THE CERULLI REPORT. Managing RFPs and Database Teams Best Practices for People, Process, and Technology LOOK INSIDE TO PURCHASE. Overview.

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1 THE CERULLI REPORT Managing RFPs and Database Teams Best Practices for People, Process, and Technology Overview Request for proposal (RFP) and investment consultant database teams play an integral role in managers acquisition and retention of assets. Asset managers understand these groups impact on win rates yet these teams face many challenges. This report examines how RFP and investment consultant database teams are responding to pressures of rising volumes, increasing complexity, tightening deadlines, and retaining productive personnel. It also examines the potential impact of outsourced chief investment officer (OCIO). Benefits Implement best practices in working with RFP and consultant database teams Understand how competitors are structuring and organizing their teams Learn how to use technology for efficiency Build better processes for generating RFPs, requests for information (RFIs), and due diligence questionnaires (DDQs) Establish criteria to motivate and retain productive personnel Questions Answered This report answers these and other critical questions: 1. What are the maintenance demands of consultant and other third-party databases? 2. How do CIO outsourcing arrangements affect RFP requests? 3. Which skills do managers prioritize when hiring RFP writers, and how do they train these professionals? 4. How are asset managers retaining productive employees? 5. What is the average compensation of RFP writers? 6. Are managers making enhancements such as color or graphics to enhance the visual appeal of RFP and related documents? TO PURCHASE CALL VISIT HAVE US CONTACT YOU: Subscription Information $13,000 Hardcopy Softcopy in color Unlimited online firmwide access Exhibits in Excel Key Findings in PDF Analyst support LOOK INSIDE 9 pages of report content attached 97 pages, 63 exhibits

2 Table of Contents Table of Contents Index of Exhibits...6 Report Scope...9 Beneficiaries of this Report...9 Report Roadmap...9 Methodology...10 Executive Summary...11 Key Findings...12 Overview...16 Source of Documents by Channel...18 The Evolving Investment Consulting Business...21 Chapter 1: The 10 Characteristics of Highly Effective RFP and Database Maintenance Teams RFP and database functions are highly valued and supported by senior management Hire and retain strong RFP writers, database analysts, and other professionals Partner with colleagues in other areas of the organization in a professional and productive manner Understand clients needs and objectives Meet deadlines while also producing high-quality, error-free, and compliant content Know when to say no Savvy users of technology Generate polished documents with consistent messaging Make ongoing improvements Don t operate in a bubble...32 Chapter 2: PEOPLE: Building an Effective Organization...34 Organizational Structure and Alignment...36 Geographic U.S. versus Non-U.S...37 Integration: Subsidiaries/Affiliates...39 Distribution Channel Alignment: Institutional versus Retail...40 Reporting Structure: Marketing or Other Areas...43 Staffing: Roles and Responsibilities...44 Manager...45 Writer...46 Consultant/Third-Party Database Administrator or Analyst...47 Duties beyond Documents...50 C A 4 Managing RFPs and Database Teams

3 Table of Contents Hiring and Training...51 Skills for Successful RFP Writers...52 Training...53 Compensation and Retention...54 Retaining RFP Team Members...56 Career Paths as a Retention Tool...57 Chapter 3: PROCESS: Operating an Efficient Process...60 Why Process Matters...62 Time Spent Versus Payoff: Early Steps in the Process...65 Qualification of RFPs...66 Kick-Off Meeting...68 Assign Writer/Project Manager...68 Document Assembly: Compiling the RFP Document...71 Subject Matter Experts (SMEs)...71 Editorial/Non Compliance Review...72 Managing Compliance Risk and Review...73 Document Completed: Getting It to the Client or Prospect...74 Final Sign-Off...74 Branding RFPs Look and Feel...76 Chapter 4: TECHNOLOGY: Navigating and Deploying it Effectively...78 Use of RFP Software...80 Headed to the Library: Content Warehousing and Management...82 Investment Consultant and Other Third-Party Databases...83 Prioritizing Which Databases to Maintain...85 Determining Which Strategies to Maintain...88 Quality Control and the Division of Labor...90 Outsourcing to External Providers...91 Automation Tools...92 Provider Profile: ProFusion...93 CIO Outsourcing: Its Potential Impact on RFP and Database Teams...94 Company Index...97 Managing RFPs and Database Teams 5 C A

