RETHINKING DISTRIBUTION

Focus on Client Services Distributors and advisers will desire increased added services that allow themto decrease their administrative and compliance burden. In addition, AM firms can develop services like alerts and reportings that distributors and advisers could provide their clients. With the diminishing influence of commission based advice, added value services provided by AM players will become all the more important for advisers. Build brand to enhance pull from investors The segregation of asset management, distribution and advice will put greater responsibilities on AM firms to develop their brand and differentiate themselves. As the industry will move more from a push to a pull approach, where investors will have a greater power in investment decision-making, the AMbrand will be critical to attract investors’ interest. Offer tailor-made products to distributors and advisers Advisers and distributors will have different needs that AM firms will need to address. To justify the intrinsic value of advice, advisers will be offering more sophisticated services and AM firms will have to develop tailor-made products in order to develop solutions in close collaboration with advisers that meet end-investor needs.

On the other hand, as Continental European players will keep to their current commission charging structures, the segregation between pure distribution and pure advice may be slow. Increased regulation at the point of sale will encourage distributors to develop their own products to better control the costs and risks of distributing funds to a still captive clientele. This would lead players to increasingly concentrate on asset management, distribution and advice activities within their own group rather than sourcing these externally.

What will be the key implications?

As we move towards a clearer segregation of pure distribution and pure advice, two differing distribution models will exist.

Implications of the Anglo-Saxonmodel towards a segregation of asset management, distribution and advice

Strengthen Customer Relationship Management The Anglo-Saxon model will be characterised by a greater fragmentation of the distribution marketplace. To promote their products, AM firms will need to set-up marketing and sales teams to improve their proximity to distributors and advisers. Customer RelationshipManagement will be essential to listen to both distributors and advisers’needs and liaise with them on a regular basis to inform them on significant market movements, new trends, changes in portfolio asset allocation and fund performance.

Rethinkin g

buti on 33