oda& B had one of m& %est in#estment sales da& e#er! B found o#er a do(en strong leads and
possi%l& landed a couple of new in#estors for the fund that B am promoting! 3h& did this
happen? :arlier this week m& %oss had %een tra#eling and m& B felt like B wasnDt getting
an&where! B completel& changed m& attitude and now the opportunities in front of me at work
are almost o#erwhelming!
B ha#e studied in m& s&cholog& of Bnfluence class at Har#ard that negati#e thoughts can
%lock creati#e or e#en mundane solutions to challenges we face e#er& da&! B ha#e also
disco#ered that the unconscious part of our %rain grinds awa& on pro%lems that we are facing
and know we ha#e to conCuer! .cientific studies ha#e shown that successful professional
athletes use more positi#e self6talk than non6professional athletes! Bn one of =effre& GitomerDs
%ooks he talks a%out seeking mentors earl& on in his sales career! ;ne emplo&ee at his
compan& had onl& started working in the industr& $ &ear ago and was the compan&Ds 87
salesman out of a group of o#er 700 people! Gitomer asked him how he did and he said that
one thing he did differentl& from e#er&one else was tell himself o#er $00 times a da& IB am the
%est! B am the %est! B am the %est!!!I B donDt %elie#e that simpl& sa&ing these words will make
&ou the top salesman at &our compan& %ut B do %elie#e that ha#ing that strong of a positi#e
attitude impro#es all of &our relationships, &our positi#e self6talk, and a%ilit& to come up with
creati#e win6win solutions on the fl&!
Here is how B tr& to ha#e a positi#e attitude1
F B ha#e se#eral @64 minute moti#ational podcasts or audio %ook clips on m& ipod that B can
listen to on the wa& to work
F B 3orkout at least @ times a week
F B read $' pages of attitude changing articles or %ooks e#er& morning while B am eating
%reakfast! (see =effre& GitomerDs 0ittle +ellow )ook of +:.S>ttitude)
F B ha#e created a $ page lamented page of the top '0 %usiness and sales lessons B ha#e
learned and B ha#e posted it in m& shower, on m& %athroom mirror, and %ehind m& desk at
work! B do m& %est to read this list twice a da& to remind m&self of what is important!
F B set )H>G. for m&self! )H>G. are )ig Hair& >udacious Goals as descri%ed %& =im
Collins in Good to Great! ,& current )H>G.? B want to %ecome -H: expert in in#estment
marketing and sales, run '0 in#estment we%sites that rank in the top @ slots of Google search
results, and %ecome a %est selling author!
F B tr& to find a lesson to %e learned from each Inegati#e experience!I Bf nothing else a
negati#e experience should alwa&s tell &ou something a%out &ourself!
F B am alwa&s learning and exploring something new! Bt was getting into Har#ard and
mo#ing to )oston, now it is learning all B can a%out in#estment marketing and sales, the
ps&cholog& of influence, and we% marketing! >s soon as &ou stop %eing curious and
challenged &ou %ecome stale and un6moti#ated!
F B cut off or drasticall& reduce communication with negati#e people!
F B donDt watch the local news! Bt is worthless! How often do &ou see a news stor& a%out a
generous church donation, a child winning a science proAect award, or a organ donor sa#ing
someoneDs life? *ot nearl& as often as a plane crash, fire, or ro%%er&! Bf &ou ha#e to get the
local news read it online for ' minutes and sa#e &ourself some time!
B am taking a four month course on ositi#e s&cholog& this spring that should %e #er&
interesting! B will %e updating this %log with those details as soon as B can! 0et me know if &ou
ha#e an& other great tips on keeping positi#e attitude or using self6talk!
Hedge Fund 5utsourcing Trend
Hedge Fund ;utsourcing is growing as competition in the field increases and smaller funds
focus more resources on creating a competiti#e in#estment process and growing their assets
through sales and marketing acti#ities! ;utsourcing their office space, operational, trading,
accounting, B-, and compliance needs lets small hedge funds act more nim%l& and simpl&
deli#er results instead of ha#ing each emplo&ee wear 4 hats or constantl& hire consulting
firms on an on6demand %asis!
Hedge Fund ;utsourcing ;ptions
B know of one hedge fund outsourcing firm in *ew +ork that offers a full suite of trading,
operational, and compliance hedge fund outsourcing ser#ices! 0et me know if connecting with
them would %e helpful for &ou!
)n!luence Through 5rienting Re!leB
;ne wa& in which people are influenced e#er&da& is through our orienting reflex! -he
orienting reflex is the process we go through while reacting to something no#el, new, or
m&sterious! Bt is what makes first dates, roller coasters, and #acations to exotic islands so
enAo&a%le!
3hen a loud alarm goes off we stop and ask oursel#es wh& it is going off and if it has an&
effect on us! Bf &ou are in the middle of a mo#ie at &our local theater and the fire alarm starts
to go off e#er&one will look around for a minute %efore taking action! :ach person is orienting
themsel#es to this new situation and com%ination of #aria%les and the& are looking for
instructions from other peopleDs actions, their past experiences, or some sort of authorit& such
as a mo#ie theater emplo&ee! -his #er& moment while the mo#ie audience is determining
what to do next is when the& are most easil& influenced! -his same rule applies to changes in
stock market conditions and the reaction of wall street anal&sts and in#estment news
%roadcasters!
Bf &ou can %e the person to suggest a strateg& or pro#ide additional credi%le e#idence when
others are still orienting to a new en#ironment &ou can %e #er& influential #er& Cuickl&!
0ttracting Hedge Fund )n*estors
B recentl& recei#ed this email!!!
$i%hard! I am involved in the management of a new hedge fund that we started last year. Aur
hedge fundBs strategy is a %ombination of sto%k and derivatives. Aur goal is @"5C growth per
year! and thus far! we are right on tra%k. &hat I wanted to ask you is this* 3re these types of
earnings %ompetitive within the hedge fund world( If we %ontinue with this kind of
performan%e! would this type of growth be attra%tive to third party marketers(
=ohn, Bf &ou could sustain 705K returns o#er ',H and $0 &ears and show positi#e growth
during Cuarters of negati#e eCuit& market performance it will help! -he incenti#es in the hedge
fund world fa#or those that are long6term greed& not Cuarter6to6Cuarter or &ear6%&6&ear short
term greed&! -he trick is consistenc&! Bt is %etter to ha#e a 795 returns for $0 &ears than
$005 returns for @! +ou will %e attracti#e to man& groups, including some third part&
marketing firms if &ou ha#e a deepl& experienced team, understanda%le and repeata%le
in#estment process, solid returns, good portfolio risk controls and a sound %usiness %ehind all
of this! > recent report showed that institutional in#estors look #er& closel& at the risk
management controls in place for %oth the portfolios %eing managed and the hedge fund
%usiness itself!
0re Your usto'ers High:
>%stract
Bn a time where each consumer sees thousands of ad#ertisements or corporate s&m%ols
e#er& da& this article discusses se#eral components of the highl& researched area of drug
addiction and draws parallels use in the world of sales and networking! -he %ulk of this article
is %ased on the knowledge and research of <r! .cott 0ukas, <r! "o%ert Cialdini, and <r! /e#in
Hogan who are experts in reward circuitr& and the ps&cholog& of influence and persuasion!
)& examining the wa& and reasons wh& we %ecome addicted to su%stances and acti#ities we
can disco#er truths a%out how the reward circuitr& in our %rain works and create actiona%le
product positioning and sales steps towards a more profita%le %usiness or successful career!
Bntroduction
Mirtuall& e#er&one %ecomes addicted to something at some point in their li#es! ,an& times it
is to drugs like nicotine or caffeine %ut it can also %e to sex or the feelings experienced while
shopping with a group of friends! ;ur %rains are wired to reward positi#e experiences that
%enefit us while minimi(ing those things that create a negati#e impact or feelings on our life!
-his reward center patholog& is at the core of what creates patterns of use that are #er&
reinforcing and sometimes lead to negati#e health conseCuences or e#en death! -his is
%ecause the %rain can %ecome conditioned into desiring a certain %eha#ior or su%stance to
the point where the logical points of ceasing the acti#it& are ignored(/uhn 700@)! > good
analog& for this is imagining &our unconscious mind is a Aet engine strapped to the %ack of
&our conscious mind, a minicooper! 3hen &our unconscious mind fires it can %e difficult to
control the steering, or %ring it to a halt! Bt is not often that experts in sales and marketing look
directl& at addiction for clues on how to gain lo&al customers! -his means that while most
companies profit from our natural reward center patholog&, few consciousl& appl& an ethical
&et s&stematic application of these lessons in an attempt to tap the same reward circuits that
creates addiction!
-his article discusses four components of addictionP initiating use, the en#ironment, a rapid
high after use, and the emplo&ment of cues! -he goal is to introduce specific methods that a
compan& as a whole or indi#idual sales person could use to create an addicting product or
ser#ice without the use of an& drugs! 3hile the use of these methods %rings up se#eral
ethical issues, these warrant a length& discussion in itself and will not %e discussed in this
piece!
<escription of /e& Findings
-here are three t&pes of drug (or product) users! :xperimenters, Compulsi#e users, and
Floaters!
F :xperimenters are usuall& defined as those indi#iduals who use a drug from time to time
%ut generall& out of peer pressure or curiosit&! -he eCui#alent to this might %e the indi#idual
who onl& goes to the g&m when going along with a friend or to see what cardio classes are
offered!
