Category: Best Practices


A Gemini Evolution

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Our May issue highlights the evolution of Gemini as Kevin Hesselbirg takes the helm as CEO, true costs of mutual fund distribution, adding to your value proposition, and much more!

Click here to read the May issue of The Exchange!


7361 GFS-5/10/2017



What’s the Best Way to Manage Risk?

By Andrew Rogers, former CEO, The Gemini Companies

There are many different methods to calculate and monitor portfolio risk. However, many believe that the best approach starts with, and is generally driven by, the philosophy and requirements of the investor within the context of the investment mandate and portfolio goals. Effective risk management therefore combines a rigorous due diligence process with the establishment of investment guidelines, and leads to the definition and implementation of risk policies and procedures. From there, it then evolves to a continuous monitoring of exposures using a variety of advanced risk metrics and strategies.

Thorough due diligence is a prerequisite for any effective portfolio risk management process, and a full quantitative analysis of the track record is an important first step. In a relatively recent development, we have seen trading advisors greatly increase their data transparency and are generally happy to provide information on returns, holdings, allocations and historical margining. These data points can be used to determine information about volatility, historical drawdowns, correlations to benchmarks, return distributions, etc., and serves a dual purpose—to fact-check the manager-provided metrics as well as to provide a framework for additional research. Trading advisors can provide this information to investors to fill in any gaps about a specific investment strategy, how risk is managed internally, and the operational framework for doing so.

In this way, a strong understanding of the investment process allows investment risk to be both understood and managed on an ongoing basis. As part of their continual risk-management monitoring, investors should, at a minimum, be able to confirm that the trading advisor is adhering to their stated investment and risk guidelines. This involves monitoring the portfolio to make sure that mandates are not being broken with regard to the size of positions and the markets that are traded. While this measure is necessary for good governance, this is especially important to avoid any unforeseen concentration risk, liquidity risk, and geographical risk. Additionally, ensuring that a portfolio is properly liquid and diversified, a prerequisite for the efficacy of standard risk metrics, also generally allows investors and advisors to better manage extreme, or “tail,” risk events.

Among the most common risk analytics applied to portfolios are variants of Value-at-Risk (VaR) calculations as well as stress-testing. Interestingly, the strength of VaR is also its weakness—while effective at calculating potential losses at a given confidence interval, VaR does not forecast the magnitude of losses in periods of tail risk.

Stress-testing with both custom and historical scenarios can partially fill this gap, but they are only as strong as the scenario being presented. By their nature, no two financial crises are ever identical, with the resulting correlations between markets being difficult to predict. In those cases, the explanatory power of both Monte Carlo and discrete event stress-test models can generally be limited.

Therefore, while VaR statistics and mathematical modeling can be useful, many believe a robust approach towards risk management should include an overall-exposure-based strategy. This allows for the forecasting and management of actual losses when correlations between markets and asset classes diverge from their modeled or historical patterns.

It is for these reasons that we see many top trading advisors employ this type of proactive methodology. They combine traditional risk strategies with limits on exposures to markets and asset classes, as well as a top-down portfolio-level view of risk. When trading advisors set and adhere to comprehensive risk management policies and procedures that augment this approach, they can generally implement a sensible way to both forecast and manage losses in multi-standard deviation events—and provide a strong framework with the potential for total returns consistent with mitigating potential losses, thereby benefiting investors as well as their firms and strategies.


7341 GFS-5/1/2017



Bus Factor

How Not To Get Hit By It

By Scott Spratlen, Senior Vice President of Technology

When you hear the term “bus factor,” I imagine a few different images come to mind. Maybe it’s the impending headlights of a bus heading straight for you or a fleet of busses trekking across the country.  In and of itself, the term bus factor doesn’t sound like a negative term. On the contrary, it almost sounds powerful, unless you have already been exposed to it, or have experienced it firsthand.

The term bus factor represents the risk an organization or team takes when only one or a few individuals have key knowledge or skills which are not possessed by others on the team or organization.

To evaluate the bus factor in an organization or team, ask the question, what would happen if this person was no longer available or “hit by a bus” (hence the term)? Would the team be able to survive and at what cost? If the answer to that question results in not being able to operate without that individual, then the bus factor is very high and immediate attention is needed.

In smaller organizations, bus factor is common and almost unavoidable. As growth occurs and teams expand, it is also common for the bus factor to rise. This is because new employees, hired during a reactionary growth period, hit the ground running and pick up new tasks or simple tasks and begin to create their own bus factor while solidifying the bus factor of those already on the team.

