This groundbreaking new book answers an essential question: why is it
that a fund client selects, or an investment consultant recommends, one
asset manager over another when the two are, on paper at least, very
similar? Also, why is it that some asset managers maintain their
mandates during difficult periods in the cycle and others don't, even
though their performances are identical?
Authors Herman Brodie and Klaus Harnack investigated the drivers of
these selection decisions and uncovered that so-called 'soft' factors
play the primary role - even more so for consultants than for
end-clients. They also discovered that these soft factors are
essentially the means clients use to judge an asset manager's benevolent
intentions, one of the two dimensions of the universal human evaluation
more commonly known as trust.
Backed by compelling data and research from multiple disciplines, The
Trust Mandate breaks open the science of trust for asset managers,
revealing the systematic steps clients take in their search for evidence
of good intentions - the essential, but often missing, component in
business relationships. It also shows how trusted managers are able to
win more clients, keep them longer, merit good recommendations, allowed
to take more risks, and justify higher fees.
The clients of trusted managers enjoy reduced anxiety, earn higher
long-run returns, and avoid costly and pointless transitions from firm
to firm. So high-trust relationships are a genuine win-win situation.
Yet the task of initiating and nurturing them falls squarely on the
service provider. Asset managers must learn to convey their good
intentions. The Trust Mandate shows why - and how - in unprecedented
detail.