F Floaters are those who use relati#el& sparingl& and mostl& when pro#ided with the drug
from someone else! >n example of this could %e the indi#idual who onl& goes to the g&m for
four weeks out of the &ear during the times when his friends can get him the two week free
g&m trial mem%erships!
F Compulsi#e Qsers focus a relati#el& large percentage of their energ& to use of the drug!
>n example of this is the indi#idual who enAo&s going to the g&m J0 minutes e#er&da&! Bn
addition to the workouts this person might also spend hundreds of dollars and do(ens of
hours a month on sports supplements and research on how to increase their gains from
working out (<r! 0ukas .+C:6$4$0)
-he point of descri%ing these three t&pes is that indi#iduals can mo#e %etween the groups!
3hatRs important to note howe#er is that most people who %ecome compulsi#e users cannot
easil& downgrade and maintain their drug use at the experimenter or floater le#el! > parallel
can %e seen in product purchasing patterns! .ales people should work towards con#erting the
experimenters and floaters of their product up towards %eing a compulsi#e user! -he point is
not to con#ince someone to do something that is unhealth& financiall& or ph&siologicall&! Bn
the example of the g&m mem%ers the mo#ement would %e from slightl& profita%le customers
to extremel& profita%le customers!
Bnitiating <rug2roduct Qse
-o get someone addicted to using &our product or at least to ha#e them experience some
positi#e reinforcing experiences the& will ha#e to at least tr& &our product! -herefore the first
step is finding an in6road to a new customer! <r! 0ukas of Har#ard Qni#ersit& has detailed
these two learning6%ased processes that can lead to experimenting with a new drug or
product1
F +our peer group is 7nd onl& to &our parents in their a%ilit& to influence &our drug6taking
%eha#ior
F Bf a drug is associated with gaining appro#al or affection it can %e reinforcing (<r! 0ukas
.C+:6$4$0)
<o we ha#e an& reason to %elie#e that this would %e different for product purchasing
%eha#iors? -he success of >#on, #iral marketing firms, ,ar& /, and we%sites such as
,&space!com are great examples of peer groups and families %eing used for commercial
gains! <r! "o%ert Cialdini of the >ri(ona .tate Qni#ersit& has done a significant amount of
research on this su%Aect of peer and social pressure! He calls it Tsocial proof,U and %elie#es
that one of the most powerful wa&s people make decisions is looking to see what others are
doing or %elie#ing in that arena! -his is e#en more hea#il& relied upon in situations of
uncertaint& or when the indi#idual %elie#es that the others %eing o%ser#ed are similar to
themsel#es! (Cialdini 700$)
)efore &ou can create an en#ironment to TaddictU someone to &our product, &ou will ha#e to
educate them! Bf the& donRt know &ou exist the& cannot seek &ou out! Camel Cigarettes is an
expert at making sure e#er&one knows that the& exist! Bn FischerRs $JJ$ stud& on %rand logo
recognition his team found that @05 of @6&ear6old and J$!@5 of 66&ear6old children could
match the =oe Camel logo with a picture of a cigarette! .tarting a #er& &oung age we are
exposed to and remem%er ad#ertisements! (!,! Fischer $JJ$)! <o @ &ear olds recogni(e
&our logo? <oes it matter? -he point is imager& is a #er& powerful wa& of raising familiarit&
with a product and is the most popular reminder or cue (more on this later) that corporations
use toda&!
:n#ironmental Bnfluence
How do most people act in the li%rar&? How a%out at a dance clu%? > Church? -he meek and
sh& will sing out in church and the o#erl& extro#erted #ocal indi#iduals will remain Cuiet in a
li%rar&! -hese are direct effects of the en#ironment influencing how we act!
-he en#ironment an indi#idual is in directl& affects the likeliness and extent to which the& will
%u& and use a drug! -here is strong e#idence that indi#iduals that ha#e taken a certain dose
of a drug in a comforta%le familiar en#ironment later o#erdosed while taking the same amount
of the drug in an unfamiliar en#ironment (<r! 0ukas .+C:6$4$0)! -his shows how powerful
our en#ironment is on influencing our actions! <r! /e#in Hogan author of T-he .cience of
BnfluenceU %elie#es that changing the en#ironment is the single most powerful wa& to
influence someoneRs %eha#ior!
-his has two important applications to accessing profita%le reward circuits! -he first is that
&ou can increase some immediate positi#e impressions or experiences %& setting the right
en#ironment! Bn the same wa& &ou can limit an& immediate negati#e perceptions or feelings
%& %eing sensiti#e to what might set some of those off! -he en#ironment can stimulate new
%eha#ior and almost instantl& changes an indi#idualRs actions when the& enter into it! -he
second important application is that in a new en#ironment the %rain is tr&ing to interpret and
adapt so enters into what Hogan refers to as a Tstate of fluxU and it %ecomes influenced much
easier (Hogan 700')!
.moke the competition
.moking a drug is the Cuickest wa& for a user to feel a high! -he acti#e ingredients enter the
lungs where the al#eoli capillaries a%sor% the su%stance and the %lood is Cuickl& pumped
through the heart and directl& to the %rain! .moked su%stances are usuall& the most addicti#e
%ecause of the rapid onset of positi#e feelings experienced after taking a hit!
;ne of the %est pieces of e#idence that something will %ecome addicting is when there is an
immediate positi#e experience following the acti#it& with a dela&ed or un6associated negati#e
experience! -he closer the positi#e experience is to the action and the farther awa& the
negati#e experience is, the more likel& the drug is to %ecome addicting! <r! "o%ert Cialdini
and <r! /e#in Hogan ha#e %oth conducted extensi#e research on influencing others %&
creating a positi#e initial experience for new customers!
<r! "o%ert Cialdini has completed o#er @0 &ears of research in the ps&cholog& of influence!
His most well known %ook entitled, Bnfluence1 .cience and ractice, details 6 tools of
influence and was %ased on decades of research focused on the logic and mechanics %ehind
influencing others in the %usiness world!
-o gain an instant positi#e first impression <r! Cialdini prescri%es to use the influence tools of
0iking and "eciprocation! )elow are descriptions of these tools that directl& relate to and work
with the immediate positi#e experience components of addiction!
F 0iking1 -he Friendl& -hief
o eople like to %u& from other people the& know and like! h&sical attracti#eness,
similarit&, and familiarit& are three le#ers that can %e emplo&ed to increase this TlikingU factor!
F "eciprocation1 -he ;ld Gi#e and -ake_and -ake
o -his deepl& im%edded social rule is what makes one feel o%ligated to repa& someone
who has pro#ided us with a gift, fa#or, or concession!
<r! Cialdini does not research reward pathwa&s or the process %& which we %ecome addicted
to acti#ities or drugs! His research descri%es how &ou can gain a greater a%ilit& to influence
others or defend &ourself against those who might %e using these same tools of influence!
-his is an important distinction %ecause his ad#ice is in line with the lessons that can %e taken
%& looking at addiction and the reward pathwa&s that fuel it!
Bf &ou follow <r! CialdiniRs ad#ice &ou successfull& gi#e something awa& that &our customer
%elie#es is #alua%le and come off as #er& friendl& and likea%le &ou would not onl& create an
o%ligation on their %ehalf to repa& &ou with a purchase %ut &ou would %e triggering their
reward center pathwa&s in the same fashion as a drug with a high potential of %eing addicting!
-he Cuicker and more powerful the earl& positi#e experience the more Taddicti#eU &our
product or ser#ice %ecomes! (Cialdini 700$)
<r! /e#in Hogan %elie#es we are constantl& undergoing 4 second e#aluations! :#er& time
some%od& sees us the& are e#aluating do(ens of details a%out our clothes, %od& language,
hair, facial expression, and mo#ements to categori(e us into a general &es or no categor&! <o
the& generall& like &ou and associate with &ou or feel that &ou completel& different or possi%l&
someone with different #alues and morals? +ou are placing e#er&one in %uckets of +es B
would like to meet or do %usiness with this person or *o, B am not interested!
>ll of this happens #er& rapidl& and almost completel& unconsciousl&! Bt is part of how we are
wired, rel&ing upon thousands of mini stereot&pes that help us make decisions such as
deciding whether to trust a compan&, product, or sales person! ;ne some le#el this is almost
reCuired of us so that we can process all of the information we recei#e ()odenhausen,
,acrae, N .herman, $JJJ, Fiske N *ue%erg, $JJ0), it helps us make sense of e#er&thing
without ha#ing to start from scratch with each o%ser#ation (Gigeren(er N Golstein, $JJ6) Bn
-he .cience of Bnfluence <r! Hogan discusses how &our first impression is recorded and used
again and again later in time! ,anage &our four seconds! (Hogan 700')
3hat does &our logo, we%site, customer ser#ice reps, store, and product sa& within 4
seconds of looking at or talking with them? Bt has %een shown that we automaticall& assign
traits such as talent, kindness, honestl&, and intelligence to attracti#e indi#iduals (:agl&,
>shmore, ,akhiAani, N 0ongo $JJ$)! 3hile B ha#e not found a specific stud& on the same
effect appl&ing to products B %elie#e that an attracti#el& designed product would create
automatic Audgments of the products Cualit&, relia%ilit&, #alue, etc! -his is a powerful piece of
the pu((le %ecause all of these Audgments occur so rapidl&, if &ou can make them extremel&
positi#e &ou or &our product will %e far more attracti#e! Four seconds happens to %e #er&
close to the amount of time it takes for a smoked su%stance to enter the %lood %rain %arrier
and create a high! Bf &ou can get &our customer to smoke &our drug(tr& &our product), do &ou
want them to feel nothing, get sick to their stomach, or reall& high?
