Making the Transition to Leadership in Institutional Distribution

An expansive discussion with 18 institutional distribution team leaders offering advice, personal reflection and candid insights for new managers coming up the ranks. 

Top performing salespeople often become team leaders with a ton of enthusiasm and drive to make a positive impact, yet very little preparation for the unique demands of the role. While experienced managers promoted from other functions generally have more innate leadership DNA, they face other challenges in establishing credibility and understanding the institutional process without the benefit of time in the trenches.  

Regardless of one’s path, a leadership role in distribution can ultimately be an incredibly rewarding experience, but a new promote is likely stepping in to this role a bit green. There is no playbook or training manual, and while general management books can help, they lack nuance. Unlike other industries, from sports teams to the military to management consulting, where these skills are built incrementally throughout one’s career, asset managers tend to run leaner and full throttle without pausing to consider the ramifications of placing their distribution efforts in the hands of inexperienced hands.

“A high level of turnover in business development creates a whole host of issues; it takes years to get back on track with LPs and this incurs huge organizational costs.” 

As an executive recruiter, I’ve had the privilege to serve some of the top distribution leaders in the industry, either placing them in their roles or recruiting for their teams. Over the years, I’ve also heard an earful from prospective recruits. Frustration with an ineffective manager is one of the leading catalysts for a talented fundraising and investor relations professional to entertain an outreach call from someone like me. 

Consider the distribution leader’s paradox: the DNA and attributes that make an exceptional individual salesperson so successful can be in direct contradiction to the elements of a strong team leader. When asset managers promote their top salespeople to leadership positions, not only are they pulling strong revenue generators out of the market they also risk creating dysfunction that can result in dissatisfaction and lost productivity.

“The irony is that when the best producers get put in to positions of authority it takes them away from what they are really good at, and what they really love doing. This is a transition and a journey….”

On the other hand, a new manager with the right skill set, temperament, mindset and motivation can energize the team, establish better alignment with portfolio managers, create an environment where everyone is pulling in the same direction, and ultimately position the firm to have greater impact with prospective and existing investors. It also leads to greater enjoyment and engagement on the part of the leaders themselves.

“For me it’s the love of teaching. After some time spent managing and mentoring, I began to find it incredibly rewarding to see high potentials grow and excel. Getting a heartfelt thanks for helping them unlock that potential is the most rewarding part for me.”

What does this skill set and temperament look like? If most salespeople aren’t natural born leaders, how and when should they work on developing these qualities? How do the most extraordinary leaders operate differently throughout their careers?

We will explore these topics in three parts:

Part One: Top Qualities to Cultivate While Coming Up the Ranks

Part Two: Top Considerations for the Transition 

Part Three: Qualities of Sustained Leadership (a sneak preview to my next follow on piece)

 Part One: Top Qualities to Cultivate While Coming Up the Ranks

While a total shift in mindset would be counterproductive and premature before one is actually promoted, there are critical skills and qualities that client-facing professionals can work towards cultivating throughout their entire careers. In fact, I would encourage even the most junior professionals to get intentional about this now vs. trying to learn on the fly while drinking from the proverbial fire hose that is the reality of new managers.  

“Self-awareness and making time for introspection suddenly became much more important, just as I was getting way busier.”

The following skills and qualities can position up and comers to be considered for management roles in the first place, serve them well during the transition, and support their ability to lead with impact over the long haul.

Summary of Top Qualities to Cultivate While Coming Up the Ranks:

• Develop EQ / self-awareness
• Become skilled at delivering constructive feedback
• Sustain relationships with mentors and managers
• Informally mentor others
• Build a habit of intentionality around strategic planning
• Develop a client-centric mindset
• Establish a reputation of authenticity, trust, integrity and collaboration

Develop EQ / self-awareness

EQ is widely acknowledged as one of the leading indicators of success in business, yet the demands of a career in financial services often push carving out time for introspection and “doing the work” to the back burner.

Working with an executive coach has become much more accepted in recent years, as financial services professionals have come to appreciate the leverage gained through working with a coach in the same way a professional athlete does quite naturally in pursuit of peak performance.

Many career inhibiting behaviors are unconscious vs. malicious. Seeking outside perspective through assessment and coaching can shed light on and effectively shift these behaviors.

Qualities and skills like active listening, managing emotions during conflict, self-awareness, seeking and learning from feedback, empathy, approachability, taking ownership, responding vs. reacting, and keeping biases and perceptions in check can all be cultivated, and the earlier the better. 

Become skilled at delivering constructive feedback

New managers often struggle to strike the right balance between respect and likability, particularly if they are moving from peer to manager. This can result in avoiding conflict all together, or delivering feedback unskillfully (by phone, publicly, inconsistently, or without having first earned the credibility and trust that assures team members that their manager has their best interest at heart).

