Diane Harrison, principal and owner of Panegyric Marketing, outlines how investment managers can improve their dialogue with prospective clients by giving some examples of what not to do in a pitch.

The views below belong the author, but Family Wealth Report is pleased to share them and welcomes reader feedback.

Spring is typically filled with events for investors and managers to engage, learn about industry happenings and market views, and find investment opportunities with each other. One of the newer trends at such events includes the “speed-date,” in which pre-arranged, one-on-one sit down meetings allow investors with an interest in particular strategies to interact for 10-20 minutes with the fund manager or representative and get an initial feel for the fund’s uniqueness. After attending numerous networking functions and witnessing many of these manager/investor exchanges, I thought it useful to offer up ten of the popular blunders managers make with prospective investors.

While these statements may be truthful in general, they offer no color, specificity, or distinction from which managers can separate their approach from other rival managers in the business. Many of these phrases can be found in hundreds, if not thousands, of the pitch book presentations these managers rely on. But to paraphrase George Patton’s “If everyone is thinking alike, then somebody isn't thinking,” if everyone is saying the same thing, then no one is saying anything.

Following are ten of the more egregious errors in alternatives marketing pitches. The first five are general to any strategy. The last five are offered for those managers who have approaches that focus on equity-related strategies, as these are most popular and offer many generalized blunders.

1. We capitalize on market inflection points in which we can successfully execute our strategy. The most generalized statement with virtually all of its meaning stripped away by vagueness. What investment manager can’t say they do this?
2. We have a unique/ proprietary network from which we get deal flow. Investors want to know about the source of a manager’s universe of investment trade ideas. Does this “secret-sauce” protected statement give them any insight into the answer they are seeking? Can the manager obtain enough opportunities as they scale their AuM? Is their investment approach based on a singular, limited set of current market dislocations? This general answer provides no clue to either of these issues.
3. We employ an integrated top-down and bottom-up approach to exploit market opportunities. This phrase is found in virtually every pitch. All managers seem to be either top-down, bottom-up, or both. Strike this phrase in favor of one or two sentences that actually describe how markets present opportunities for a particular strategy.
4. We apply private analysis to public securities. This is supposed to imply the manager knows secrets that others miss in the public market channels. In reality, every manager is looking at the market data and assessing it to arrive at some actionable conclusion to yield attractive results. Give an example that showcases your evaluation abilities to demonstrate the result of this analysis.
5. We employ effective risk management to emphasis downside protection. Is there any manager who isn’t managing risk to avoid a blow up? Does the word “effective” really offer an investor comfort that a manager has this risk covered? Put some parameters around this process to strengthen the conviction for investors that their money will be well-managed for the long-term.
6. The equity market’s wide dispersion in returns suggests a key opportunity for stock picking. The equity markets include companies that range from poor returns to great returns? This seems self-evident, not a selection criteria for a hedge fund manager who trades in equities.
7. We believe that opportunities exist to invest in fundamentally-sound companies at a discount. This statement varies only slightly from the above generalized statement, and offers just as little insight. The manager might as well say, “We buy low and sell high.”
8. We exploit market inefficiencies to capitalize on these dislocations. What types of inefficiencies do managers look for? How can these be uncovered? Define “capitalize” in terms of a strategy—is it opportunistic? Activist? Event-driven? Arbitrage? Market neutral? What is the market disconnection and how can the manager take advantage of it? An investment example would say much more than the headline statement.
9. We analyze a company’s business and determine key pressure points which could materially change the company’s prospects, and monitor such issues. This concept is fine as a lead-in to what constitutes a pressure point, but the focus seldom develops. Various strategies will determine differing pressure points, and more importantly, react to them in specific ways. Where managers often go wrong with this point is that they leave the details unsaid, or undefined in their pitch presentations, believing that investors will accept the statement at face value.
10. Our exit strategy for positions centers on key thesis points for what makes a position investable ceasing to exist. Regrettably, this answer is often given in various iterations to the question, “How do you determine an exit strategy?” While the statement is likely true (albeit awkwardly worded), saying that a position which was investable has now become un-investable is at best the tail wagging the dog. A clear, concise trade entry, hold, and exit example would be much more illustrative in expanding on a manager’s approach to the markets.

Hopefully these points will inspire managers to inject some color, specificity, and distinct articulation into their strategy in the next conversation or pitch presentation they make.