)ottom line1 Create a rapid and powerful positi#e experience for &our customer! Qse the rule
of reciprocit&, %e likea%le and friendl&, %e cogni(ant of the first 4 seconds, and a#oid or dela&
an& negati#e experiences or feelings at all costs! "emem%er, once &ou ha#e done the
legwork to get them to TsmokeU &our product experience &ou want to make sure that &our
product creates the most rapid positi#e experience possi%le to create an initial ad#antage
o#er &our competitors!
Cues X "einforcing Qse2urchases
;ne of the most commerciall& profita%le lessons to take from the world of
ps&chopharmacolog& is the role that cues pla& in the process of addiction and drug use in
general! Cues are triggers, reminders of a dug that makes &ou think of feelings and
experiences associated with a drug! Cues are often what reminds users to continue use,
immediatel& seek the drug, or relapse and %egin use again! Cues are so powerful that after
months in a drug reha% program a single cue can set someone on edge and induce use!
Cues can %e odors, s&m%olic o%Aects, sounds, or people! >cti#it& in se#eral areas of the %rain
rapidl& change after a cue is o%ser#ed! >n example of a cue for someone who has Cuit
smoking could %e the simple smell of a lit cigarette %eing held %& someone walking 70 feet
ahead of them on the sidewalk! =ust the smell triggers acti#it& in their %rain and %rings %ack
the old desire and feelings that led them to %egin or constantl& reinforced smoking in the first
place (.+C:6$4$0)! Cues are used in the %usiness world all of the time! -he& are %ill%oards,
freshl& %aked cinnamon rolls placed on a shelf, or life si(e ;scar ,e&er 3einer wa#ing &ou
towards their hot dog stand on the corner of the street! -hese are things that remind us of the
positi#e experiences we associate with a product!
-he following is %ased on a true stor& and it pro#ides examples of cues that can %e and are
commerciall& emplo&ed!
Bmagine a @0 &ear old woman who used to shop at ,ac&Rs @64 da&s a week after work or
during her lunch %reak! Bt was comforta%le, fun, and exciting! For &ears she continues this
TuseU of shopping on a weekl& %asis enAo&ing new purses, shoes, and perfumes! 3hile this
was not going to put her into financial ruin, her hus%and would like to %u& a #acation home
and the& ha#e %een tr&ing to sa#e more mone& for one! >t one point she successfull& reduced
her shopping at ,ac&Rs to one weekend a month when she would go out with her hus%and!
;ne da& at lunch she eats in a food court and walks past the front of ,ac&Rs on the wa& there!
.he can smell all of the perfumes and lotions (Cue 8$1 .mell) that are Aust inside the open
doors! .e#eral areas of her %rain are acti#ated %& this cue and she %egins thinking a%out how
fun it would %e to go shopping for some new spring clothes! .he goes to lunch and all she
can think a%out is how her purse is looking a little out of st&le and how she wishes she could
%u& the same shoes the lad& is wearing (Cue 871 .&m%olic ;%Aect) at the ta%le next to her!
.he resists the urge to shop and tries to forget a%out the whole thing! -wo da&s later she gets
a ,ac&Rs catalog (Cue 8@1 Bmage) in the mail, the& ha#e a 405 off sale! -hat same da& she
takes a two hour %reak from work and heads to ,ac&Rs! >s she searches the racks and tries
on each item her %rain is %eing flooded with dopamine and she remem%ers exactl& wh& she
used to shop @64 da&s a week! .he ends up spending o#er E$,000 on products she could
ha#e done with out!
-he golden nugget to take from the use of cues is that through thorough anal&sis of each t&pe
of customer &ou ser#e &ou can inAect dail& reminders of the high the& experienced or could
experience from purchasing &our product! >nal&(e &our %usiness practices and s&stematicall&
tinker with using cues that other professionals in &our industr& ha#e ignored!
Conclusion
Hundreds of studies ha#e %een conducted on influence and persuasion and hundreds more
on addiction! Mer& few articles or li#e experiments ha#e looked for a direct connection
%etween these two areas! -his article has detailed four direct wa&s to learn from the
thousands of research studies done on addiction and reward circuitr& in the %rain and use it to
create lo&al customers who canRt get enough of &our product! -hese include Bnitiating Qse,
:n#ironmental Bnfluence, .moking the Competition, and :mplo&ing cues! Qsing these in a
s&stematic fashion will unco#er ethical a#enues of creating a more profita%le customer %ase!
"eferences
)odenhausen, G!M! ($JJ0)! .tereot&pes as Audgmental heuristics1 :#idence of circadian
#ariations in discrimination! s&chological .cience, $, @$J6@77!
Cialdini, "o%ert )!, TBnfluence1 .cience and racticeU 4th :dition Cop&right 700$ %& >ll&n N
)acon! .ee also www!influenceatwork!com!
:agl&, >!H!, >shmore, "!<!, ,akhiAani, ,!G! N 0ongo, 0! C! ($JJ$) T3hat is %eaitufl is good
%ut_U1 > meta6anal&tic re#iew of research on the ph&sical attracti#eness stereot&pe!
Fiske, .!-!, N *ue%erg, .!0! ($JJ0)! > continuum of impression formation1 Bnfluences of
information and moti#ation on attention and interpretation! Bn ,!! \anna (ed!), >d#ances in
experimental social ps&cholog& (Mol 7@, pp! $6H'! *ew +ork1 >cademic ress!
Gigeren(er, G!, N Goldstein, <!G! ($JJ6)! "easoning the fast and frugal wa&1 ,odels of
%ounded rationalit&! s&chological "e#iew, $0@, 6'0666J!
Hogan, /e#in, T-he .cience of Bnfluence!U Cop&right 700' %& /e#in Hogan!
/uhn, .wart(welder, 3ilson, T)u((edU Cop&right 700@ %& C&nthia /uhn, .cott
0ukas, .cott :!, Ts&chopharmacolog& lecture notes,U Har#ard Qni#ersit&! Cop&right 7006
Har#ard Qni#ersit&!
!,! Fischer, ,! ! .chwart(, =! 3! "ichards =r, >! ;! Goldstein and -!H! "oAas T)rand logo
recognition %& children aged @ to 6 &ears! ,icke& ,ouse and ;ld =oe the Camel =>,>, <ec
$JJ$P 7661 @$4' X @$49
Hedge Fund Third "arty 7arketing areers
Bf &ou are starting a third part& marketing career &ou are in good compan&, do(ens of highl&
experienced in#estment and hedge fund marketing2sales professionals are entering the
industr& each &ear! Bn terms of total firms offering ser#ices the industr& is growing %& o#er
$'5 each &ear! 3hile some professionals ma& lea#e an in#estment manager or hedge fund
to start their own third part& marketing firm man& more first work or partner with an existing
third part& marketing firm! -he %enefits of starting or working for a third part& marketing firm
are man& and doing either is relati#el& eas& to do!
Bf &ou can raise capital, and consistentl& %ring in E$00m6E700,2&ear &ou can t&picall&
eliminate most t&pes of political2corporate risks while earning 76$0x more than &ou would
while working for a large institution such as 0ehman )rothers or Goldman .achs! >s the
econom& goes through this rough patch and %onuses are skimmed and '0 &ear old
executi#es laid off B see this trend of third part& marketing startups and career mo#es
increasing!
)nstitutional Hedge Fund 7arketing
> recent reCin sur#e& pro#ided some great insight into what is important in marketing hedge
fund managers to institutional in#estors! -he& sur#e&ed o#er $,000 institutional in#estors and
found that the following factors were the most important for determining which hedge fund
managers to in#est in, with the last @ points %arel& ha#ing an& impact on the decision!
$! erformance "ecord
7! "isk ,anagement
@! Gualit& of ersonnel
4! .ource of "eturns
'! Fees
6! Firm "eputation
H! Client .er#ice
3hat is interesting a%out this list from a third part& marketing or hedge fund marketing
perspecti#e is that points 7, @ and 4 can %e impro#ed o#er a &ear or two %& working on a
firmRs in#estment process, team and risk management procedures! )& taking an institutional
%est practices risk management approach, working with the right #endors, hiring the right
professionals and ensuring that &our in#estment process is repeata%le and is producing the
returns &ou %oast &ou can increase &our chances of winning new institutional hedge fund
mandates! B think this is fascinating and this t&pe of deep insight should %e another la&er of
insight that third part& marketer can pro#ide to hedge fund clients!
Targeting E5s For 7arketing and .ales
3hen networking or selling there are man& ad#antages for targeting the C:; as &our first
point of contact! ;%#iousl& most C:;s are %eing cold called and emailed on a dail& %asis so
this is not a new techniCue to closing a sale or landing a Ao%!
-he reason B am writing this %log entr& is %ecause B was Aust reminded of the power of
contacts C:;s! B recentl& sent out $0 networking emails to a #er& prestigious in#estment firm
on wall street! *o%od& replied! <uring the same da& B read an article a%out the president of a
maAor pri#ate eCuit& shop lea#ing his post to start his own compan&! B emailed him directl& and
he responded within74 hours sa&ing to send him m& resume and he would gi#e me a call so
we could meet!
B %elie#e it was dum% luck that he actuall& saw and replied to m& email %ut e#en if all $$
people had replied this president who will soon %e starting his own firm is worth 70x the #alue
of those other contacts B reached out to! B %elie#e 905 of &our #alua%le contacts will %e
leading executi#es or C:;s of small and influential or large and powerful organi(ations! Bt
might not make sense for where &ou are at right now %ut B will alwa&s %e asking m&self!
