RETHINKING DISTRIBUTION

Invest in relationships Keeping a close relationship to the distributors, investors and/or emergingmarket players will allow for a better understanding of product and service needs, preferences, constraints and changingmarket trends. Combining the technical knowledge of portfolio management and the communication skills of a sales force will be indispensable to a successful distribution strategy. This has been illustrated by the recent success of some European boutiques in whichmarketing and sales teams account for approximately 50% of their staff. Invest time, especially with pension funds, insurance companies and “informedinvestors”(throughsocialmedia)toofferadequate answers to daily queries but also proactively provide relevant and timely information onmarket fluctuations and investment decisions. This will allow asset management firms to build trust and to position themselves as a privileged interlocutor and provider. Share and collaborate While a good relationship to the distributor and the investor is vital, asset management firms should be able to listen to and capture client feedback. This will allow them to develop and to deliver successful products in a timely manner. Organisations must be based on a strong customer centric culture with ongoing dialogue and evaluation of customer needs through market research and sales force feedback. Asset management firms and associations should also provide increased education materials and training to both investors and advisers, with a short-term emphasis placed on increasing the capability of financial advisers. With globalisation and rise of emerging markets it will also be extremely important to allow for equal opportunities between the mutual funds of these regions. This may include cross distribution, close collaboration with the regulators of

these regions and the integration of their views within future regulatory developments of EU fund frameworks.

Put YOURSELves in each other’s shoes The asset management industry should draw on their relationships with distributors and investors and cultivate ongoing feedback to discover opportunities for new products. A bottom-up approach to product development and selection will ensure that their funds meet the needs of future clients. With increasing moves towards solution-based products, the asset management industry may not always be in a position to deliver the required product internally. In such cases the key to success will lie in the ability to team up with other financial solution providers to deliver bespoke products meeting the needs of specialised investors. Enhance value through quality The most sophisticated and comprehensive distribution strategy cannot be successful if the product fails to deliver: • Performance: even thoughprice sensitivitymay differ between countries, products and investors, the keydriver of demandwill be performance; • Value-for-money: a strong customer centric approach in the product development process will maximise benefits for the investor in the most cost-effective manner. As such, the cost of daily NAV reporting, monthly factsheets, etc. arguably produces little in the way of concrete benefits to the investor of retirement products; • Safety: EU-domiciled funds, especially UCITS, enjoy a worldwide reputation for regulatory integrity and security. The fund industry should ensure that this integrity is maintained, as well as building a comparable level of trust in AIFM.

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