COMBINING DECENTRALISED PRODUCTION WITH CENTRALISED DISTRIBUTION

So far we have discussed how OA is forcing distributors to listen to what their clients want when offering third-party products through their internal networks. The question is now to find out what manufacturers need to do in order to get their products across in the most effective way. For some, going directly to distributors or using distribution platforms is proving to be the best way of doing business. This is not the approach followed by the Ixis Asset Management group.

For Gilles Guérin, CEO of Ixis Asset Management Global Associates, the recipe for success is decentralised production and centralised distribution. “We believe this is the right solution for the challenges of the open architecture world,” said Mr Guérin.

The Ixis AM group, with E370bn in assets under management, operates under a business model that includes 16 different affiliated investment manufacturers located in cities across the world and specialised in various asset classes. The products they manufacture are then distributed through a centralised distribution platform.

This way, according to Mr Guérin, manufacturers can concentrate their research, time and money on improving what they offer, without having to deal directly with the distributors. “Each investment affiliate is completely autonomous in its decision to keep and develop competitive investment capabilities and its marketing efforts towards its own institutional markets,” he said. “This investment affiliate brand is a point of differentiation in our approach to capitalise on multi-brand recognition.”

INDEPENDENT SPECIALISATIONS

The investment affiliates specialise in different asset classes. One of them, Loomis Sayles, manages $50bn ( E38bn) in fixed income. Its products, and those of the other investment affiliates, are distributed to clients around the world through the group’s distribution affiliates – Ixis AM Advisors Group, for US-based investors; Ecureuil Gestion/Ixis AM France, for French investors; and Ixis AM Global Associates, focusing on cross-border markets – that work to consolidate all in-house investment expertise and present distributors with the products that best fit their requirements.

As another example of the coordination between manufacturers and the centralised distribution infrastructure, Mr Guérin mentioned one of the group’s Luxembourg-based Sicavs, a multi-manager umbrella fund with 23 sub-funds where investment affiliates from the US, Paris and Asia are represented, whose distribution is coordinated by Ixis AM Global Associates.

“So instead of each of the investment affiliates going direct to Merrill Lynch, Schwab or to UBS, it’s more efficient to centralise everything under a common infrastructure before going to those platforms,” Mr Guérin explained. This coordination makes the negotiation process with distributors more efficient. “Distributors are looking for a business partner. A global distributor should be able to offer the same expertise in the US, in Europe or in Asia,” he said, noting that it is also essential for them to offer legally sound, innovative and competitive products for their clients.

So far, this approach to manufacturing and distributing seems to be working well for Ixis. At the end of September last year the Ixis AM Global group’s distribution relationships represented $34.7bn, more than double the $14.8bn registered at the end of 2002.

Guérin: Ixis business model includes 16 different affiliated investment manufacturers