How man& C:;s did &ou reach out to toda&?
>@@ .ales +etails 5riented
3hile doing third part& marketing BDm finding that %eing detail oriented doesnDt reall& sum up
what &ou need to do! I<etail orientedI makes it sound like there are @64 things &ou need to
watch closel& or a need to %e aware of changes or concerns with &our clients! -he realit& in
competiti#e sales en#ironments is &ou ha#e to %e proacti#el& detail oriented! +ou need to not
onl& %e cold calling %ut also writing, speaking, networking, creating uniCue marketing pieces,
pro#iding #alue to others e#er& da& in 90 different wa&s! ,an& of the people B call recei#e o#er
$'0 emails and '0 phone calls e#er& single %usiness da&! -o %e #er& successful &ou almost
need a list of $00 wa&s to %e proacti#el& sales detail oriented or &ou will ne#er rise a%o#e the
noise!
)n*est'ent .ales ,o-s 5*er*ie3
B ha#e found a few great online resources for in#estment sales Ao%s! ,an& in#estment sales
Ao%s seem to %e Cuickl& filled through recruiters or without an& announcement of a hiring need
in the first place! B would like to find a couple more in#estment sales Ao%s listings! ,& %est
recommendations are1
F -he 0adders
F Hedge Fund ,arketing >lliance
F -hird6art&6,arketing!com
F >l%ourne Millage (great resource)
Hedge Fund .tartup
Hedge Fund .tartup
To% 5 Ti%s !or .tarting a Hedge Fund
B recentl& had a 4' minute con#ersation with a hedge fund startup related to capital raising,
seed capital, prime %rokerage and %uilding a team around &our hedge fund during the first few
&ears of operation! >fter hanging up the phone with this professional B thought it ma& help to
pu%lish a list of tips for those starting hedge funds1
-op ' -ips for .tarting a Hedge Fund
$! .tarting a hedge fund is not a get rich scheme, in JJ!J5 of all cases it takes 764 &ears
%efore the hedge fund %ecomes profita%le and sta%le as a %usiness! BR#e worked with a
client in the past which had %een running a fund for H &ears and still had not raised
enough capital to %e self6sustaining
7! Complete due diligence on &our ser#ice pro#iders! B heard of a hedge fund last month
who was Cuoted at o#er E90,000 for their legal formation costs, which is at least E@'k
a%o#e what most other firms charge for this same ser#ice! Bf &ou donRt shop around &ou
could end up pa&ing twice as much to ser#ice pro#iders as &ou need to! *o, &ou
should not select ser#ice pro#iders %ased on price %ut &ou should alwa&s sit down or
ha#e conference calls at least with three prime %rokerage firms, three auditors, and
three administration firms %efore deciding who to work with!
@! >lwa&s %e growing relationships! -his is different than alwa&s %e selling! .elling can %e
spotted from ' suits awa& and a networking e#ent, and felt %& how someone asks what
compan& &ou work! Bt is alwa&s %est to take the high road, the long6term approach &et
alwa&s %e looking out for those indi#iduals who &ou should in#est a significant portion
of &our time getting to know! -he %enefits of doing so could %e #alua%le ad#ice, leads
or an allocation! Bf &ou are alwa&s looking to close than no professionals along the wa&
will want to gi#e &ou feed%ack on &our marketing materials or suggest an alternati#e
path to raising assets!
4! Focus on risk management and &our in#estment process more than high performance
returns! +es, in#estors want to see strong returns %ut a top ' sign of a green hedge
fund manager is someone who constantl& pushes their extremel& high returns found
within %ack6testing or their first 4 months of operating! <oing so ruins much chance of
serious consideration as it gi#es off the impression that &our fund will reach for those
returns at an& cost or risk! .peaking a%out returns too much takes awa& from
confidence within &our fundRs in#estment process and risk management controls!
'! Bn#est in &ourself! Choose high Cualit& ser#ice pro#iders, %uild a team, %reak down
&our in#estment process into concrete steps, and spend '0 hours creating a solid
oweroint presentation2pitch %ook for &our fund and donRt show it to a single in#estor
until &ou ha#e completed ' drafts of it! -oo man& times B see hedge funds looking to
raise capital who ha#e not &et taken the time to organi(e their own thoughts, plans or
marketing materials! Bf &our hedge fund is not worth &our own in#estment of time, wh&
should an& in#est their time and possi%l& capital into it? Bn#estors look for signs of a
manager ha#ing skin in the game in multiple wa&s!
-here is a formula that B ha#e used o#er the past H &ears to help me %uild m& resume, career,
and now m& own small %usiness, that is the ./>" Formula! -his is not a wa& to shortcut the
hard work it takes to %e successful, %ut rather a map as to where in#est &our energ& to
increase the results &ou get in return for &our in#estment!
./>" <e#elopment Formula
.peciali(ed /nowledge K >uthorit& positioning K tangi%le "esults L huge growth opportunities
and faster de#elopment within &our career or %usiness!
<efinitions
.peciali(ed /nowledge L .pecific knowledge that is practical, functional and #er& niche
specific to the area within &ou work or the skill or a%ilit& &ou rel& on to perform well!
.peciali(ed knowledge exists whether &ou are an airplane pilot, hedge fund anal&st, or third
part& marketer! -he difference %etween ha#ing speciali(ed knowledge or not could mean the
difference %etween spending $9 months to complete a task or proAect or %eing a%le to
de#elopment strong client relationships and complete the same task in Aust @ months! Bt lets
&ou identif& more opportunities, mo#e more Cuickl& on them, and execute with efficienc&
when once multiplied o#er se#eral &ears puts &ou within a different league of competition!
.ome ideas on how &ou can further de#elop &our speciali(ed knowledge include1
$! "ead two %ooks2month for the next two &ears on the area of speciali(ed knowledge
which is going to %enefit &our %usiness or career most!
7! .u%scri%e to @ of the %est newsletters from %logs or experts in &our industr& which are
*;- re6hashed press releases and gar%age news! +ou learn close to nothing from reading
the news 6 read insights, anal&ses and white papers within these newsletters instead! -here
are at least 76@ #alua%le free newsletters in each industr&!
@! Complete a niche training and certification program specific to &our area of speciali(ed
knowledge! Ha#ing a third part& #erif& that &ou ha#e o%tained a certain le#el of speciali(ed
knowledge is >03>+. going to %e more credi%le than, B like to read %ooks and email
newsletters, here is what B ha#e read latel&! .eek out an online certification program and start
one within 6 months, this will force &ou to read and learn more within &our niche!
4! 3rite one article a week on &our thoughts, %est practices, and lessons learned within
&our niche area of practice! 3rite anon&mousl& %& creating a free %log at )logger!com and
start s&nthesi(ing what &ou are learning and com%ining other ideas to create &our own
original concepts (such as this %log post)!
>uthorit& ositioning L Creating structures around &our firm or self so that &our knowledge
and a%ilities are communicated in a wa& that positions &ou as an authorit& in &our niche area!
Bdeall& this area lines up $6to6$ with &our area of speciali(ed knowledge and it can %e the
result of gathering this knowledge! -wo professionals can hold the same knowledge though,
while one write ' %ooks and completes o#er '0 press inter#iews a &ear the other ma& %e an
arm chair critic with a small group of '6H consulting clients! -he more well positioned
professional will reap rewards from new opportunities coming towards him instead of the
other wa& around! B was a competiti#e swimmer earlier in m& life and the %est %ook B read on
swimming was called I.wimming <ownhillI it was a wa& to swim so that &our %od& is tilted
forward and &ou literall& cut continuall& downwards into the water! Bf &ou get >uthorit&
ositioning right it will %e like &ou are swimming downhill! =effre& Gitomer is a great stud& of
authorit& positioning, he started writing 9 pages a da& when he was 46 &ears old, now in his
fifties he has o#er $0 %est selling %ooks, and charges more than Colin owell for speeches 6
the real important detail though is he *:M:" cold calls an&one and ne#er scram%les for new
%usiness! His phone literall& rings off the hook with new opportunities, clients, and Aoin
#enture partnerships due to his positioning, he is swimming down a steep hill!
$! u%lish &our own newsletter or %log 6 e#en if &ou onl& pu%lish something once e#er& 7
weeks, ha#ing it and %uilding it o#er time is what is important!
7! Bnter#iew one professional each month for &our own %log or newsletter, tell them that &ou
canDt compensate them %ut as &our we%site %ecomes more popular the& ma& get some
exposure and the& can ha#e a cop& of the recorded phone call transcript, ,p@ file or
document which &ou t&pe up! Bnter#iewing experts is a shortcut to gaining speciali(ed
knowledge and authorit& positioning Cuick! .impl& telling others that &ou ha#e inter#iewed 70
of the top experts in the industr& and o#erall &ou found > N ) and most surprisingl& C is #er&
powerful! *ote, the strong &ou ha#e fulfilled &our work in %uilding speciali(ed knowledge the
more willing these experts will %e to connect with &ou and the more pointed and refined &our
Cuestions will %e! :#er done an inter#iew with a Aournalist who has ne#er worked in &our
field? *ot alwa&s fun or fulfilling to answer the %asics which can %e looked up on Google in @
seconds!