Universally, the leaders interviewed for this article cited developing the skill of regularly delivering constructive feedback as critical to their effectiveness.

“The managers who create an environment where sharing constructive feedback is safe and expected, and who deliver feedback that is honest, candid and direct are the ones who receive the highest accolades.” 

Sustain relationships with mentors and managers

The power of mentorship is obvious, but the rate at which professionals fall out of contact with former managers and mentors is surprising, especially in such a relationship driven business. Working intentionally to maintain these relationships will serve new managers well. “It’s lonely at the top” is a cliche because it’s true.

Great leaders credit much of their success to prior bosses who served as positive models and the mentorship they received coming up the ranks, while remarking on how it becomes simultaneously more difficult and more important to have trusted sounding boards and guidance the more senior they become.

Informally mentor others

Strong leaders also develop a track record of giving back. Being generous with one’s time and attention to informally mentor junior team members is great training, and invaluable experience to cite when the time comes to be considered for a management role.

Build a habit of intentionality around strategic planning

Approaching one’s work with intentionality is a practice even the most junior team member can cultivate even if, practically speaking, their daily activities seem directed by the demands of others. Getting in the habit of setting aside time to consider “what do I want my work day to look like?” and “how will I define success for myself in the next 3, 6, 12 months?” sets one up for the strategic business planning required in later years.

Develop a client-centric mindset

Developing a client-centric mindset early on can serve as a “north star” throughout one’s career.

“Anchor your listening, activities and messaging around client service. Later on, you will find that everyone has opinions, but client-grounded viewpoints and decisions carry more weight.”

Establish a reputation of authenticity, trust, integrity and collaboration

Finally, there are vastly different styles and approaches to institutional sales and investor relations. Virtually any style can be effective, and there are benefits to this diversity given the range of styles among LPs. However, one common denominator in sustaining a successful career over the long haul is operating with credibility, integrity, trust and collaboration from day one. 

While sharp elbowed professionals continue getting hired at a rate that honestly astounds me, these folks rarely last very long in their roles. Their resumes are a collection of 1-2 year moves, a rate of jumpiness that does not serve anyone well. A solid reputation buys a new manager time and trust to find their footing, and will get their teams pulling in the same direction more quickly. 

Part Two: Top Considerations for the Transition

The early phase of moving in to a management role is exhilarating, challenging and insanely busy in a way even the most talented professionals often underestimate. This time can be wrought with as many landmines as opportunities. The leaders interviewed for this article offered these top considerations along with some rookie mistake(s) to avoid. More than a few admitted learning these lessons the hard way themselves.

• Immediately shift one’s mindset
• Work with leadership to establish a clear definition of success
• Embark on a listening tour
• Carve out time for strategic planning
• Set the team structure
• Develop an understanding of team members’ motivation, strengths & areas for further development
• Shift direct client responsibility
• Establish a communication strategy
• Decide which underperformers to exit and which to work with
• Take a measured approach to hiring
• Create a team culture of fun, collaboration and open communication
• Re-establish relationships with former bosses or mentors if you’ve lost touch

Immediately shift one’s mindset

“If you think the skill set that got you promoted in to this job will make you a successful manager you’re delusional.” 

Almost everyone interviewed recommended a new manager’s highest priority should be recognizing the need for an immediate shift in mindset. An effective team leader gets equally as excited by the success of their team as much as their own, and eventually even more than their own.

For a salesperson historically rewarded and valued for putting individual numbers up on the board, this is not a natural shift and requires a healthy degree of intentionality and commitment.

“The hardest part is stepping out of the way and not jumping in at the final stage to try and close everything.”

“I had to go from waking up every day and asking “how do I raise money today?” to “how do I help others raise money today?” 

The shift is subtle, but as one leader put it: "it’s everything."

Rookie mistake to avoid: believing one’s current skill set is sufficient and allowing ego to stand in the way of growth.

Work with leadership to establish a clear definition of success

Working with leadership early on to establish a clear definition of success is the next step, and will serve as a foundation for the listening tour and strategic work that follows. Often new leaders are surprised that they themselves will need to initiate and drive these discussions.

Embark on a listening tour

An individual contributor will often be surprised by the complexity of satisfying so many different constituencies. Understanding different perspectives across the ecosystem (from PMs to clients) is the first step in shaping a strategy to navigate what will surely be a time intensive part of the job.

“In my earlier years, I wish I had listened more. I would have kept more of an open mind and allowed myself to be surprised. I would have been more patient, and picked my battles more carefully, and perhaps avoided having so many open fronts at the same time.”

