RETHINKING DISTRIBUTION

Figure 7

Role of the intermediaries towards end-investors

Investment fund asset ownership (share in percent)

Fund distribution is mostly a B2B business for fund managers and there is a continuous trend in the fund industry towards further intermediation. The share of households ownership in investment fund assets has been decreasing over the last years while insurers, pension funds and other financial intermediaries have been continuously increasing their fund asset ownership on behalf of end-investors (see figure 7).With a potential shake- up of investor trust and loyalty, and regulatory changes, the distributionmodels may becomemore complex. This could lead to a clear distinction between the roles of pure distributors (e.g. Stock Exchanges) and pure advisers. On top of these two roles, we anticipate the emergence of new types of intermediaries which will help investors to make more informed investment decisions (e.g. social media). 22.5 2.5 24.7 2.8 25.4 2.9 26.4 3.2 28.6 3.4 32.0 3.4

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

22.5 2.5

24.7 2.8

General government Insurers & pension fun Other nancial interme MFIs Non- nancial corporati Households

25.4 2.9

3.2

3.4

3.4

26.4

28.6

32.0

11.6

13.4

15.6

17.0

15.6

9.8

15.8

9.1

9.6 9.5

9.2 8.7

10.8

9.0 8.8

7.8 8.6

10.1

42.8

39.9

37.0

35.5

34.6

32.4

2004

2005

2006

2007

2008

2009

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

General government Insurers & pension funds Other nancial intermediaries MFIs Non- nancial corporations Households

11.6

13.4

15.6

17.0

15.6

9.8

15.8

Looking forward: howwill the relations between fund managers and distributors/ advisers evolve? 9.1 10.8 10.1 9.6 9.5 9.2 8.7 9.0 8.8

7.8 8.6

42.8

39.9

37.0

35.5

34.6

32.4

With increasing investor and regulatory scrutiny on the distribution of investment funds, the question is how much the model of large distributors, generally vertically integrated groups in Continental Europe, will change. In Anglo-Saxon countries, with investors welcoming the end of product influence, how will advisers position themselves towards traditional distributors? 2004 2005 2006 2007 2008 2009

Source : EFAMA Factbook 2010

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