@! -ake what &ou ha#e written within &our own newsletter or %log and self6pu%lish a %ook,
with 60690 pages of single spaced text an&one can do this for E$' at 0ulu!com! Mer& simple,
no more excuses that &ou do not ha#e a %ook deal! B got m& second %ig in#estment marketing
contract partiall& %ecause B had a self6pu%lished %ook in hand and someone ga#e me a
chance %ased on m& dedication to the niche! -he %ook positions &ou as an authorit&!
4! Create a $ page <F list of all of &our past clients! -his can show depth, experience, and
respect that others ha#e gi#en &ou %& pa&ing for &our ser#ices and time in the past!
'! .peak at conferences! Bt is relati#el& eas& to land speaking spots at conference,
networking e#ents and seminars! 0ots of professionals are looking for others with uniCue
ideas and lessons to share, and again teaching what speciali(ed knowledge &ou ha#e gained
helps &ou connect and s&nthesi(e these ideas! Bf &ou are speaking to a crowd &ou are within
an authorit& position and when &ou mention &our speaking it adds credi%ilit& %ecause others
ha#e stopped their %usiness da&s and in#ested their #alua%le time to listen to what &ou had to
sa&!
-angi%le "esults1 -he importance of showing real tangi%le results cannot %e o#er6stated!
Finding wa&s to do this within ser#ice %usinesses, the fund management industr&, or within
certain areas of extreme confidentialit& is challenging! .ome t&pes of tangi%le results that can
%e shared include1
F >n actual printed out #ersion of part of the ser#ice or end result of the product or ser#ice
F Mideo or text (not as good) testimonials from past and current clients, the more specific to
the immediate need or concern of &our potential client or emplo&er the %etter!!!the more
numerous the testimonials the %etter!
F -he first $'6705 of the product or &our ser#ice gi#en awa& for free on a trial %asis! E$ first
month trial, 4 weeks of free work or time so we can pro#e our worth to &ou, etc!
F <i#erse and numerous case studies of past clients or emplo&ers, this pro#es that &ou
work with firms with #arious needs and ha#e found solutions for them, it allows the reader of
these case studies to imagine &ou sol#ing their pro%lem
F > little tip, Cuick take awa& or lesson within &our sales letter or we%site which pro#ides the
potential client with immediate %enefit! -his pro#es that &ou ha#e the goods, are an authorit&
and do ha#e their %est interests in mind!
>nother related topic that B donDt ha#e space to go into here is that underl&ing all three of
these items are ha#ing the right ha%its! Ha%its ha#e %een shown to form J65 of what we do
e#er& single da&! 3e tend to eat the same things, walk the same wa&, watch the same
shows, and read the same t&pes of %ooks! >s the Cuote goes, Ifirst &ou form &our ha%its, and
then &our ha%its form &ou!I 3hat %usiness ha%its are &ou forming? 3hat elements of the
./>" formula are &ou using each week? 3hen &ou read this t&pe of ad#ice are &ou thinking
IB alread& know this stuffI or Ihow good am B at that, and where could B impro#e?I
."EE+ o! )'%le'entation
3h& &ou should appl& .::< of Bmplementation starting now_
Bn mid 700J B attended a %usiness conference where o#er $0 guest speakers, all of which
were self6made millionaires and %usiness owners spoke! B took o#er $' pages of notes and
condensed those down to Aust one single page! 3hile re#iewing common themes from the
@0K hours of ad#ice from these professionals the onl& piece of ad#ice which each expert
mentioned and emphasi(ed was Tspeed of implementation!U .ince that conference B ha#e
de#eloped a deeper understanding of this concept, figured out how to appl& it to m& %usiness,
and wh& it is so important!
Bn short focusing m& attention on increasing m& speed of implementation has %rought m&
producti#it&, moti#ation, and sense of progress to another le#el! Bncreasing &our speed of
implementation means making decisions faster, recei#ing feed%ack faster, and adAusting and
growing further more rapidl& as well!
3ith e#er&thing in life we mo#e through learning cur#es whether it is starting a new career,
starting a new %usiness, or launching a new product! .peed of implementation is a%out
mo#ing up that learning cur#e @x faster than &our competition so %& the time the& ha#e
reached the top of that first cur#e &ou ha#e conCuered three new areas of knowledge or
a%ilit&! -hat ma& sound #er& loose and non6exact %ut sta& with me here and B will pro#ide
some examples %elow!
Bn short &ou can speed up the success that &ou reali(e %ut anal&(ing what actions &ou know
will need to %e taken, whether &ou know what the following steps are or not! ,an& times in
life we cannot see the full path to success, onl& a few steps that we could %e taking right now!
Bf &ou sei(e those first few steps more Cuickl& than others additional paths of actions will
unfold that others who are contemplating the risks of the unknown will ne#er %e a%le to see!
Bterati#e rocesses
>ppl&ing speed of implementation reCuires a fundamental understanding how it will help &ou
reach a le#el of %reakthrough success that surprises e#en &ourself! 3ithin the diagram %elow
&ou see four letters1 >,),C,<, followed %& a single letter -!
> X` ) X` C X` < X` - ()reakthrough .uccess)
.teps >, ), C of most proAects are o%#ious, &ou know what first steps &ou need to take_&et
step 870 which is - is so far remo#ed from the knowledge and foresight &ou ha#e now that
the proAect seems unachie#a%le, unrealistic, or risk&! -he result? -&picall& we enter gathering
more information and asking others for their opinion mode! -his has its time and place %ut
JJ5 of the time if &ou would Aust start on .teps >, ), and C, %& the time those are complete
&ou would ha#e a much %etter #ision and more clarit& on exactl& what steps <, :, F, and G
are! ;nce &ou get those next steps complete through G &ou ma& e#en %e a%le to see all the
wa& to step 0, etc! :#entuall& &ou will get to -, step 870 %ut there is no wa& that &ou can get
there without first going through the iterati#e process of taking the first steps that are clear
right now!
Bn short &ou can e#ol#e faster, meet &our goals sooner, and o#er a short period of time out6
pace e#er&one around &ou in &our industr& %& Aust taking massi#e action within the areas
where &ou ha#e identified the next $67 steps to take! Happ& implementingS
Hedge Fund Business "lan Ti%s
,ost hedge fund startups B speak with want referrals to respected ser#ice pro#iders or ad#ice
on attracting seed capital! >lmost none ha#e a %usiness plan for their hedge fund and onl& a
few ha#e oweroint presentations explaining their in#estment strateg&! Bf &ou are a fund
manager in this position that doesnRt mean &ou ha#e done an&thing wrong %ut &ou ma&
consider writing %oth a hedge fund %usiness plan and comprehensi#e $'67' page oweroint
presentation now to make it easier to work with ser#ice pro#iders, third part& marketers,
institutional consultants, and potential in#estors!
arts of &our hedge fund %usiness plan should include1
,anagement 6 3hat team mem%ers are reCuired to run the fund effecti#el&? 3hat is the
chain of command, how are decisions made and what happens if 76@ professionals
disappeared tomorrow? 3ho would take o#er responsi%ilities and what would happen to &our
in#estors funds? -he importance of a well constructed and managed team can not %e
o#erstated!
Bn#estment rocess N "isk ,anagement 6 ,anaging risk is what running a hedge fund is all
a%out! ,eet with &our prime %rokerage firmRs risk ad#isor& di#ision, speak with &our traders
and portfolio managers, and network with other managers to pick up some %est practices
within this space! >t the end of the da& &our risk management approach, in#estment process
and team must %e molded into one cohesi#e group all pointed in the right direction! -here is
no magic %ullet to raising assets or gaining seed capital %ut getting this com%ination right is
the most important thing &ou can focus on!
.er#ice ro#iders1 3ho are &ou going to use as &our prime %rokerage firm, fund
administrator, auditor or third part& marketer? How will this e#ol#e as &our fund passes the
E$00, and E@00, marks? 3ill &ou use multi6prime %rokerage ser#ices? Capital introduction
teams? ,ultiple third part& marketers? +our choice of firms within this space can affect the
le#els of assets &ou manage, the Cualit& of ad#ice &ou recei#e and the reputation of &our firm
as a whole! ;ur ad#ice would %e to meet and inter#iew at least @ ser#ice pro#iders of each
t&pe in person or o#er se#eral phone calls and go with one that is well experienced &et no so
large that &our su% E$) account is an anno&ance to them!
Bnfrastructure N -echnolog&1 ,eet with other local hedge fund managers, &our trader, &our
prime %rokerage firm and other ser#ice pro#iders to nail down exactl& what &ou will need in
terms of reporting, processing and functioning as not onl& as a hedge fund, %ut a small
%usiness! 3hen &ou start a hedge fund &ou %ecome an entrepreneur and &ou ha#e to face all
of the challenges that accompan& that distinction in addition those challenges found in
managing &our portfolio! ,an& funds under6estimate the costs of some of the technolog&
needed to operate as the& grow %e&ond more simple E$6E', fund operations!
,arketing1 *othing is traded or managed until the dollars come in! >n&one who Aoins &our firm
or %oard will want to know how &ou plan to grow &our %usiness! 3hat channels of in#estors
will &ou approach? Bnstitutional in#estors including fund of hedge funds, consultants, large
famil& offices and pension funds or smaller famil& offices, wealth management firms, H*3
indi#iduals, and accredited in#estor clu%s? Here is a hint, in our asset raising experience the
later should %e 905 of &our focus if &ou are managing less than E$00,! 3hat resources do
&ou or should &ou ha#e in place to meet these goals? -hird part& marketers? <ata%ases of
in#estors? >n in6house marketing specialist? How much does this cost and when should
these resources %e put in place?
