In structured finance, I’ve learned that investor trust is something you earn over time, not a punchline to tell on a closing date. Simply put, investors buy from people they know and trust. That means the best time to start a relationship with an investor is well before you have an offering to sell. Pre-transaction communication – through industry conferences, calls, even casual check-ins – lays the groundwork. By contrast, the “pitch deck” style outreach made only at deal time usually falls on deaf ears. This is a general truth in finance: as one industry saying goes, “Authority is built before the transaction.” I often remind myself that even in real estate, a homeowner values the offer from a buyer who they’ve met and vetted, versus a stranger who calls at closing.
Why early relationships matter: There are several reasons. First, when market conditions change or deals get tight, an investor is likelier to stick around if they know your track record. For example, institutional investors vet originators and servicers very carefully. OSFI’s securitization guidelines explicitly advise investors to consider the originator’s and servicer’s performance history with similar assets. This means that if a firm (or its clients) has successfully closed and administered comparable deals in the past, it gives them credibility. Conversely, if another firm came in “cold” with an unknown structure, investors would default to skepticism. By building a name for reliability beforehand, the actual transaction feels like the continuation of an ongoing partnership rather than a leap into the unknown.
Second, early engagement allows for valuable feedback. When I’m planning a new deal, I’ll often informally ask key investors what they want. Do they have appetite for certain maturities? Do they need extra credit support? Are there compliance constraints on their side (e.g. regulatory bans on certain asset classes)? Having that dialog up front means we can tailor structures to fit investor demand, rather than trying to correct course at signing. In practice, this has helped on multiple occasions: for one client’s home loan securitization, we pre-emptively addressed a rating agency’s expected concerns by consulting lead investors early. This paid off during final placement, as investors had confidence in the deal’s mechanics.
Lessons learned: Experience (and industry reports) make clear that seasoned players reinforce trust through transparency. For example, a post-crisis review of ABS markets found that many early investors were burned by deals where the sponsor’s risks were misunderstood. The result is that the market “underwent a painful yet necessary transformation,” with only the most disciplined issuers and dealers remaining active. The lesson we draw today is: never let trust slip. We maintain frequent reporting, hold regular calls on portfolio performance, and respond openly to questions – all to ensure the relationship is not merely transactional.
In sum, building investor relationships is akin to tending a garden. You plant seeds long before harvest and cultivate them continuously. If we start from scratch only when we need to raise capital, we’re behind the curve. My advice to junior colleagues: attend the conferences, join the calls, circulate ideas – not just when deals are live, but always. That ethos will help us place transactions more smoothly, and invest in the long-term trust that underpins every structured finance deal.
References: OSFI guidance on checking originator/servicer track record; industry lessons on post-crisis discipline.