Mitigating bus factor is an intentional process and sometimes a difficult one. Many of those holding onto knowledge and skills will feel vulnerable, and even expendable, when approached about passing items off. They will often react defensively and resist the change. As a company grows it is imperative to reduce and even remove bus factor in order to make continued and even exponential growth scalable.

The team I work with was wrought with bus factor, and it was only getting worse. We needed to do something quickly before it devastated our productivity. Our team of developers is a distributed team (not collocated), and essentially made up of two teams, one in each location, making this challenge even more daunting. So we did what seemed counter-intuitive, but necessary, we setup team leads and assigned them team members that are not collocated to them. Each team lead was given specific challenges to rotate the work items and a pair program was developed to share knowledge.

What came of this process was nothing short of miraculous. Efficiencies are skyrocketing, and team morale is continuing to rise. Why?  Because team members get to work on different projects all the time. They are no longer pigeon-holed for the bus factor project only they were stuck on, even if they were the ones intentionally holding on. Queues are shifting and workloads are much more balanced.

Benefits of Removing Bus Factor

– Knowledge and skills that are scalable

– Better leadership that communicates and shares

– Better collaboration and trust among the team

– Employees who provide value instead fearing being expendable

Side Effects of Bus Factor

– Siloed knowledge and skills

– Lack of sharing and trust among team

– Poor collaboration

– Selfish mentality

– Log jams in queue waiting for one person to work on them

It is essential to reduce and even remove bus factor, whenever identified, in order to reduce risk and improve efficiency. It is a difficult challenge to overcome if you are facing it, but one well worth the fight!


7324 GFS-4/24/2017



How Fostering Relationships Can Add To Your Value Proposition

By Rom Beneche, CPA, Vice President, Business Development

We’ve all heard the old adage that “people do business with people they like.” I am a strong believer that relationships in business are important. I can confidently say that the relationships I have built over the last 17+ years in the alternative investment industry have greatly contributed to my career success, and I will prove it to you.

I spent the majority of my career as an accountant, and became a business development professional four years ago. When I made the transition from accountant to a business development professional, I had a choice to make: how was I going to create a healthy and sustainable pipeline? I could either spend the majority of my time sending out prospecting emails and making cold calls, or I could get out in the vast alternative investments universe and make some friends. I chose the latter and I am very thankful that I did. I spent months meeting with some of the best and brightest service providers in the industry. I took time to learn about every single aspect of their respective businesses and their areas of expertise. When meeting with these professionals, I wanted to come away with a great understanding of what they could offer to the prospects I would be selling to. I wanted to create a value proposition that would enable my prospects to have a first class operational infrastructure.

The result of my interactions with multiple other service providers was that I was able to create an impressive toolbox of services that I could offer to my prospects as they navigated their way through the sometimes overwhelming fund launch process. In my toolbox are services offered by a network of trusted professionals in the following areas:

  • Legal
  • Audit
  • Prime Brokerage
  • Custody
  • Compliance
  • Third Party Marketing
  • Real Estate
  • Pitch Book Design
  • Banking
  • Technology Infrastructure
  • Cybersecurity
  • Payroll and HR Services
  • Currency Hedging Strategies
  • Lead Generation Databases

I have a rolodex full of professionals that can provide the aforementioned services for any given strategy and size of fund. So, how did I build such a large network of trusted professionals? Well first of all, I think that I have personally kept Starbucks, Gregory’s Coffee, and Le Pain Quotidian (AKA, LPQ) in business with all the coffee meetings I have attended. Besides becoming a coffee connoisseur I would suggest the following.

Find a connector within your industry

Find someone who is well connected and who has influence in the industry, and simply ask them who else they suggest you connect with. I was lucky because my connector took the time to personally send an introductory email to multiple contacts within the industry, which provided a great start to my rolodex formation.

Get out of the office and meet people

Don’t get me wrong, prospecting via the traditional methods, such as calling and emailing is absolutely necessary, but there should be a balance. Get out of the office and meet the people suggested by your connector. I mentioned coffee earlier because I like to meet for no longer than 30 minutes in a relaxed environment for two reasons:

  1. People are busy, so respect their time. If synergies exist between your respective organizations, book lunch for a follow up, more in-depth conversation.
  2. I like informal introductory meetings outside of the office. Let’s talk about life, goals, family, and business. Yes, in that order.

Your competition is not thy enemy

You will be surprised how collaborative you can be with a competitor. There may be a potential prospect that may not meet the profile you are looking for and vice versa for your competitor. I have received referrals from competitors that lead to great connections and valued clients. Don’t run away when you see a competitor at a conference or networking event, be cordial and connect.

