The assets of institutions are generally invested, except for a small percentage required for liquidity purposes. While a certain amount of asset ebbs and flows are normal over the course of a multi-year period, and there are periods when cash allocations run high as market cycles move, it is rare to see an institution with an entirely available asset pool to invest. As such, the majority of allocations come from replacement searches. The firm will most often be competing against an incumbent, one whom the very institutional researcher they are marketing too may have participated in selecting.
Why do replacement searches occur? In most cases replacement searches occur because the manager is underperforming. Replacement searches can also occur because the institution changed its mandate parameters and/or asset allocation, leading to a necessary change. In either case, managers are most often contending for an existing slot; the assets are already at work.