Carve out time for strategic planning

In the early weeks and months, new managers are often overwhelmed with putting out the fires directly in front of them. Still, setting aside time for strategic planning and creating a road map to success for themselves and the team is critical at this stage, particularly as they begin to implement changes.

Rookie mistake to avoid: launching in to one’s new role without a clear definition of success, and implementing changes prematurely, without investing the time to listen and consider different perspectives.

Set the team structure

Universally, setting clear expectations, roles and responsibilities within the team early was recommended as critical; several wished they had been more thoughtful and strategic in laying out a stronger team structure much sooner. At the same time, it’s important to appreciate the different styles on one’s team and avoid micromanaging. An intuitive, more relationship driven salesperson can be just as effective as a more quantitative or process driven one.

Rookie mistake to avoid: wanting to be viewed as a friend or laid-back manager in a sincere effort to avoid micromanaging. Allowing one’s team to operate in a “wild west” dynamic is a sure-fire way to leave a team vulnerable to recruiting calls.  

Rookie mistake to avoid: swinging the pendulum too far in the other direction and insisting team members adopt the particular style and approach that made one successful. This manifestation of micromanaging is a great way to create animosity, frustration and, you guessed it, more calls to recruiters.

Develop an understanding of team members’ motivation, strengths & areas for further development

Spending time with team members one-on-one and instilling a sense of accessibility while formulating the structure is critical. A new manager who works hard to first understand, then deliver what uniquely motivates their reports (e.g. recognition, title, compensation, career advancement, resources, autonomy, flexibility etc.) establishes mutual accountability. Importantly, it also helps establish the trust and credibility required to deliver constructive feedback later on.

Particularly when managing a larger, global team, it’s important to consider cultural and generational nuances. For example, managers will generally need to work harder to gauge employee satisfaction and motivation in regions of the world where direct communication is not the cultural norm. Another example is encouraging the career ambitions of millennials while reigning in unrealistic timeline expectations for advancement.

Rookie mistake to avoid: focusing on setting team metrics and expectations without establishing a commitment to mutual accountability (and honoring promises as the months progress).

Shift direct client responsibility

Perhaps one of the hardest shifts is deciding which key client and consultant relationships to maintain and which to transition, an exercise that seasoned team leaders encourage as early as possible. Freeing up bandwidth for the demands of management while maintaining enough connectivity to remain sharp and credible is a balance a new manager needs to strike, and quickly. It only gets harder to roll off these accounts as time goes on. Often this means giving up control, and “getting over one’s insecurities” as more than one leader candidly put it.

 “The number of new managers who have failed spectacularly in their roles because they wouldn’t get their egos and desire to control everything out of the equation is astonishing.” 

“You’re competitive and you like to win, but now you’re not even in the room.”

Rookie mistake to avoid: allowing insecurities to drive decisions or inaction, namely an inability to let go.

Establish a communication strategy

At this point, new managers will have solicited feedback from the various investment teams and will now need to decide on a communication strategy. There was much debate among those interviewed regarding the actual frequency and depth of communication as leaders sought to strike a balance between keeping investment teams informed and feeling secure in the capital raise without creating more anxiety by over-communicating and providing too granular a play-by-play view of the process. 

Ultimately the right level of communication is highly individualized, but all agree that collaborating with the investment teams to establish a suitable level and format for communication is critical to earning early credibility and sustaining it through the inherent ups and downs of capital formation and retention.

“It feels like BDIR is the emotional epicenter of the firm sometimes. We were doing multiple fundraises for multiple teams, and the PMs felt like their future would live or die on my team’s efforts....it was a lot of work balancing the emotions of those around us, and I made the mistake of allowing them to watch the fundraise live, which was time-consuming and ultimately counterproductive.”

“The risk of under-communicating is higher than over-communicating. The reality is that what feels like a lot is often less than you think. It’s important to check your assumptions.”

Rookie mistake to avoid: not establishing a clear and deliberate communication strategy early on, which can result in inconsistency and under or over communication. 

Decide which underperformers to exit and which to work with

Taking the time to fully understand the issues around underperforming team members is also critical in the early months. When reflecting on their experiences throughout the years, most leaders grew to recognize the importance of exiting cultural misfits (sharp elbowed, dishonest, wild cards) swiftly. Too harsh? Perhaps. But many shared candid stories of regret for not doing so earlier.

However, when the reasons for underperformance were a mismatch in roles, expectations or situational disengagement, working to turn these situations around often proved a great investment given the time and expense of recruiting and training, not to mention the value LPs place on consistency. 

While experienced leaders tend to place more value on quality vs. number of meetings, taking an objective look at metrics can provide the clarity required to make tough decisions. For example, is this product even attractive to a salesperson’s client channel or geographic region? When measuring activity levels, are they even putting themselves in a position to be successful?