Become a connector 

Come full circle and become a connector yourself. Work diligently to connect people and find out how you can help their businesses. Refer, refer, and refer. It is very important to reciprocate any referrals that come your way. Create a network of sharing. I will go out of my way to help a fellow professional connect with the right individual in their pursuit of building their own toolbox that they can use to add value.

I can honestly say that I feel fully equipped to provide value and guidance for every area of the operational process. The great news is that I have also made valuable connections with some of the most professional and intelligent individuals in the alternative investment industry.





Best Practices: Sponsoring an Advisor Conference

Marketing can be expensive and sometimes it is difficult to see the direct benefits, especially if there are upfront costs involved. Northern Lights Distributors, LLC (NLD), understands the potential constraints within a marketing budget and aims to assist you in getting the most from your marketing dollars. There are many marketing options to consider, spanning content creation, public relations, conference participation and sales representative support. These are all key contributors to driving distribution activity. NLD advocates participating in industry conferences to maximize your distribution activity. Sponsoring a financial conference event is a distinctive opportunity to share your story, highlight your competitive edge and meet peers and potential prospects to raise your firm’s profile and brand recognition. While conference sponsorships can generate potential opportunities, they can also be a costly endeavor. Attendance and travel fees, entertainment expenses and booth material costs can all add up quickly. Therefore, it’s important to properly plan for conferences to ensure you have a meaningful and worthwhile experience.


NLD believes there are items to consider before deciding to make an investment in sponsoring a conference. The investment field has a plethora of local, regional and national conferences that provide educational forums for investment managers and clients. Thoroughly research event engagements that speak to your target audience. This will help eliminate conferences that may not be a good investment of time and budget. Additionally, consider speaking with trusted peers and partners for more details or best practice suggestions.



Speaking opportunities are coveted sessions. They allow investment managers to highlight their expertise and provide credibility in front of potential prospects as well as industry peers. Additionally, speaking engagements offer brand awareness and endorsement for your firm and strategy. Most conferences seek speakers who deliver topics that are relevant and impactful to both investment advisors and their clients. If you are interested in delivering a value add presentation, consider acquiring Continuing Education (CE) credit for your session, as CE is a draw for conference attendee participation.

Speaking opportunities may be offered at a higher sponsorship level, so ensure you select the conferences where it makes sense for you to pay such a premium. Should you decide to invest in a speaking sponsorship, maximize this opportunity by driving attendance to your session. Handing out print pieces or paying for push notifications on the conference mobile app is another way to inform your audience of your speaking engagement.


Further maximize your time by sponsoring or cosponsoring a dine-around. Dine-arounds allow you to plan and select the client/prospect invitation list. This dine-around can include individuals in the area, as long as the dine-around location is not at the conference venue or competing with conference events. For example, if the conference is in Chicago, you could consider selecting a nearby Chicago restaurant or venue to host a dine-around opportunity. You should also take advantage of city visits to schedule other meetings before or after an event. Ask yourself, who might you know in the area that could be worthwhile to visit: prospects, current clients, industry partners, etc.? Remember, you don’t want to schedule meetings at the same time as the conference.


Research additional brand awareness opportunities. Events can include, but are not limited to cocktail hour, lunch or dinner, and Wi-Fi for the event. At times, these can be coupled with push notifications for a conference app, or speaking and panel opportunities. Additionally, many conferences provide an attendee list before and after the event. This list is key in preparing for a successful event and follow up.


Conferences vary in size, audience and venue, and are subject to the investment manager’s target audience and marketing budget. If you have a limited marketing budget, you may want to consider one or two events per year. This will assist in providing maximum exposure in a single location and will broaden your sponsorship selections. If your budget allows, consider more local targeted events. It is important to remember, it isn’t the number of events you attend each year, but rather the amount of engagements you commit to within each event.


There are many levels of conference sponsorship, ranging from basic meeting attendance and others that present to a more robust sponsor offering. When researching which events to attend, determine exactly what benefits you will receive for sponsoring a conference. While some events may only provide you a booth, others may provide follow-up engagement opportunities like webinars throughout the year or featuring your white papers on the firm’s website. Your Strategic Relationship Manager will help determine what type of conference and level of sponsorship would best suit your sales and marketing efforts.


Creating a memorable brand begins with your distinct competitive edge. The defining characteristic may be an individual or multiple combination of culture, process and execution. It should magnify your organization’s competitive edge as a differentiator amongst its peers. Consistency is key. Your booth should clearly represent your brand. Work to design an impressive backdrop, pull banners, tablecloths, etc. If you are sponsoring a booth at a conference, obtain booth specifics, such as dimensions, table size for a tablecloth and what type of setup you are allowed to bring (floor or tabletop). Additionally, consider investing in branded trinkets to give away. This could be pens, hand sanitizers, mints, etc. Keep in mind, you are competing with all other booths at the conference. How will you make your booth stand out?


