First Person: commentary by Sarah Quist Mazzocco

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Saturday, April 01, 2006

{safe_alt_text} What's in a name?

One woman finds that defining her firm’s strength takes more than just an official term.

By Sarah Quist Mazzocco

Not everyone is familiar with the term “emerging manager.”  Is it a special kind of mutual fund? A training program for a new recruit? Do an online search, and you might be surprised. Officially, emerging managers refer to small money management firms (those with less than $1 billion under management) that may be minority- or women-owned. But to me, “emerging manager” is the path of discovery I have been on since last fall.

Last September, I joined Vision Capital Management, an investment adviser firm. Part of my job was to explore the institutional world of investing, specifically state retirement plans. This was an attractive direction for us, a women-owned firm with a desire to expand our services beyond individuals to institutions.

Portland-based Vision Capital, founded by Suzanne McGrath and Marina Johnson, manages money for high net-worth individuals. Working at one of the largest female-owned Registered Investment Advisors in Oregon with solid investment returns, I thought that breaking into the institutional world as an emerging manager would be a breeze. After all, I’ve been in the business for more than 20 years — I was raised in a family of investment bankers — so I was feeling pretty confident that just a few phone calls would lead me to the right person. Then, bingo! I’d be submitting my first proposal. 

How wrong I was. The first thing I quickly discovered is that the term emerging manager didn’t mean the same thing to everyone. My introductory phone pitch — “I am inquiring into the individual who is in charge of your emerging manager program” — needed a drastic overhaul. The treasury in each state had its own unique emerging manager definition. Some days I would spend hours talking with the people in private equity (wrong) or spend several days tracking down another person only to find out, “Oh yes, we do have an emerging manager program, but it is only open to managers in our state.“

I soon discovered that all my years working with individual clients were not helping me on this new journey. In the institutional world of investing, each state’s retirement fund had a different set of rules. So, I changed my pitch. Instead of using the obscure term, “emerging manager,” I began my call with “I work for a female-owned investment adviser firm looking for the opportunity to be selected as one of your investment advisers.” What a difference! Women-owned and not emerging manager proved to be more persuasive. Quickly I was getting to the right people. Soon I had in my possession several Request For Proposals (RFPs) from various states. But it still wasn’t smooth sailing.

One call stands out most vividly in my mind: On my first try, I actually reached the individual who was managing the state’s selection process. We talked for several minutes. I once again explained that I worked with a female-owned investment adviser who invests in large-cap growth stocks, and that we’d like to submit a proposal. The guy on the phone was very excited — they were looking for both a large-cap growth manager and a female-owned firm.

I thought I’d hit the jackpot. The conversation progressed. The e-mail with the proposal had already hit my in-box. Then I was brought up short: I was asked how much Vision Capital was willing to give up in equity. Blind-sided, I wondered: “What did he mean give up equity?” I soon discovered that in order to be selected as an emerging manager in this particular state, we had to give up a percentage of ownership in our company. From this state’s point of view, they were helping to incubate your firm, so asking for equity was not out of line.

My mind began to reel. After all, we feel Vision Capital is very well established, no incubation needed. If our firm’s investment returns are solid, and we qualify as a minority-owned emerging manager, is it really necessary to give them an ownership position? I thanked him for his time. In the end, we reluctantly submitted our proposal. We may be established players in individual investing, but we’re new to the institutional world.

It has now been several months since I first embarked on this uncharted path. Vision Capital has submitted several proposals and we’ve begun to set up appointments with prospective client states, including Oregon — where Northern Trust, the firm that manages our state’s emerging manager program, has been helping us navigate this process along with Jay Fewel at the Oregon State Treasury. Our goal is pretty simple: to secure one annual contract.

But on top of everything else I’ve learned during this process, the most important lesson has been this one simple fact — even with 20 years in the financial business, being a woman is what counted most.

Sarah Quist Mazzocco is vice president of marketing and client relations for Vision Capital Management in Portland.

 

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