Hedge Fund "o3er"oint )'%ro*e'ent Ti%s
;ne of the more freCuent Cuestions that we get through the prime %rokerage firm B am with
and through the Hedge Fund Consulting Group is a%out how to impro#e oweroint
presentations so that managers can more effecti#el& raise assets from wealth managers,
famil& offices and institutions! -he ad#ice is alwa&s different %ased on the strateg&, targeted
channel of capital and current state of marketing materials %ut there are common threads
which come up within e#er& con#ersation!
)elow please find a few of the most common tips which B often pro#ide to fund managers
looking to impro#e their oweroint presentations1
F Qpdate &our oweroint Cuarterl&, most potential in#estors will ha#e most likel& alread&
seen &our one pager which is updated monthl&! -he presentation should mention &our
performance %ut the main purpose of it is to present &our teamDs pedigree, in#estment
process and risk controls! Hire a professional editor to spend $ hour re#iewing the
presentation after each maAor re#iew, this costs less than E$00!
F @ >reas of Focus1 >s mentioned within the %ullet point a%o#e the three areas of focus
within &our presentation should %e team pedigree and experience, in#estment process and
risk controls! ,an& managers tend to %e #er& high le#el while descri%ing their in#estment
process and risk controls, often times using terms which are seen too often within generic
industr& presentations! +ou ha#e to let out enough of &our secret sauce within &our marketing
materials so that others know there is actuall& something there! .olid returns alone, e#en
within these recent markets is not enough, &ou must pro#ide some explanation of &our
consistent process, s&stem and parameters for operating! lease see the following %ullet
points for ad#ice on each of the three most important sections of &our oweroint
presentation
F -eam edigree1 -ake the time to descri%e all of the rele#ant experience that &our team
holds and tr& to explain those experiences in wa&s that mesh well with &our firmDs in#estment
process and approach to managing risk! ,an& times certain t&pes of experience can %e
#alua%le to managing a portfolio of in#estments %ut man& times that connection needs to %e
spelled out within the presentation!
Bf after creating this section &ou reali(e that &our team consists of Aust one or two
professionals without a long industr& track record consider %eefing up &our close ad#isor&
%oard with industr& #eterans and experts in risk and portfolio management! ,an& times
in#estors will ask how much of a fund principalDs own assets are in#ested within the funds,
regardless of the exact dollar amount if 906J05K of &our own liCuid assets are in#ested within
this fund check with &our compliance officer a%out noting this within &our presentation
materials, man& in#estors turn to hedge funds due to the alignment of interests and pro#iding
e#idence of this within &our fund sometimes helps!
Bt is important to retain capital raising talent as well, %ut without proper portfolio and risk
management professionals or ad#isor& professionals in place &ou ma& Aust spin &our wheels!
>s &ou expand &our team make sure and include a team hierarch& tree to &our presentation,
this ma& include &our ad#isor& team and a few ser#ice pro#iders or research groups which
&ou work with dail& and rel& upon for operations!
F Bn#estment rocess1 -his is the most common area of oweroint presentations which
needs impro#ement! B ha#e found it easiest to tr& to %reak &our in#estment process into @6'
steps which could then as appropriate %e %roken down further during a due diligence phone
call or within meetings with potential in#estors! B would start with a single page displa&ing the
@6' step in#estment process &our firm uses, B would follow this %& $67 pages explaining each
step of the process in great detail!
<escri%ed the tools &ou follow, the decision making process, research inputs,
parameters for refining the uni#erse of potential in#estments and triggers that ma& affect how
the portfolio is constructed at each step! Following this consider adding another page to the
oweroint on %u& and sell decision triggers, when do &ou trim a position? 3hen do &ou sell?
3hen are positions cleared out completel&? 3hat stop loss pro#isions are in place?
ro#iding a few trading case studies within this part of the oweroint ma& %e helpful!
Qse real life examples from the pre#ious Cuarter and update these freCuentl& so that anal&sts
will %e a%le to read into &our decisions in context of the recent market conditions!
F "isk ,anagement -echniCues1 +our risk management techniCues can %e placed within a
separate section of the presentation or tacked on to the end of &our in#estment process
section within &our oweroint! Bt is hard to go o#er6%oard on explaining with granularit& what
risk management techniCues &our firm emplo&ees! .tart with the status Cuo, what tools,
research, stop loss pro#isions and s&stems do &ou use? *ext mo#e on to proprietar& models
&ou ma& %e using, exclusi#e trading research or experience which pro#ides additional insight
into how to manage risk within &our portfolio!
F ,ore is ,ore! Bt is often %etter to go o#er%oard with details on &our in#estment process
and risk management details rather than not pro#ide enough information! -hat said, ne#er let
&our presentation grow to o#er 7' pages unless &ou ha#e @ or more products %eing presented
within a single presentation! Getting &our oweroint right is a%out %alancing transparenc&
and granularit& with confusion and information6o#erload! :#er&one is %us& and often getting
someone to in#est @ minutes to re#iew &our one pager can %e a challenge of its own!
Creating a solid oweroint presentation is a task of continual impro#ement, %ut if &ou start
with the tips a%o#e it should set &ou a%o#e '05 of the su% E700, hedge funds that we often
speak with!
>E 6essons !ro' .hooting .tar Hedge Funds
Fast growing hedge funds are unlike most large hedge funds and emerging hedge fund
managers! -he& ha#e figured something out and are positioned to grow unlike J05K of the
industr&! Here are some lessons which can %e taken awa& from some of the fast growing
hedge funds we ha#e worked with1
$! -he& take transparenc& serious and work to %e pro6acti#el& #er& transparent 6 more so
than their competition!
7! -he& approach multiple in#estment channels %ut mostl& ignore those completel& out of
their reach (example, potential pension fund clients for a EH', fund)!
@! -he& are alwa&s de#eloping relationships and the& ha#e dedicated internal and some
external professionals alwa&s selling on their %ehalf!
4! -he& not onl& pedigree on their team %ut the& are alwa&s %uilding that pedigree
through additional research, hiring of expert staff, and through speaking N writing!
'! -he& document their operations and make decisions %ased on what is %est long6term
for the organi(ation rather than what is cheaper to implement toda&!
6! -he& ha#e risk management and trading plans which are closel& followed, this helps
them impro#e their actual trading results and pro#ides confidence to in#estors since
their historical trading actuall& matches up against the decision making rules of their
plans!
H! -he& know that Irisk managementI while sounding less sex& than Ihedge fundsI is the
%usiness the& are in, and the& in#est in their own %usiness accordingl&!
9! -he& ha#e documented, tested, and third part& #erified financial controls, compliance
processes and audits completed at least Cuarterl& and these reports are sent to at
least %oard mem%ers if not in#estors
J! -he& in#est and impro#e their infrastructure e#er& &ear e#en if the pa&6off for doing so
could %e '6H &ears awa&, ironicall& these are sometimes the in#estments which pa& off
the soonest though %ecause in#estors recogni(e the t&pe of long6term in#estments
%eing made
$0! -he& are experts at completing due diligence processes with institutional consultants,
famil& offices and other t&pes of institutional in#estors! -he& ha#e professionals who
are trained for phone6%ased pitches and sales and hand6offs during these processes
are seamless!
$$! -he& ha#e Aust as good of marketing materials as the E$) hedge funds %ecause after
in#esting E@00,000K in infrastructure, talent, research, and risk management it would
%e a waste not to spend E70,000 on presenting it in the right light in a professional
manner!
$7! -he& ha#e seen the light that in#esting in the right areas does produce returns so the&
re6in#est their mone& e#en faster and often more efficientl& than e#en small hedge
funds on a tight %udget!
$@! -he& in#est in training for their emplo&ees and %oard mem%ers who the& grow more
long6term relationships with than man& emerging hedge fund managers might!
$4! -he& are not onl& aware of the competition %ut the& are watching them! *ot in terms of
what the& are in#esting in so much as what risk management tools, software, trading
tools, and Q.s the& are emplo&ing!
$'! 3hile hiring the& look for #er& specific skill sets and a minimum of H &ears of
experience in the industr&, unless the& ha#e a polic& of grooming from the ground up!
,ost fast growing hedge funds we know though like to hire professionals who can hit
the ground running and Cuickl& integrate as part of the team! -he& actuall& ha#e an
H" department or at least one person who is head of talent de#elopment and H"
related acti#ities, something almost all small hedge funds lack! 3hen the& are asked
on the phone %& institutional consultants if the& plan on adding an&one the& ha#e a
sophisticated intelligent answer instead of the generic, Iwe ma& add an anal&st within
the next @ Cuarters!I
$6! -he& understand the Itrust %& #erif&I mindset of in#estors and the& make it eas& to
#erif& e#er&thing!
$H! -he& conduct more due diligence on %usiness partners, in#estors, and potential
emplo&ees than some retail in#estors spend on in#esting in small emerging manager
hedge funds!
$9! -he& reali(e their success is ne#er going to %e %uilt on one software program, capital
raising process, or in#estment trend so the& constantl& are working to %uild their $,000
%locks of competiti#e ad#antage and a%ilit&!
Hedge Fund .tartu% EBa'%le A Why .tart 2o3:
> good article was put out %& <eal%ook this week on hedge fund startups, wh& the& are
launching funds right now and how the& are doing! -his particular article pro#ides an example
of a &oung fund in 0ondon ran %& #er& experienced professionals in the industr&! B think these
t&pes of articles are great as man& articles put out on hedge funds toda& written a%out the
whole industr& and not on &oung hedge funds or a%out man& indi#idual funds, here is the
excerpt from this article1
Bn a small office in 0ondonRs upscale 3est :nd, three #eterans of high finance
are getting read& to start their own hedge fund!
