October 2007

OPEN FORUM: Shopping around

Do you feel that fund supermarkets offer adequate distribution opportunities to help asset managers grow their business in Europe? open_forum_2.jpgSteve Cook, business advisor, Morse
“The dominant model for third-party distribution in continental Europe is guided architecture rather than open architecture, and the buying process for inclusion in the guided range is a professional buying process. This model is somewhat different to the “shelf space” model employed by fund supermarkets, where the objective is to carry funds from a wide variety of fund managers and deliver a service to advisors who require a ‘whole of market’ choice. The major challenge for fund managers growing their business in Europe is to establish relationships with the professional buying teams in the banks and insurance companies that dominate distribution in all the major European markets.” Jerry Devlin, head of UK retail sales, business development, client service, Baring Asset Management
“Our experience of platforms in the UK is that they have been a replacement for existing business rather than significantly growing new business overall. However, it has lead to a number of firms who previously did not have mass-market distribution capability coming to the attention of the wider IFA market. This had lead to increased business, but only where the firm concerned had outstanding performance, a recognisable brand and the ability to deal efficiently with high volumes. The outlook is for more platform consolidation accompanied by better access for more IFAs to a better selection of performing funds.” Wade McDonald, head of customer management, State Street Investor Services Division
“The industry recognises that the traditional model for the distribution of retail financial products is undergoing radical change, which encompasses the way products are sold and constructed, the increased importance of regulation and the downstream consequences on infrastructure and administration. The fund supermarkets have experienced growth in certain markets, however the distribution model for investors remains linked to specific cultural dynamics. Fund managers will continue to share in distribution opportunities on a multi-channel basis and the evolution of market forces in relation to choice, quality of service and cost will remain key drivers on the success of the fund supermarkets.” Antony Ahearne, spokesperson of Moneyspider.com
“Fund supermarkets and fund performance companies such as Moneyspider.com offer a great opportunity for smaller investment houses and boutique fund managers to get more widely recognised and to subsequently grow their business. If an investment management firm hasn’t got the advertising budget of Fidelity and the likes, then fund comparison tools provide an excellent platform to spread the word about a fund’s performance. Fund supermarkets and fund performance companies give the wider public access to important financial data that enables them to be more investment-savvy and become more confident with all fund investments.” Scott Dakers, head of strategic alliances, SWIP
“I went a bit misty eyed when asked this question. I thought about starting in the industry as a trainee inspector in the mid 80s. Some life companies were dismissive of multi fund companies, ‘This Swedish company will never work –who wants that much choice!’ How wrong they were! Platforms offer the ability to touch a wider market. SWIP’s funds are now on platforms across the UK retail market and European institutional market. Platforms provide consolidation for fund managers’ investment solutions,  that’s good for the consumer and the advisor. Maybe the only worry is independent platforms turning into pseudo life companies as they offer more product.” © fe October 2007

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