Planning is crucial for amplifying your conference experience. There are several items you can address to maximize your resources before, during and after the event:

  • What are your goals and expectations for the event?
  • Are you leveraging your brand and getting the maximum exposure?
  • Did you send trinkets and promotional materials?
  • Have you sent an email to the attendee list informing them about your sponsorship or additional activities? NLD has prepared a Conference Checklist, complete with items that you can accomplish before, during and after a conference to gain the best possible return for your investment.


Brand awareness is not only built through brand materials, but is projected by the individuals representing your organization at the event. Select a representative who will serve as your brand ambassador. Consider individuals who are outgoing, friendly and are comfortable networking. It is not in your best interest to send individuals who will not participate, and thrive in a conference environment. This can be potentially detrimental to your firm’s reputation. Your representative should exemplify the firm’s core beliefs and can be able to articulate your story to potential investors. He or she should have a clear goal and understand the importance of his or her role in relation to representing the brand.


DISCOVER – Utilize your network to uncover the best conference opportunities that meet your firm goals and needs.

PLAN – Determine the number of conferences you will participate in and what level of sponsorship best suits your firm’s marketing strategy.

PREPARE – Review your conference checklist to help select what will be needed to maximize brand presence and overall conference opportunity success.

ACT – During the conference, amplify your brand, be present, engaged and focused on your goals. This will only further your sales opportunities.




Northern Lights Distributors, LLC, Member FINRA / SIPC


Time for a Rebrand?

By Megan Boulter, Marketing Coordinator, NorthStar Financial Services, LLC

The doctor is in and it’s time for your brand’s marketing checkup! Over time, your company will evolve and change. External factors may have made an impact on your industry, or, perhaps it is just time for a refresh. It is important to ask ourselves questions to assess where we stand with our marketing. Are you still targeting the same market as you were last year? How has your company changed in the past three years? Do your marketing efforts reflect your company’s vision? You may need to revisit your marketing and branding efforts to make sure they still align with your company’s overall strategy. We have come up with some questions to help you assess where you are and where you need to be.


It’s time to ask some of those tough questions; have we accomplished our marketing goals? Have we generated the results that we were aiming for? It’s time to take a good look at the accomplishments as well as the faults in your company’s marketing efforts.

It’s important to think about how your brand is portrayed, both internally and externally. Miscommunication may have dimmed trust in the company or turned away possible clients. Broken promises reflect poorly on the company’s values, culture, and reputation. Companies who don’t portray their core strengths well, may be hindering new clients from coming on board. You must be able to pinpoint and successfully communicate what makes your company stand out, and be able to drive effective marketing efforts highlighting those strengths. Once you have assessed your marketing efforts, you can then move onto fixing any shortcomings as well as continue with the successful marketing efforts.


When you are going through your brand’s marketing checkup, it is important to re-examine your strategic business plan as well. Has your company’s purpose, goals, or story transformed over time? Have your clients’ buying patterns or needs changed? Are you targeting a more specific market now? Do your marketing materials reflect those changes? What new materials do you require to accommodate changes and what existing materials do you need to modify?

Businesses evolve and that is the nature of the market. Product and business expansions, leadership changes, or periods of great growth or decline are just some examples of situations that may cause a marketing disconnect. Consistent marketing will build loyal customers. Sending a survey and getting feedback from clients is a great way to gauge external brand perception.


One of the most effective ways to prepare for the future is to evaluate how the industry is evolving. Where is your company in terms of trends, competition, technology, product, and service offerings? Pinpoint your competitive edge and highlight how your firm differs from the crowd. Let clients know about business and marketing changes that show you are being proactive and staying ahead of the curve.


Where is your brand today and where do you want it to be in the future? After you have completed a thorough and comprehensive marketing assessment, you will have a much better understanding of what the next steps look like. List your long-and short-term business goals and steer your marketing initiatives toward achieving those goals.  Allocate resources accordingly. Review materials and marketing initiatives. Get feedback from clients and partners to gauge the effectiveness of your marketing strategy. Set specific goals, complete with the person or team to champion each initiative and set realistic target dates. You must be clear about expectations. Finalize your new marketing plan and stick to it.




