8 Tips to Win Over Information Sources and Influence Your Boss/Clients (Part 2 of 2)

This post covers this element(s) of GAMMA PI: #1. Generate Informed Insights, #4. Motivate Others to Act
win over your boss clients

Those of us with finance backgrounds usually lack a key skill found in those with marketing backgrounds. We tend to think “if we build it they will come” in terms of expecting others to seek out our research because we spent time building a great financial model, conducting a thorough valuation analysis and writing up an impressive research report. I’ve worked with a number of sell-side firms that started to track readership statistics and many analysts were dismayed at how few clients were actually reading their impressive work.

It may not seem fair that great work goes unnoticed, but it’s a fact of life. The reality is we need to proactively pitch our best ideas to those who consume our research, and I’m not just talking about speaking on a morning call or investment committee meeting because that’s just the cost of entry. I’m talking about making an effort to follow up with those individuals who have the most influence over our compensation (PMs for buy-side analysts and large clients for sell-side analysts).

The most highly paid buy-side and sell-side analysts aren’t always the best stock pickers, but they’re almost always among the best at influencing others

In Part 1 of this series, I introduced our PRACTICE™ framework to help analysts influence others, with specific advice on obtaining insights from information sources. In this post, I provide two tables below to help. If you’re a sell-side analyst, the first table is for you; and if you’re a buy-side analyst, the second is for you:

For Sell-side Analysts: Win Over Buy-Side Clients Using PRACTICE™

“Step of PRACTICE™“Steps to Influence Others
“Prepare to influence (1 of 3):
  • Target only key clients
  • Target to influence buy-side counterparts working at your firm’s most profitable accounts (avoid investing time building relationships with clients that are not likely to add to your bottom line). These include:
    • Key counterpart at those firms deemed a “priority” by your firm
    • Seasoned buy-side analysts who can provide a window into real-time buy-side market psychology
    Prepare to influence (2 of 3):
  • "What's in it for them?" (WIIFT)
  • Speak to your firm’s salesperson to get the following answered before your first conversation with a new client:
    • Client’s entire assigned universe of stocks
    • Firm/fund characteristics (value, GARP, event-driven, etc.)
    • Analyst's approach to research (detailed vs. big picture)
    • Analyst's demeanor
    Prepare to influence (3 of 3):
  • Self-awareness
  • Self-assess by honestly answering these questions (fix deficits where possible):
    • Are you an expert on the critical factors for this conversation?
    • Do you have strong communication skills?
    • Are you a good listener? (most people over-estimate their ability)
    • Are you empathetic?
    • Do you adapt well?
    • Will you be credible to client?
    Rapport building
    • Reach out to make the initial introduction (don’t wait for a new client to call you)
    • Show respect to the client even if he/she has less experience within the sector or fewer years as an analyst
    • Build common bridges by mentioning the names of other individuals you work with or have worked with at the client’s firm (but not in a boastful tone)
    • Listen attentively -- at all costs, do not interrupt – it shows a lack of respect and may convey an over-sized ego. When others want to speak, let them do 95% of the talking for the first conversation – it’s all about them
    • Be confident (but not arrogant) by ensuring you know the topic when answering a question. (You are better to say “I’ll need to get back to you” when answering a question than to provide an incorrect answer.)
    • It may seem obvious, but always thank clients for spending time with you – they have alternatives
