ASSET MANAGEMENT MOVES INTO THE SPOTLIGHT

CONCLUSION MOVING INTO THE SPOTLIGHT

rEdEfining rElationships with kEy stakEholdErs

Performance will be a pre-requisite in this environment. Value-added services, such as prompt sales support for distributors and any services which ease the advice and sales process of the distributors, will differentiate them from their competitors. Furthermore, the asset management industry will need to explore new partners and channels with strong distribution reach as well as understanding. The disruptive success of Tianhong Asset Management in China clearly demonstrates how the development of such a partnership can be a game changer. In light of transparency requirements and bans expected in coming years on retrocessions in major markets, asset managers will have to play a more active role in communi- cating directly to retail clients. Marketing brochures and regulatory reporting such as KIID (Key Investor Information Document) are not enough. A comprehensive approach is requiredbyassetmanagers, as theymove fromapushstrategy to a pull strategy - instead of selling products to clients through their distributors, they should strive to educate and inform investors andmotivate them to demand the products/ solutions of specific asset managers from their distributor. This includes not only brand marketing, but interactive com- munication with retail clients via social media and other new technologies. Paying lip service to customers will not suffice in a market in which the power is shifting from the asset manager and distributor to the client. rEtail invEstors

The asset management industry has recovered well from the latest financial crisis with global AuM exceeding pre-crisis levels and set to reach above $100 trillion by 2020. 35 In addition, a number of trends have created an opportunity for the industry to play an even more central role in supporting the global economy and addressing some of the challenges facing governments. This opportunity does, however, come with increased responsibilities. To make the most of it, asset managers will have to redefine their relationships with key stakeholders and adapt their operations to a new paradigm. Retail Distribution Review (RDR) in the UK and other similar initiatives by policy makers across the globe herald a new era in the relationship between asset managers and distributors. In the past, retrocession was the strongest, if not the only, clout asset managers had with distributors to place their products in front of end investors. But within a few years, this leverage will be wiped out or, at least, strongly curtailed by regulators. Hence, the asset management industry will need to find appropriate products and services to motivate distributors to sell their products. distributors

35 PwC,“Asset Management 2020”, 2014

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