BtRs a scene that was common enough in the worldRs financial hu%s during the
%oom &ears! )ut in the post60ehman, post6,adoff and post6credit6crunch world,
starting a hedge fund has %ecome harder, riskier and potentiall& less lucrati#e!
.o wh& do it? -hatRs what <eal)ook recentl& asked ,ahmood *oorani, one of
the founding partners of the new 0ondon6%ased fund, G&ldmark 0iCuid ,acro
Fund!
T3e think it presents an opportunit& to finall& do things right,U he said a%out
the timing of the new #enture! T>nd it was the e#ents of 7009 that con#inced us
that the right time is now for what we want to do!U
,r! *oorani, along with his partners, >lastair Hollingdale and George
HatAoullis, ma& represent the new face of the hedge fund start6up1 arrogance
and m&ster& are outP liCuidit& and transparenc& are in! source
Raising a%ital !or a Fund .tartu%
-his article %elow was first pu%lished on HedgeFund.tartupGuru!com! 0ast week B
moderated a panel discussion in new &ork on capital raising and how starting a fund is reall&
starting a small %usiness! -he discussions were great and while e#er&one knows that capital
is hard to raise some good tips and in#estor feed%ack came out of the e#ent! 3e hope to do
more of these in the future, sta& tuned for Hedge Fund Group (HFG) e#ent announcements
for Chicago next month and ,oscow, "ussia this .eptem%er! )elow please find an article on
hedge funds tar
-he g&rating financial markets ha#e pro#en difficult for e#en the most experienced
alternati#e6in#estment managers to na#igate o#er the last &ear, %ut startup hedge funds and
commodit& trading ad#isors now confront an e#en tougher challenge1 con#incing in#estors to
entrust them with their mone&!
Bn the wake of 7009 6 the hedge fund industr&Ds worst &ear on record 6 fledgling funds face
gun6sh& in#estors and tougher competition for the assets that are a#aila%le, amid a fickle
market that has made it tough to put up the num%ers that made hedge funds famous! >dding
to the pro%lem are the effects of !!! source
.tarting a Hedge Fund A Ti%s
)elow is an article a%out starting a hedge fund and running one o#er the long6term! -his piece
is from -im .&kes, a colorful wall street personalit& with a large online following and
experience in running a small hedge fund and then writing a %ook on the experience, which B
ha#e re#iewed here! B do not agree with e#er&thing noted %elow %ut B %elie#e it is #alua%le as
it is rare to read articles %& those who ha#e managed a hedge fund a%out the struggles of
running a small hedge fund!
aaaaaaaaaaaaaaaaaaaaaa
B %rought an outline of m& strateg& and performance to a friend of a famil& friend, who
supposedl& had access to man& hedge fund and rich clients 6 he was impressed, %ut wanted
to know the details of m& strateg& %ut wouldnRt gi#e me an& assurances he simpl& wouldnRt
use it for himself! Bn addition, he wanted m& returns audited and onl& then would he consider
helping me raise capital in exchange for a TslightU fee! B couldnRt trust this gu& and B didnRt want
to tell him m& secrets so B passed! -his encounter made me reali(e that audited returns would
%e necessar& %ecause m& success was rather un%elie#a%le! B figured this expense would %e
crucial to m& fund raising, so B found a local accountant familiar with stock trading and spent a
college semesterRs tuition to ha#e m& tens of thousands of trades audited!
>fter a few weeks of patientl& re#iewing all m& trades with this accountant, the audit was
finall& finished and the num%ers looked good! Bn fact, the num%ers looked too good! +es, m&
ridiculous returns might %e a pro%lem!
0esson 8$1
Bf &ou consistentl& %eat the market, &ou will face endless Cuestions a%out whether or not &ou
are a fraud!
*o matter, B decided to form m& own fund and take m& chances raising capital! .ince B was
still in college and had focused solel& on trading for the past few &ears, B had #er& few
%usiness connections and most of m& friends and famil& were not wealth& enough to in#est
considering the all knowing industr& regulations stated m& in#estors would need a net worth
of E$ million or more to %e worth& of such a Trisk& in#estmentU! ;nl& m& continued
performance could attract new mone&, %ut, %eing m& cock& self, that was the one part of the
eCuation B wasnRt worried a%out!
,utual funds could accept less wealth& in#estors, %ut had se#ere in#estment limitations! *o, B
did not want to start a mutual fund %ecause most of them had to %e in#ested at all times and
the& couldnRt e#en short sellS Hedge funds were considered the hot new in#estment #ehicle,
so B researched the industr& nonstop for a few weeks and liked what B saw! B disco#ered the
startup costs to %e surprisingl& modest and B lo#ed the legal flexi%ilit& that would %asicall&
allow me to in#est in an& manner B saw fit!
)efore the emergence of discount hedge fund startup shops o#er the past few &ears, B found
the template for offering documents and law&er fees could exceed EH',000! .ince then,
hedge fund %outiCues had appeared, offering their administrati#e and startup ser#ices so
startup costs did not exceed E$0,000! -hat was some reductionS
B chose the second least expensi#e %outiCue B could find (pro%a%l& something ingrained in me
e#er since m& dad ad#ised to alwa&s purchase the second cheapest %ottle of wine from a
restaurantRs wine list)! .till, B was surprised there were so man& forms to fill out and small fees
to %e paid, %ut B went along with whate#er m& fund administrator said %ecause he had set up
do(ens of firms o#er the past few &ears! -his was the real world so it would take patience,
something ne#er reCuired of me in the trading world!
0esson 871
:#er&thing takes much more time in the real %usiness world compared to the trading world!
-he ink on m& letters of incorporation was %arel& dr& when it hit me! B had %een distracted %&
m& Cuest for finding outside in#estors and creating all m& companies that m& trading had
suffered as a result! .uccessful trading is all a%out focus, discipline and concentration and
these lessons had %een consumed %& m& am%ition and greed! B had taken some rather stupid
losses and now, with m& fund inception Aust da&s awa&, B would no longer ha#e that magic
whole num%er in front of the millions of dollar under management! *o, B would ha#e to put a
dreaded decimal point and some other num%ers %efore the word million, hurting m& credi%ilit&
from the start!
0esson 8@1
Focus on trading firstP ne#er schedule in#estor meetings during market hours!
,eanwhile m& fund administrator con#inced me to switch %rokers %ecause m& trust& online
discount %rokerages were simpl& not used in the hedge fund world! B Cuickl& agreed, %ut B was
in for a rather %ig surprise! -his newl& recommended %rokerage did not ha#e an& electronic
trading platform (B was told it would %e read& within weeks) and the traders executing m&
orders ga#e me some of the worst executions B had e#er seen! B called to complain, %ut the&
%rushed me off! -he& placated me %& sa&ing their new online software was onl& da&s awa&
from completion! >lmost twent& months later, the software is still almost read&! B switched to
&et another recommended %rokerage that had online trading software and B %ecame friends
with one trader who expertl& executed m& larger orders!
.till, the commissions B paid were much higher than m& pre#ious setup so B asked for and
recei#ed se#eral price reductions, %ased on how much trading B did! Bt Cuickl& %ecame clear
which %roker B wanted to sta& with when the %roker without electronic access incredi%l& upped
their commission on a trade without telling me! 3hen B called to complain, the %roker told me
he knew B was pa&ing more at the other %roker and therefore he was entitled to the same rate!
He was mistaken on top of the fact that he Aust had taken matters into his own hands without
consulting me! -he difference in price on that one trade was onl& a few dollars, %ut B lost m&
temper %ased on the principle of the situation!
0uckil&, B had started chatting regularl& with a popular industr& commentator and he referred
to me another %roker that was perfect for short selling! -his new %rokerRs online software,
cost, and short6selling list %lew awa& the competition so, B dropped m& other %rokers and
focused on this new gu&!
0esson 841
<o not feel %ad a%out changing %rokers if the& are ripping &ou and &our clients off! -he& are
not girlfriendsP there is alwa&s some%od& cheaper and %etter out there!
-he C:; of the %rokerage B dropped called me to see what the& had done wrong and ask
wh& B had closed m& account! B could not understand wh& it was so important m& small fund
sta&ed with their firm that supposedl& had %illions of dollars in accounts! ,& commissions with
them %arel& touched into the thousands! >s ridiculous as this con#ersation was, B respected
this man for his dedication to pro#iding customer ser#ice! -oo %ad their %rokerage ser#ices
werenRt up to par!
:#er& fund manager should price as man& prime %rokers as possi%le that fit the fundRs
strateg&! -here are man& %rokers who ma& trade for themsel#es, %ut mainl& exist and make
mone& %& taking their share out of our online trading commissions! -he& make their mone&
from trading commissionsbthatRs the %ottom line! -here should %e no reason to ha#e to pa&
an indi#idual representati#e of a maAor %rokerage when we simpl& use their online software,
%ut thatRs the wa& it is! B am #er& skeptical when dealing with these people, and B do not feel
%ad a%out getting into arguments with them! Bn fact, BR#e grown to enAo& these fights!
3ithin a few months with m& Cualit& %roker, m& performance mo#ed %ack to the range of m&
pre#ious &ears, crushing the o#erall market and m& in#estors were #er& happ&! +es, m&
parents and a few of their friends were elated! >fter months of solid performance that
consistentl& %eat the market, B still had &et to raise much outside capital! B reali(e now that it
will take a lot longer than B originall& anticipated, %ut B ha#e made so much mone& in the past
and B am confident in m& skill as a trader and that is what gi#es me the faith to go forward! Bt
doesnRt hurt that B make up a large portion of m& fund so B can pro%a%l& go on fore#er,
howe#er unhappil&, e#en without man& outside in#estors!