    Ask about needs (WIIFT)If you haven’t already learned the client’s “WIIFT” during your research in the “Prepare” step above, start this step by discovering it. Buy-side clients are often motivated to speak with sell-side analysts because they want:
    • Help identifying and forecasting critical factors as well as the associated risks and opportunities for the assigned universe of stocks
    • Greater access to company management via the sell-side analyst
    • To assess the market psychology about a stock (by asking sell-side analysts about conversations they’re having with other buy-side clients)
    • Association/friendship with a high-profile analyst in their sector
    Conform
    • Think in their style of investing (if the client is at a value shop, think “value” before starting a conversation)
    • Embrace “their ways” by showing interest in something unique to their firm, personal background or geographic region
    • Match your presentation style with the client’s preference (formal vs. casual, cynical vs. open-minded, judicious vs. relaxed with time, loud vs. quiet, etc.)
    • Begin the discussion by asking questions to understand their perspective. When clients say something you disagree with, ask them to expand so you better understand before providing your view
    • Avoid using terms or jargon that the client may not understand
    Trustworthy (build credibility)
    • To illustrate your expertise, show or send the client your best thought-leading work (in advance of the first meeting/conversation if possible)
    • Be honest about capabilities and deliverables (Say “I’ll need to get back to you” if you don’t have the answer to a question.)
    • Follow through on commitments to send follow-up info (take notes during meetings and then review afterwards)
    • Show the client you have thought about where you could be wrong
    • Treat everyone with respect (including the client’s assistant receptionist, mailroom clerk, etc.)
    Ignore distractions (external and internal)
    • “Be in the moment” with the client by avoiding distractions such as emails, phone calls, texts, etc. (turn it all off or to “do not disturb” mode)
    • Ignore internal distractions such as mentally preparing to pitch an idea before the client has finished explaining his/her perspective or asking a question
    • When possible, choose a location conducive to a conversation and potentially a presentation. (A “lunch meeting” isn’t as good as it sounds if it’s in a crowded restaurant.)
    Communicate persuasively
    • Use a comforting non-threatening tone, timing, pace and volume that will appeal to the client
    • Convey body language that shows you are interested in the conversation:
      • Good eye contact, posture and facing the other person
      • Smiling
      • Energetic
      • No crossed arms or legs
      • No scanning smartphone
      • Avoid skepticism in facial expressions and tone
      • Lean forward to show interest
    • Ask the interviewee’s opinion on topics
    • Use metaphors, stories and analogies when conveying your views to help the client remember both you and your views
    • Link and build (i.e. start with one of the client’s strong views and build to yours)
    • Use visioning (i.e. vividly show how the future will look if your stock call plays out as expected)
    • Ask the client’s opinion on topics where it is warranted
    • Use these strategies below:
      • Reciprocation
      • Commitment and consistency
      • Social proof
      • Liking
      • Authority
      • Scarcity
    Ensure needs are met (WIIFT)
    • Satisfy all reasonable direct requests in a timely manner (e.g. send them information they requested)
    • Offer to invite key clients to special events that may help in their areas of interest
    • Ensure clients are receiving the desired information on their respective universe in a desired manner (e.g. via email, voicemail, personal calls, etc.)
    • Proactively reach out to clients when new insights are found on topics of interest (keep a database of client needs) and seek new areas of need
    • Offer to conduct bespoke research on a topic of interest if it will also help your franchise

