The Wrong Question: How Understanding Client Needs Redefined a $1 Billion Deal for Callum Laing

In a recent LinkedIn post, Callum Laing discusses a pivotal moment in his career where a seemingly “terrible deal” was reframed by understanding the client’s true needs. Laing recounts his experience evaluating a $1 billion fund where the manager was earning $30 million annually, primarily for holding money in a bank. Initially, Laing questioned if the manager was an exceptional salesperson or if the families were being exploited.

However, Laing realized he was asking the wrong fundamental question. Instead of focusing on the manager’s actions with the money, he shifted his perspective to understand the core problem being solved for the ten families, each with $100 million.

“The question wasn’t ‘What’s he doing with their money?’ The real question was ‘What problem is he actually solving?'”

Laing explains that these families were not seeking aggressive investment returns (alpha). Their explicit directive was to preserve capital, prioritizing certainty above all else. The manager had initially employed a strategy yielding 8-9% safely. When market conditions shifted, making that strategy less secure, he transitioned the funds to a bank deposit account, which offered a 4-5% return. After the manager’s fees, the families received a 1-2% return, a outcome they were content with.

The Value of Peace of Mind

Callum Laing argues that the $30 million fee was a direct reflection of the value placed on “peace of mind” for managing such a significant sum. The families’ objective was not to maximize gains but to ensure the safety of their substantial assets. This insight led Laing to a crucial lesson about deal evaluation.

“He’d started with a strategy getting 8-9% safely. When that stopped looking safe, he moved it to a bank getting 4-5%. Families got 1-2% after his fees. And they were happy.”

As Laing points out, the families were not buying investment performance in the traditional sense; they were purchasing a sense of security and the ability to sleep soundly at night, knowing their wealth was protected.

Reframing Value and Perception

Laing emphasizes that judging deals or financial arrangements solely through one’s own lens can lead to misinterpretations. What appears to be an exorbitant fee or a poor return from an external perspective might be precisely what the client needs and values most.

“Most of us are so busy judging other people’s choices through our own lens that we miss what’s actually being bought and sold.”

He further elaborates on this point, stating, “What looks overpriced to you might be solving a problem you don’t have.” This highlights the critical importance of client-centric analysis in business and finance. While acknowledging that the families were technically losing money to inflation on this specific allocation, Laing notes that this was not their primary concern for this portion of their wealth.

The core takeaway from Laing’s post is that effective business and financial strategies are built on a deep understanding of the client’s actual problems and desires, rather than on assumptions based on the observer’s own priorities or metrics. This approach, he suggests, is key to understanding why certain “terrible deals” might, in fact, be highly successful from the client’s perspective.