 “You need to make tough people decisions quickly. The first time I made the mistake of waiting too long, it took me two years. The next one took one year. In the next it will take me 3 to 6 months.”

“It’s so important to work closely with HR to prepare. These conversations can be emotionally difficult at best and open up the firm to litigation at worst.”

Rookie mistake to avoid: hesitating to quickly exit team members who are toxic to the culture

Rookie mistake to avoid: underestimating the complexity of letting an employee go

Take a measured approach to hiring

New leaders are often under significant time pressure to fill gaps on the team, but hiring decisions should be made thoughtfully and with tremendous diligence, as the opportunity cost of having the wrong person in the seat is greater than if that seat remains empty.

“Talent mistakes risk your credibility. If you hire the wrong person and protect them for too long it negatively impacts the perception of your team, which is only as strong as your weakest link.”

Create a team culture of fun, collaboration and open communication

The best managers work hard to create a work environment built on fun, respect and collaboration. They make the most of their time in the office, and proactively calendar time to meet with team members both formally and in more relaxed, social settings. While logistically challenging, they try and avoid being on the road for extended periods of time.

“Managing sales teams is very challenging. There are big personalities and complex team dynamics to sort out around coverage, incentives, collaboration, internal relationships and accountability. This requires a commitment to setting aside time to do it, and this can be frustrating for someone transitioning in from an individual contributor role.”

Rookie mistake to avoid: failing to foster a sense of accessibility and neglecting to regularly carve out time to connect both formally and informally. 

Re-establish relationships with former bosses or mentors if you’ve lost touch

Finally, we’ve discussed the benefits of continued mentorship, and how these relationships become even more critical as one advances.

“It’s time to eat crow if you’ve lost touch – you need these relationships and perspective more than ever, so pick up the phone however awkward.”

Rookie mistake to avoid: allowing professional relationships to lapse just when one needs them the most.

In summary, distribution is filled with driven, competitive and highly talented professionals. It’s no surprise that so many want the top job. But while management can be incredibly rewarding, it isn’t for everyone. To the extent the candid realities of the job explored here haven’t deterred my readers, we’re going to level up soon.

In an upcoming article, I will more deeply explore the qualities observed among leaders who have sustained their positions over many years and market cycles, and who have built teams that are both highly effective and relatively impenetrable. Above all, we will look at the practices and attributes of those who genuinely enjoy and thrive in their roles.

For now, a sneak preview:

Qualities of Sustained Leadership:

• Recognizes that becoming a “master of one’s craft” is a lifelong process requiring time and effort, and embracing the positive impact becoming so can have on the lives and careers of others
• Cultivates personal attributes (humility, intentionality, confidence, authenticity, empathy)
• Has the ability to see the opportunity in adversity, particularly in instilling team loyalty and camaraderie
• Provides regular, constructive feedback that is skillful, direct, candid, and yet kind
• Honors commitments to mutual accountability
• Recognizes that respect and likability are not mutually exclusive; constantly re-calibrates their approach to achieve both
• Continually refines one’s communication strategy to satisfy the needs of all constituents
• Invests the time, genuine interest, and activities required to bring out the best in people (e.g. off-sites, professional development opportunities, service projects)
• Strikes a balance between advocating for their team while maintaining an open mind regarding their own perceptions vs. others’
• Demonstrates the confidence to hire people who are smarter and perhaps even more highly compensated than themselves
• Offers junior team members the opportunity to shine in solving challenges and pushes their team to come up with solutions on their own, even at the risk of failure.
• Takes calculated risks in the pursuit of growth (turn-around situations, start-up efforts, relocation etc.)
• Develops sustainable, healthy habits “all of these dinners and travel take their toll.”

I want to express a sincere thank you to the 18 team leaders who contributed their time and insights so generously to this article. Demographically, they range from current or former leaders of small, regional teams to heads of global distribution working for traditional and alternative asset managers in various US cities and London. Some I know well from having served them as clients and candidates. Others I intentionally sought out after hearing such positive feedback in the market throughout the years. All contributed with an impressive level of alacrity and generosity of spirit, which I am particularly grateful for given their extreme schedules, and, in one case, a legacy and retirement the rest of us can only dream of someday realizing.

As always, your comments and questions are welcome. 

Laurie

Laurie Thompson is the founder of Willow Hill Advisors, a retained executive search and career advisory practice she launched in September 2019.

With nearly 20 years of experience serving the financial services community, Laurie helps traditional and alternative investment firms build and sustain top performing institutional client-facing teams.

Prior to launching Willow Hill, Laurie spent 16 years in the financial services practice at Heidrick and Struggles. She started her career working with two boutique executive search firms.

For a full overview of Willow Hill’s executive search and career advisory offerings, please visit www.willowhilladvisors.com