    For Buy-side Analysts: Win Over Your Boss Using PRACTICE™

    “Step of PRACTICE™“Steps to Influence Others
    “Prepare to influence (1 of 3):
  • Target the key decision makers
  • Target the PMs who likely have interest in the stock being discussed:
    • PM with authority to make final investment decision, responsible for a fund with an investment style suitable for the stock being recommended
    Prepare to influence (2 of 3):
  • "What's in it for them?" (WIIFT)
  • Utilize internal colleagues to get these questions answered before your first conversation:
    • What is the PM’s mandate and style?
    • Are there similar stocks currently in the portfolio?
    • Has the stock been in the portfolio in the past – if so, why was it sold?
    • Which portions of the portfolio have been performing the best/worst YTD or over the past 12 months?
    Prepare to influence (3 of 3):
  • Be self-aware of your strengths and weaknesses
  • Self-assess by honestly answering these questions (fix deficits where possible):
    • Are you an expert on the critical factors for this conversation?
    • Do you have strong communication skills?
    • Are you a good listener? (most people over-estimate their ability)
    • Are you empathetic?
    • Do you adapt well?
    • Will you be credible to the PM?
    Rapport building
    • Use every opportunity to get to know your firm’s PMs. The more you know, the faster you can influence.
    • Show respect to the PM even if he/she asks basic questions about the sector or stock
    • Compliment the PM on stocks that have performed well recently
    • Listen attentively -- at all costs, do not interrupt – it shows a lack of respect and may convey an over-sized ego. When others want to speak, let them do 95% of the talking for the first conversation – it’s all about them
    • Be confident (but not arrogant) by ensuring you know the topic when answering a question. (You are better to say “I’ll need to get back to you” when answering a question than to provide an incorrect answer.)
    • Offer to do more than requested for the PM such as following up on unanswered questions or scheduling a call with an information source (the “rule of reciprocity” may lead them to be more receptive to your future calls)
    • Thank the PM for his/her time
    Ask about needs (WIIFT)If you haven’t already learned the PM's “WIIFT” during your research in the “Prepare” step above, start this step by discovering it. PMs are often motivated to speak with their analysts because they need to know if a recommended stock will:
    • Act very similar or different than stocks already in the portfolio
    • Add or reduce exposure to key themes
    • Outperform the other stocks in the sector
    • Look like an intelligent choice to the fund’s clients
    • Unexpectedly blow up
    Conform
    • Think in their style of investing (if the PM manages a value fund, think “value” before starting a conversation)
    • Embrace “their ways” by showing interest in their investment performance (a great call or sector that’s doing well)
    • Match your presentation style with the PM’s preference (formal vs. casual, cynical vs. open-minded, judicious vs. relaxed with time, loud vs. quiet, etc.)
    • Avoid using terms or jargon that the client may not understand
    • If in-person, follow standards or customs expected by someone of their generation. (Even though you may not be required to wear a tie at work, you might want to have one on the day you meet with the PM.)
    Trustworthy (build credibility)
    • Research topics thoroughly before presenting to PMs. (They’re not looking for a guess or hunch, but rather better information than can be found in the general marketplace.)
    • Be honest about capabilities and deliverables (Say “I’ll need to get back to you” if you don’t have the answer to a question.)
    • Follow through on commitments to get answers to questions (take notes during meetings and then review afterwards)
    • Show the PM you have thought about where you could be wrong
    • Treat everyone with respect (including the PM’s assistant receptionist, etc.)
    Ignore distractions (external and internal)
    • “Be in the moment” with the PM by avoiding distractions such as emails, phone calls, texts, etc. (turn it all off or to “do not disturb” mode)
    • Ignore internal distractions such as mentally preparing to pitch an idea before the PM has finished explaining his/her perspective or asking a question
    • When possible, choose a location conducive to a conversation and potentially a presentation. (The PM’s office is likely better than the trading floor or morning meeting room.)
    Communicate persuasively
    • Use a comforting non-threatening tone, timing, pace and volume that will appeal to the PM
    • Convey body language that shows you are interested in the conversation:
      • Good eye contact, posture and facing the other person
      • Smiling
      • Energetic
      • No crossed arms or legs
      • No scanning smartphone
      • Avoid skepticism in facial expressions and tone
      • Lean forward to show interest
    • Ask the interviewee’s opinion on topics
    • Use metaphors, stories and analogies when conveying your views to help the PM remember your views
    • Link and build (i.e. start with one of the PM’s strong views and build to yours)
    • Use visioning (i.e. vividly show how the future will look if your stock call plays out as expected)
    • Ask the PM’s opinion on topics where it is warranted warranted (e.g. “have you owned this stock in the past?”)
    • Use these strategies below:
      • Reciprocation
      • Commitment and consistency
      • Social proof
      • Liking
      • Authority
      • Scarcity
    Ensure needs are met (WIIFT)
    • Satisfy all reasonable direct requests immediately (e.g. follow-up with answers to their questions)
    • Ensure PMs are receiving the desired information on their favorite stocks in a timely manner
    • Proactively reach out to PMs when new insights are found on topics of interest, including those that may not directly impact your universe of stocks. (Think of the PM’s “big picture” rather than just your universe of stocks.)

    As I mentioned in the last post, nothing in the tables above is complicated, but it can be tough to incorporate into your day, just like going more frequently to the gym or eating more healthy food. For that reason, if you want to be better at winning over those who influence your pay and promotion, I encourage you to review this table once a week for a month so you can periodically reflect on where you’ve successfully used the skills in the past week and steps you should take to incorporate even more in the upcoming week.

    This wraps up my thoughts on influencing others. As I was researching this topic, I discovered when I used the 8 elements of the PRACTICE™ framework with my wife and children, they responded to me better and seemed more interested in my needs. Try incorporating these principles in your personal life and I suspect your efforts to win friends and influence people will see an improvement.

    This Best Practices Bulletin™ targets activities #1. Generate Informed Insights, and #4. Motivate Others to Act, within our GAMMA PI™ framework, which is discussed in detail in our workshop: Generate Differentiated Insights Through Better Discovery, Questioning and Influencing.

    ©AnalystSolutions LLP All rights reserved. James J. Valentine, CFA is author of Best Practices for Equity Research Analysts, founder of AnalystSolutions and was a top-ranked equity research analyst for ten consecutive years

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