Guidance for Consultants Seeking AMC Management for Association Clients

Matching the right AMC for management services with an association relies heavily on a thorough understanding of the association’s needs by the AMC and the AMC’s capabilities by the association.   Common expectations are a must for a successful long term relationship between an association and an AMC.  

The following guidelines will go a long way toward effectively connecting the association with the appropriate AMC as well clarifying common expectations. AMCI offers these recommendations to consultants to optimize their role in connecting the parties. 

Consultants should:

• Encourage their clients to issue a written RFP and advise that a detailed scope of work be provided along with financial information about the association.  Sometimes association don’t want to spend the time to detail their needs, which not only puts the consultant is a difficult position in communicating what services the association is looking for, but also frequently results in one party or the other being disappointed in the management relationship after it is agreed upon.  Some associations also seem to feel that disclosing their financial information may result in not getting the lowest fee proposal.  Assuming the association is not simply price shopping, full disclosure actually provides a guide for an AMC to determine how best to tailor its services for the most cost-effective management.

• Disclose the fees and/or expenses that an AMC candidate will be expected to pay while under consideration for management as well as any expenses the selected AMC will be expected to reimburse the association or the consultant for.  It is common practice for an AMC to pay for travel for their staff to make a presentation to a potential management client.  However, AMCI is aware that some consultants may suggest to their association clients that candidate AMCs may be willing to pay for association representative travel to visit the headquarters of the AMC or may even be willing to reimburse the consultant’s fees if the AMC is awarded the management contract.  AMCI does not consider having the candidate AMC pay for or reimburse these association expenses  to be a best practice.  In fact, they could be viewed as attempt to “buy” the business for those companies with the resources to do so.  All expenses and fees expected or that may be expected to be paid by the AMC should be divulged when the AMC is first contacted by the consultant for their interest in pursuing management.

• Recommend open dialogue between association representatives with candidate AMCs.  It is understandable that initially representatives of associations seeking AMC management will not want to invest the time to engage every potential candidate in dialogue.  But once capabilities are determined and the process winnows candidate AMCs to a small number, discussion between association representatives and the candidate AMCs serves to assure that the association receives the best possible proposal.  It is also understandable that consultants want to protect their relationship with the association.  For that reason consultants should participate in all of these open discussions.

• Association representatives will often schedule a “cattle call” phone Q and A for all AMCs who initially wish to pursue being considered for management.  Consultants should advise their clients that silence from many AMC participants on such calls is often not indicative of lack of interest.  Rather these AMCs are interested to learn as much as possible but may not want to ask important questions that their competitors will benefit from in developing their proposals.

• If a scorecard is to be used to rank candidate AMCs, provide the scorecard to candidate AMCs or at least specifically detail the criteria in the RFP that candidate AMCs will be judged upon.  This may actually have the salutary effect of certain AMCs realizing they do not have the capabilities desired to remain under consideration

• Disclose any consultant conflict of interests to both parties.  This would include any business interest in or any relationship with an AMC as well as any remuneration consideration by an AMC.

• Encourage clients to honor AMC confidential information and copyrighted material.  The cost of developing and tendering new business proposals and presentations is not insignificant for the AMC.  While this is an accepted cost of doing business it is nonetheless considered unprofessional for an association to share a management proposal with an AMC’s competitors.  Intellectual property is among an AMC’s most valued assets. Consultants should make every effort to reinforce with their clients the necessity of maintaining confidence for the proposals they receive.