4 Index of Exhibits Index of Exhibits Overview: Maximizing Win Rates: Challenges, Opportunities, and Changes on the Horizon Exhibit 1. Importance of Qualities in Relationships with Investment Consultants, Ongoing Servicing, Exhibit 2. Average Number of RFPs, RFIs, DDQs, and Consultant Databases Completed, 2012 vs. 1Q Exhibit 3. Average Number of RFPs, RFIs, DDQs, and Consultant Databases Completed by Firm Size, Q Exhibit 4. RFP Origination, Institutional vs. Retail, 2012 vs. 2013E...19 Exhibit 5. Segmentation of Institutional Flows: Consultant-Intermediated vs. Direct, Exhibit 6. U.S. Retail vs. Institutional Channels, Exhibit 7. Distribution Channel Breakdown for RFP Completion in The Last Year, Exhibit 8. Asset Managers' Planned Headcount Changes Over the Next 12 Months, Exhibit 9. Impact on Asset Managers from Expansion of CIO Outsourcing, Chapter 1: The 10 Characteristics of Highly Effective RFP and Database Maintenance Teams Exhibit 10. Manager RFP Win Rate, 2012 vs. 2013E...26 Exhibit 11. Top-10 Characteristics of Highly Effective RFP Organizations...27 Exhibit 12. Daily Challenges Faced by Database Maintenance Team, Exhibit 13. Average Sales Activity by Firm, Segmented by Number of Strategies, Exhibit 14. Largest Managers of Investment Outsourcing by Global Outsourced Assets, 1Q Chapter 2: People: Building an Effective Organization Exhibit 15. Anticipated Organizational Changes to RFP Group, Exhibit 16. Assessment of RFP Team Organizational Structures, Exhibit 17. Global Asset Managers on Functions Within Sales Structures, Exhibit 18. Global Perspective of RFP Group Structure: Centralized or Decentralized Teams, Exhibit 19. RFP Team Approach to Affiliates Segmented by Firm Size, Exhibit 20. Channel Approach to RFP Team Structure, Exhibit 21. Channel Approach to RFP Team Structure Segmented by Firm Size, Exhibit 22. Distribution Channel in Which the RFP Process Resides, Exhibit 23. Organizational Structure: Group to Which RFP Team Reports, Exhibit 24. Organizational Structure: Group to Which RFP Team Reports, Segmented by Firm Size, Exhibit 25. Marketing Organizational Chart Example...45 Exhibit 26. Anticipated Volume (RFP, RFI, DDQ) for the Next 12 Months, Exhibit 27. Average Number of Personnel Dedicated to RFP Process, C A 6 Managing RFPs and Database Teams

5 Index of Exhibits Exhibit 28. Current Number of Personnel Dedicated to RFP Process Segmented by Firm Size, Exhibit 29. Expected Number of Personnel Dedicated to RFP Process in One Year by Firm Size, Exhibit 30. Additional Responsibilities Along With the RFP Function, Exhibit 31. Additional Responsibilities Along With the RFP Function Segmented by Firm Size, Exhibit 32. Most Important Skills for Successful RFP Writers, Exhibit 33. Methods of Training for RFP Professionals, Exhibit 34. Annual Salary Ranges for RFP Writers, Exhibit 35. Annual Salary Ranges for RFP Writers Segmented by Firm Size, Exhibit 36. Methods for Retaining RFP Writers, Chapter 3: Process: Operating an Efficient Process Exhibit 37. Major Challenges in Completing RFPs, Exhibit 38. RFP Goals and Turnaround Time, Exhibit 39. Key Steps in RFP Completion Process...65 Exhibit 40. Percentage Breakdown of RFP Group Responsibilities, Exhibit 41. Percentage Breakdown of RFP Group Responsibilities by Firm Size, Exhibit 42. Importance of Compensation Factors for Salesforce, Exhibit 43. Proposal Assignment Process, Exhibit 44. Group Responsible for Completing Due Diligence Questionnaires, Exhibit 45. Structure of Compliance Group, Exhibit 46. Personnel Responsible for RFP Final Review and Sign Off, Exhibit 47. Personnel Responsible for RFP Final Review and Sign Off by Firm Size, Exhibit 48. Incorporation of Graphic Changes to RFPs by Firm Size, Chapter 4: Technology: Navigating and Deploying it Effectively Exhibit 49. Type of Software Application Used for RFPs, Exhibit 50. Most Important RFP Software Capabilities, Exhibit 51. Investment Consultant and other Third-Party Database Maintenance Teams: Assessment and Best Practices...83 Exhibit 52. Top-20 Investment Consultants by U.S. Institutional AUA, 2Q Exhibit 53. Number of Databases Maintained by RFP Team, Exhibit 54. Number of Databases Maintained by RFP Team Segmented by Firm Size, Exhibit 55. Most Important Investment Consultant/Third-Party Databases Maintained by Firms, Exhibit 56. Number of Products/Strategies Being Updated for Each Consultant Database Populated, Exhibit 57. Expected Number of Databases Each Analyst Populates per Quarter, Managing RFPs and Database Teams 7 C A

