What is your competitive advantage as aninvestment advisor?Rebecca Fender, CFA As investment professionals, we spend a greatdeal of time perfecting our analytical skills, keeping up to date with thelatest events in the market. Another role that some of us play is ascommunicators, finally explaining to potential clients the advantages of ouradvisory services. This field is very competitive, so customers need to knowwhat makes us different from the thousands of investment consulting firms. The selection process for an investmentmanager often ends in something similar to “a beauty contest,” whereafter requesting an investment proposal, only a small group of firms areinvited to attract decision-makers. Some factors are raised (and tailor-madeadaptations are made) for a particular audience, but despite being wellprepared, often the suspicion is that in the end, the committee will justchoose those that perform best over a period. 1 to 3 years.

 When we asked our CFA Institute FinancialNewsBrief readers what they emphasize when searching for new clients, only 19percent of the 484 participants said that performance is what guides them.Perhaps this is because the uncertainty of the markets means that the promiseof consistently high returns is a sure way to motivate customer turnover.On the other hand, what generates loyalty tothe ups and downs of the market? The most significant number of responses (35percent) recognized that their investment philosophy differentiates them. Withthis comes his passion for investing and conviction in his investment process.These are the characteristics that the “big investments” have incommon. My colleague Jason Voss, CFA, often points out that the search foralpha means by definition that you must do things differently than thecompetition. Therefore a good investment philosophy, consistently respected formany years will stand out.

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 The second most popular response, at 27percent, is an experience. Having seen how the markets react and what theylearned on the road is what gives the advantage – this is something that cannot be copied. Wisdom cannot be taught, and while some employers point out thatknowledge of financial history should guide new graduates in the profession, weall know that reading a book is not a substitute for having lived theexperience.  So, do we know what customers are looking for?That is perhaps the tremendous competitive advantage that any investmentprofessional can have. CFA Institute, together with Edelman again, conducts astudy based on investor preferences, asking independent and institutionalclients what is important to them. The updated results will be shown in thecoming months.  CFA Society of Mexico translated this text.

Incase of discrepancy with the original version, the English translation shouldbe considered as the official version. 


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