Brand all-important in new product innovation

The discussion around trends in fund distribution held at the European Fund Series conference in Frankfurt suggested that there are still fundamental questions on where the industry is heading. Clearly, Germany is no longer a laggard or “closed architecture fortress”, but a mature guided architecture market. The challenges today are further development as well as adopting the right strategies and institutional structures to meet increasingly complex client needs. Jochen Wiesbach, managing director at DWS, Germany’s largest fund house, underlined that the target customer base has become much more complex. The industry no longer faces the retail client but new target groups in private banking. This has triggered product innovation and allowed the releasing in the market of thematic products such as emerging market funds. Now the issue is right product differentiation. The issue of branding emerged as an important preoccupation. Is product brand or are institutional brands and past performance more important for success? Karl-Heinz Pfarrer, spokesman of the managing board of Postbank Privatinvestment highlighted the fact that to reach the Postbank group’s 15m customer base, one needs to look beyond a good brand, and also provide the right IT, adopt the right price models, guarantee quality long-term client support, offer good logistics and well-defined customisation. Martin Theisinger, speaker of the management board of Schroder Investment Management, does not believe in further product diversification as the right road to take. What counts is building on brand know-how and developing advisory services. Furthermore, it is necessary to optimise the institutional framework for distribution. He supported the idea of following recent US trends, which means completely separating asset management and fund distribution. He called for “guided partnerships”. Tina Wilkinson, head of business development at FundQuest also called for advisory services to be developed. What is needed today in Europe and Germany is proper analysis and selection of funds beyond classic picking among leading brands, said Ms Wilkinson, stating that the US is the leader in this trend and that more and more American companies will enter the European market to fill the current gap.

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Theisinger: further product diversification not the right road to take