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4 Common Institutional Investor Database Myths

By: Amy Sariego

Originally posted on December 10, 2020
Last updated on April 27, 2022

Have you ever sat down to start your day, only to find your inbox flooded with other salespeople offering to sell you a “database” of accounts and contacts? If the answer is yes, we can guarantee you’re not alone in this.

This is a common occurrence in the investment industry. So much so that “database” itself has become something of a negative.

We get it. We’ve been on the receiving end of hundreds of those messages over the years, each one deleted, unopened, because we know exactly what they’re promising: a list of accounts and contacts from the sender’s former firm, available for a few hundred dollars. Which, of course, is not a database at all, but an Excel spreadsheet that will be outdated almost as soon as we open it.

We’re all tired of it, but not all databases will leave a bad taste in your mouth.

In fact, many of them, Preqin, Discovery Data, and RIA Database, for example, have good, well-respected reputations within the industry. And yet there are still common questions and misconceptions about what it means to subscribe to an institutional investor database.

As a database company ourselves, we at Dakota have the expertise to offer insight, but we’ve received enough of those unsolicited database emails to know that simply telling you that the answer to your problems with our product is not the way to go.

Instead, in this article we’ll delve into those database myths and misconceptions, breaking down which are truly myths, and which might just hold some truth. By the end of this post, you’ll be able to make a more informed decision the next time you’re considering a database subscription for your team.

 

What is an institutional investor database?

Before we dive into the myths surrounding institutional investor databases, let’s talk about what an institutional investor database actually is, since we’ve already established that it’s not a list of accounts and contacts in an Excel spreadsheet.

An institutional investor database is an online database application that not only helps your team identify new prospects and opportunities for your sales team to pursue, but also helps keep you up to date on changes within firms across the country. As people move and change jobs, you’re still always calling on the right people.

Additionally, an institutional investor database functions similar to, or inside of, a CRM, helping to track calls, meetings, and notes across your team, so that everyone stays connected about outreach and productivity. It helps your team stay engaged with each other as well as your prospects and partners, and helps to hold them accountable to meeting firm fundraising goals.

But, at the end of the day, an institutional investor database should do one thing above all else: help your sales team call on the right people, and close more business.

 

Common institutional investor database myths

     1. Databases are static and become outdated quickly

This is an idea that has been propagated largely by those sales emails we mentioned earlier, which have come to build mistrust across the investment industry.

If you download a spreadsheet without knowing where the data within it came from, you also don’t know how accurate it is. It could very well be out of date by the time it reaches your inbox. This leads to databases being forgotten, money wasted, and the salesperson right back at square one: researching contacts for who to call on.

It’s this trend that has made a lot of institutional investment salespeople leery of databases.

Typically the information within these documents is unorganized, out of date, and limited. After all, there is only so much information that can reside within the lines of an Excel spreadsheet.

However, while it’s true that Excel spreadsheets of contact information are static by nature, this isn’t true of databases that are built as online database applications that are updated on a regular or semi-regular basis by teams of professionals in the industry.

Verdict: Myth. This is true for data contained within spreadsheets, but online database applications are updated on a regular or semi-regular basis.

      2. They contain too much data that doesn’t pertain to my needs

Institutional investor databases come in a variety of sizes depending on your needs. Some, such as Preqin and Discovery Data, come with hundreds of thousands of data points, including accounts and contacts. For some, this can be overwhelming, and even more than you need to make calls and set meetings.

This amount of information is perfect if you’re just starting out or trying to get a sense of a particular market, but it can be true that there is simply too much information that becomes overwhelming to sift through.

However, there are databases that are specific to certain channels. For example, RIA database is specific to the RIA channel, and Preqin focuses on alternative investment strategies only. Additionally, there are products like Dakota Marketplace, which hones in on firms that allocate to outside managers, and allows the user to filter by channel. and are more curated to fit certain needs, like RIA Database and Dakota Marketplace.

Verdict: Misunderstanding. Not all databases are created equally, or serve the same purpose, so it's true that some can contain too much information that doesn’t pertain to you.

     3. Institutional investor databases aren’t built for salespeople

Often, databases are laid out in a way that can be difficult to navigate, especially for salespeople, who are typically pressed for time and trying to be as efficient as possible.

Especially for larger databases, it can be hard to find exactly what you need when you need it, due to the sheer amount of information within it. Additionally, most databases are built for a more general audience, and therefore not organized in a way that is optimal for how sales professionals work (by channel or metro area).

Because salespeople are so often on the road, they are trying to fill their trips with meetings in a certain city, or flesh out a certain channel. While some databases are not built with this in mind, there are some that are specific to a channel (RIA Database caters to specifically the RIA channel) and Dakota Marketplace (which allows users to filter by metro area).

Verdict: Myth. While it’s true that some databases are more general, there are some that are designed specifically for how salespeople work.

     4. Databases are an administrative nightmare

There are a few instances where this can be true.

First, let’s talk about those Excel spreadsheets we keep mentioning. Because they are static and often outdated, they end up creating more work for the salesperson. You might find yourself having to go in and ensure that everything is accurate, and then spend your time tracking down accounts and contact information rather than setting meetings.

Additionally, if you’re subscribed to a database with hundreds of thousands of data points, the same might be true. Because there is so much data within the database, they are often updated monthly rather than daily or weekly, and it’s possible a salesperson will have to go in and update or validate information themselves.

However, if the database you’re subscribed to is on the smaller side, it is likely updated daily or weekly which eliminates the administrative component that tends to frustrate sales teams.

Verdict: Misunderstanding. Because databases vary in size and scope, this can be true for some but not others.

 

So, do institutional investor databases deserve their bad reputation?

For the most part, the answer to this is no.

While there are a lot of misunderstandings surrounding institutional investor databases, a lot of the assumptions made about them tend to be just that: assumptions and myths.

Rogue, one-off operators offering Excel spreadsheets give databases as a whole a bad name, and what gives the bigger firms like Preqin and RIA Database, etc. a bad name is that in general, the key information can be overwhelming or inaccurate.

However, if you find the database that fits your firm’s needs and size, the benefits will far outweigh the drawbacks.

 

Is an institutional investor database right for you?

It’s probably no secret that we think the answer is yes, a well-curated, updated database can only benefit an investment sales team.

Now that we’ve walked through the common database myths and misunderstandings, it’s time to prove to your team that an institutional investor database can add true value and ROI to your business. This article outlines the three major benefits that an institutional investor database can provide, and will help your team move forward in the decision making process.

If you’re ready to find out how Dakota Marketplace, a curated institutional investor database created by a team of current investment salespeople can transform your team, we’d love to schedule a call or a demo.

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