6 Index of Exhibits Exhibit 58. Expected Number of Databases Each Analyst Populates per Quarter by Firm Size, Exhibit 59. Plans to Incorporate Automation Tools for Consultant/Third-Party Database Updates, Exhibit 60. Plans to Incorporate Automation Tools for Consultant/Third-Party Database Updates by Firm Size, Exhibit 61. Impact on Number of RFP Requests Resulting from Expanded Qualitative Content in Third-Party Databases, Exhibit 62. Impact on Database Maintenance Process Resulting from Expanded Qualitative Content in Third-Party Databases, Exhibit 63. Impact on Database Maintenance Process Resulting from Expanded Qualitative Content in Third-Party Databases by Firm Size, C A 8 Managing RFPs and Database Teams

7 SAMPLE SECTION from THE CERULLI REPORT: MANAgINg RFPS ANd database TEAMS: best PRACTICES FOR PEOPLE, PROCESS, ANd TECHNOLOgy

8 Overview EXHIBIT 9 Impact on Asset Managers from Expansion of CIO Outsourcing, 2013 We anticipate that more institutions will transition to a fully or partially outsourced CIO model going forward, and that this may impact the volume of RFPs that asset managers must process. Source: Cerulli Associates Anticipate that we will see increased business as we have excellent relationships with many of the top investment consultants, 32% Benefited from this trend already and experienced increased business from CIO outsourced providers, 4% Experienced a decline in business as a result of the expansion of CIO outsourcing relationships where they are hiring directly from their select lists, 4% Have not experienced any impact from this trend, 60% The number and types of firms promoting OCIO services has grown meaningfully over the past decade. Investment consultants dedicated outsourced CIO providers and asset managers offer varying levels of service to institutional investors that seek to delegate decision-making for all of parts of their investment portfolios. We anticipate that more institutions will transition to a fully or partially outsourced CIO model going forward and that this may impact the volume of RFPs that asset managers must process. To date, RFP managers report that they have not experienced a significant slowdown stemming from the growth of OCIO. Chapter Four also explores the interplay between the production of RFP documents and the maintenance of third-party databases, and how the pursuit of non-u.s. mandates combined with the growth of outsourced CIO business may shape RFP and consultant database teams roles and responsibilities in the future.u Managing RFPs and Database Teams 23 C A

9 PROCESS: Operating an Efficient Process Chapter 3 Team leaders take different approaches to assigning writers to documents. Frequently practical issues drive the decision the RFP group faces a tight deadline and the document is assigned to the writer who has availability. Half of managers we polled assign RFP and related documents based on writer availability. This flexible approach contrasts to assigned responsibilities in other areas, for example institutional sales personnel assignments. These sales professionals typically have clear-cut obligations that are based on region, client segment (e.g., public plans, foundations, etc.) or other factors. More than 75% of managers surveyed in 2012 revealed that their institutional sales personnel are aligned by geographic territory and 24% are aligned by client segment. Some RFP teams also assign documents based on specific expertise. Twenty-five percent of managers we surveyed assign proposals by asset class and 25% by other factors, including the complexity of the document or the business line. A large East Coast manager advised that they divvy up the work first by business line and then by writer availability. Business line might be the type of product vehicle or the client channel it is geared to. A well known U.S.-based asset manager we interviewed reported that its RFP team has four writers who operate as generalists. They believe this model provides maximum flexibility and helps them to turn around documents in a timely manner. This team asserts that it is difficult for writers to become specialists with so much on their plates, and that writers do not need to become product experts because they can tap the product managers and portfolio managers for in-depth content. We discuss how other experts in the organization play an important role as product experts later in this chapter. EXHIBIT 43 Proposal Assignment Process, 2013 A flexible assignment model allows proposals to be assigned to those writers with the most availability. Source: Cerulli Associates By business line or distribution channel (e.g., retail versus institutional), 7% By region, 7% By complexity of document, 11% By writer availability, 50% By asset class or investment strategy, 25% Managing RFPs and Database Teams 69 C A

10 Company Index Company Index Alpha Portfolio ASAP Advisor Services Callan Associates , 78, 83, 87, 93 Cambridge Associates , 85, 93 CAMRADATA , 93 ECOFIN evestment , 15, 47, 78, 79, 87, 92, 93, 96 Global Manager Research , 93 Hewitt EnnisKnupp Informa Investment Solutions Lipper Marketplace Merce , 78, 83, 85, 87, 93 Microsoft , 81 Morningstar , 93 Proposal Software, Inc. (PMAPS) , 81, 96 ProFusion , 47, 79, 93, 96 Russell Investments R.V.Kuhns & Associates Towers Watson Wilshire Associates , 78, 84, 85, 87, 93 Managing RFPs and Database Teams 97 C A