0esson 8'1
-he larger the Ynest eggR stake the manager has, with the initial startupXthe %etter!
3hen B first started m& fund, B mo#ed to *ew +ork Cit& %ecause B figured it was the epicenter
of the hedge fund industr& so B should %e a%le to make thousands of in#estor contacts! B had
met man& potential in#estors and man& in this industr&, %ut no matter how man& times people
said the& were interested, no checks were written nor wires sent!
;ne interesting meeting was with a senior manager of a maAor mutual fund compan& who had
heard a%out m& performance! B met him at his luxurious house in Florida and we proceeded to
discuss m& situation! >fter a few hours of listening to m& stor&, he told me B was #er& smart
and that B should focus on raising capital %& changing m& strateg& around to suit potential
in#estors! He told me in his &ears of experience, in#estors would %e skeptical of such high
returns and would want #er& low #olatilit&! B told him in m& &ears of outperforming the market B
could care less if people accepted m& strateg& as B %elie#ed people will respond to
performance! HeRs pro%a%l& right, %ut B take a certain pride in %eing a true re%el, a modern6
da& financial speculator!
0esson 861
Focus on what works for &ou and do not change to accommodate others!
*ext, B attended a few alternati#e in#estment conferences and handed out plent& of %usiness
cards! B was e#en part of a panel discussion thanks to m& fund administratorRs connections,
%ut m& speech sounded nac#e and unpolished compared to the more experienced managers
and #eteran marketers in attendance! Bn fact, B was mesmeri(ed %& one particular fund
marketer who had grown his fund exponentiall& o#er six months! B do not think he said one
useful fact during his presentation, %ut he deli#ered an eloCuent speech and se#eral people,
including me, approached him afterwards! >h, the power of marketing skill! 3e discussed
marketing m& fund, %ut he charged some ridiculous fees without guaranteeing results
whatsoe#er! B was Aust a startup fundP no matter how great he sounded, B wasnRt going to %low
upwards of E$0,000 all %ased on his incredi%l& polished speech! .o, B decided to send out m&
marketing materials to all potential in#estors! B contacted Aust a%out e#er&one B knew, %ut the
rate of follow6through was ridiculousl& minimal!
0esson 8H1
"aising mone& does not come easil& for a startup hedge fund manager!
-here are #er& few reasons for indi#iduals to take a chance on a new operation unless the&
ha#e known &ou for &ears or if &our performance warrants the added risk of %eing in#ested in
a startup! eople in large firms will not want to take a chance on &our fund %ecause of the
minimal track record, lack of transparenc& of positions, and the #olatilit& of returns! -heir Ao% is
on the line with an& in#estments the& make, and if the& mess upbthe& are fired! For the most
part, the& would rather underperform than risk losing %ig! -his is what 3arren )uffett once
called the Tinstitutional imperati#e!U Bt is a herd mentalit&, where these Tinstitutional lemmingsU
mo#e together, not necessaril& doing what is %est or smartest for their clients, %ut what is %est
and smartest for themsel#es! -he decision to go with a high performing emerging manager is
a risk& %et, due to the outside chance of looking like a fool! *o fund6of6fund manager will
make that decision, %ecause the& will %e fired or scolded if these risk& in#estments donRt go
exactl& according to plan! .imilarl&, these emerging managersR careers are to %e ended if the&
do not make positi#e &earl& performance each &ear!
,& wonderful %roker, who B was almost completel& satisfied with after months of mo#ing down
commissions, recentl& %aited me %& sa&ing one of his fund6of6fund clients might %e interested
in m& fund since he was comforta%le with m& strateg& and m& performance had %een a%o#e
a#erage! B had heard this man& times %efore, from %rokers tr&ing to lure me to changing to
their %rokerage ser#ices to potential in#estors whose checks alwa&s seemed to get lost in the
mail! .imple common sense dictates that when a fund6of6fund hears a%out meXif the& are
serious, the& will contact me, not through m& %roker!
Full of dou%t, B still met m& %roker and the fund6of6fund manager for lunch so we could discuss
a possi%le in#estment! Bnitiall&, B grew rather excited %ecause the con#ersation was
surprisingl& detailed as this manager actuall& did know a%out m& fundS Bn fact, his talk of a
possi%le in#estment sounded rather concrete and the proposed addition would increase m&
fund assets %& 7'6'05! 3e decided to meet again a few weeks later, so B spent hours
creating a new presentation tailored to this fund6of6fundRs st&le! B ne#er got to meet the fund6
of6fund manager again, %ut m& %roker said he showed him m& presentation and he
supposedl& lo#ed it! -he other da&, m& %roker told me the great news! -he manager had
agreed to in#est in m& compan& without e#en needing to meet me again! 3owS >wesomeS ;f
course, there was a catch! ,& %roker felt horri%le telling me (as he claimed), %ut he could onl&
transfer the funds to me if the commissions on trades for this new in#estment were Cuintuple
m& normal rateS B felt m& heart sink! B anticipated compensating m& %roker for this capital
introduction, %ut Cuintuple fees with no hope for a reduction o#er time o#er the lifetime of the
in#estment seemed somewhat ridiculous! B said no!
0esson 891
3ith capital introduction, thereRs alwa&s a catch!
,& fund is listed on man& hedge fund data%ases, %ut Hedgeco!net and Hedgefund!net ha#e
led to the most information reCuests %& far! >fter a &ear of listing m& fund, B ha#e had o#er a
thousand hits on m& fundRs we% pages! Bn fact, man& third part& marketers ha#e contacted me
through these we%sites! B ha#e a premium listing on Hedgefund!net that costs the eCui#alent
of a semester of college!
.ome third part& marketing firms ha#e also contacted me! ;ne marketer said he was showing
m& oweroint presentation to potential in#estors the da& after B emailed him and he would
get %ack to me! -hree months later, he has &et to get %ack to me! >nother marketer said he
would work for m& fund, %ut wanted '05 of the incenti#e fee BRd recei#e on an& profits on the
in#estment! >nother wanted @05 of the incenti#e fee! 3ith those kinds of figures, it would
take me too long to make it worth m& effort e#en if m& returns continued to trample the
market! B wanted to pa& an upfront findersR fee to them, %ut the& knew that was not where the
%ig mone& was! B understood their dilemmaP wh& should the& risk their entire reputation on a
startup fund with onl& the chance for a small pa&off?
)ut there was an indi#idual that said he had the connections and was willing to take a Ao% full
time with me without taking more than $05 of the incenti#e fee! B Aust wanted him to introduce
m& fund to his connections %ecause B ha#e Aust a handful of famil& and friend connections that
were wealth& enough to %e potential in#estors! He demanded an exor%itant &earl& pa& for his
ser#ices, and would not guarantee he could raise the millions he promised, %ut he was
optimistic after reading m& presentation and looking at m& returns! B was happ& &et skeptical
that he did not want to know more a%out m& strategies! Bt took weeks for him to Twrite out
some contractsU and he insisted B onl& use his law&er! *e#ertheless, B was optimistic after
ha#ing talked to him se#eral times! )ut when B looked at the contracts, B was disma&ed!
He wanted to focus on completel& o#erhauling m& marketing %& creating new expensi#e
presentations! He also tried to sell me on using his %udd& as a graphics designer, supposedl&
the gu& who designed the ;akle& logo, to design an incredi%le logo for me that would surel&
attract in#estorsS B am no marketing genius, %ut somehow B felt a new logo was not the
pro%lem and the ;akle& gu& was more than a little out of m& price range! He also wanted to
do a tra#eling road show to his contacts to present m& fund so B could sta& put and focus on
m& trading! .omehow pa&ing for him to Aet around the countr& without me was not m& idea of
a good in#estment! B told him no and B designed a simple logo on ,icrosoft aint! B still recei#e
man& compliments on m& simple &et modern logo each week!
0esson 8J1
-his industr& is full of frauds and con artists!
>re &ou seeing the pattern here &et? -his industr& is tough for the little gu& %ecause there are
man& promises and #er& little follow through! *ot %eing a%le to ad#ertise is #er& difficult and
&ou must rel& on contacts and networking for capital introductions! +ou ha#e to %e willing to
gi#e up &our strateg& and an& chance at tin& &et consistent profits for a shot at the %ig time! B
chose the other pathP focus on what B do %est and %e content to make some decent mone&
while waiting for more opportunities! B figure there will alwa&s %e people who want to raise
mone& for me and the& will onl& multipl& with time, especiall& if B keep outperforming the
market! B do not want to compromise m& trading and in#esting st&le and B accept the fact that
it might take &ears for in#estors to come! ;nl& performance and patience will create the path
of successba Aourne& B am willing to take!
0esson 8$01
"esults are much slower in the real world compared to the trading world!
-imoth& .&kes is a hedge fund manager, star of the realit& show 3all .treet 3arriors, and
author of the upcoming %ook, T>n >merican Hedge FundU He can %e reached at
timoth&s&kes!com
Brought To You By:
Richard Wilson is a marketing and capital raising expert who is founder
of the 46,000 person Hedge Fund Group (HFG) and the Certified
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"ichard has written o#er $0 %ooks, his articles, presentations, and reports
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contact details are guaranteed to %e updated and accurate! +ou can learn more a%out our
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