Embracing Disruption

By Jace Schuppan, National Sales Manager

For those of you with kids, I relate embracing disruption to hugging your teenager who is likely causing some sort of strife in your life. You have passion and love for your child, so you will continue to embrace them despite the disruption they cause. You find ways to adapt and evolve your communication for the good of the relationship. Work can be similar in many ways – challenging and unpredictable, but also amazingly rewarding. In order to continue the work you are passionate about, you must embrace the disruptions.

We all know that the financial industry has experienced quite a bit of disruption in recent years, from technological advances to data accessibility, fee and regulatory changes, and the list goes on. All of these changes have likely created some challenges for business owners. Finding ways to turn those challenges into opportunities is critical for continued long-term success. You don’t always have to do something you have never done, but instead often just need to do something you have always done in a different way. Think about your most successful interactions or customer relationships, what makes them successful and how can you potentially translate or adapt that model to fit new or changing client needs?  Lean on your firm’s core strengths and explore how you can replicate those strengths in the shifting regulatory and technological environments.

Technology has changed how we interact and build relationships. Trust is an important core value in any relationship, but especially so in the investment industry. Technology has changed how we interact and build relationships, and the challenge today is how to use technology to engage with clients effectively to build and maintain trust. It is important to embrace the technology available as an opportunity to engage clients in an alternate form. Being able to adapt your message across different mediums is crucial to attract and maintain clients with unique needs (which we all know will likely change in different market environments).

Offering your investment strategies to help clients navigate their financial journey is the ultimate goal. Be engaged, honest, consistent, and creative in finding ways to effectively and efficiently offer your investment strategies. Explore new investment vehicles to distribute your strategies (separately managed account, hedge fund, mutual fund, ETF, etc.). Take inventory of your core strengths, embrace the disruptions, and adapt to the unique characteristics of each client. Lastly, remember, the next opportunity (disruption) is just around the corner.

7189 GFS-3/1/2017



Positioning For Growth

Are You Ready For Distribution?

The Gemini Companies (Gemini) distributor believes successful marketing strategies require a thorough self-assessment during the distribution planning phase and frequent reviews to adjust accordingly. During strategy planning, investment advisors should seek to understand how to access their desired target client with focus on product placement requirements and expected activity. Gaining such understanding will help determine the best course of action to implement your distribution strategy and focus your time and resources in markets that are open to your fund opportunity.

Gemini developed the distribution growth cycle model to assist investment advisors in matching their current distribution characteristics with potential opportunities, allowing managers to tactically develop their distribution plan to match. Gemini’s distributor identified four distribution phases: Raising Capital, Emerging Manager, Growing Manager, and Established Partners. Each distribution phase has distinct characteristics, challenges, and opportunities. The phases are defined as:


Raising Capital – Investment advisors that have less than $250 million in firm assets under management and a fund with less than $100 million in assets. Fund may have less than a 1 year track record.

  • OBJECTIVE – Funds at this phase are seeking to raise capital and raise awareness of their strategy
  • CHALLENGES – Short track record, no Morningstar rating, conservative sales and marketing budget
  • OPPORTUNITIES –Tactical, geographic sales activity within platforms, that are open to listening to a new story

Emerging Manager – Investment advisors with approximately $250 million to $1 billion in firm assets under management and a fund with less than $200 million in assets. Fund may have a 1 to 3 year track record.

  • OBJECTIVE – Firms at this phase have garnered success raising assets and capitalize on that success to elevate awareness of their strategy
  • CHALLENGES – Less than three year track record, at the cusp of Morningstar rating, moderate sales and marketing budget
  • OPPORTUNITIES – With a young track record, broaden product placement within existing platforms and potentially expand to additional platforms. Increase activity in preexisting platforms through meeting participation and creating value add (i.e. intellectual capital)

Growing Manager – Investment advisors with over $1 to $5 billion in firm assets under management and a fund with more than $200 million in assets. Fund track record is 3 to 5 years.

  • OBJECTIVE – Firms at this phase have garnered success and are seeking deeper and broader platform placement opportunities
  • CHALLENGES – Established competition, strategic sales and marketing budget
  • OPPORTUNITIES – Broaden product placement within preexisting platforms, seek new distribution markets, and increase sales and marketing activity at the local, regional and national levels

Established Partners – Investment advisors with over $5 billion in firm assets and with a 5 plus year track record.

  • OBJECTIVE – Firms at this phase have a solid footprint in the investment community, may be seen as a market leader in their space. They are seeking to deepen relationships and product penetration across programs and platforms
  • CHALLENGES – Established competition
  • OPPORTUNITIES – Increase activity in preexisting platforms, create new strategies, seek allocations within recommended programs and seek new platforms open to a proven story







Northern Lights Distributors, LLC