Commerzbank: strategic vision pays off

Joerg Brock is finally winning his one-man struggle to introduce open architecture, or to give it its German name, “offene architektur”, to Commerzbank. He has made tough decisions on the way, such as recently striking Invesco off his list of preferred providers.

In his role as head of investment strategy and product development for private clients in Germany, Mr Brock has been advocating the use of third party funds since 2001. Back then he persuaded the bank to sample open architecture with the launch of its first funds of external funds.

Now the bank is putting Mr Brock’s ideas into full practice, with the introduction in 2004 of a preferred fund line-up, including external products, and the capacity to offer clients the chance to invest in any one of some 8000 funds available to German individual investors.

“Within the new process we identify which companies could be our preferred – or, as we call it, strategic – partners,” explains Mr Brock. “Currently, we are working with 12 different partners, including our in-house manufacturers, and direct fund manufacturing competitors like Deutsche Bank’s DWS and Allianz Dresdner’s DIT.”

Invesco was recently dropped as a strategic partner, because “they were strong in the Far East but not over the whole product range and with the problems China is having, it was no longer enough”. Mr Brock adds that Commerzbank is still talking to Invesco and its clients have kept around ?100m with them. The remaining providers have up to ?1bn from Commerzbank clients.

The most popular product types among the bank’s clients at the moment are bonds and guaranteed products, says Mr Brock. This is because German individual investors are fundamentally risk-adverse, he says.

Within the favourite product types, the best-sellers tend to match three criteria, he says: substantial size, strong performance and big brand. They are “typically funds with very well-known ‘labels’, but it is not sufficient to be a well known fund company, you have to have a fund that itself is well-known”.

Brock: “not sufficient to be a well known company”