Creating links with the heavyweights

It is vital for forward-thinking asset managers to constantly monitor relationships with key distributors. For Goldman Sachs Asset Management (GSAM), if last year was the year of promoting the Ucits III, cross-border fund concept, with its heavy use of derivatives, 2007 is the ‘year of the global distributor’. This means targeting and strengthening relationships not with Swiss Cantonal banks or UK financial advisers, but the heavyweight warehouses of Europe and beyond. This may sound obvious, but it is a relatively new approach for the likes of GSAM. The US group previously tried a regional focus, attempting to make inroads into German and French regional banks and insurance companies, but this proved hugely labour intensive, with limited payoffs. The new policy means forging deeper links with the likes of UBS, Deutsche Bank, Credit Suisse and JPMorgan. So the distributors’ point of view is crucial. We already know that each bank which has opted for the ‘guided architecture’ model, choosing a handful of big brand external managers which clients can be ‘guided’ towards, has several layers of partnership. Firstly, there is the most preferred status of its own, proprietary manufacturing machine, reinforcing the “let’s keep our profits in the family” approach. Then there is the bank’s inner circle of partners, designing specifically tailored products to order. At Deutsche Bank, Schroders and the funds arm of UBS are currently enjoying this elevated status, although we also know favourites come and go in asset management relationships, as they do in life. Fidelity and Invesco were once the golden boys on the German giant’s roster, although the level of mutual admiration has recently cooled. One way of seeking partners, is the model utilised by manager of managers houses SEI and Frank Russell. They target those big, compartmentalised institutions – the likes of Commerzbank, HSBC, Lloyds Bank and Société Générale – who are in a state of flux.less is more The story at SEI is one of less is more. Rather than try to hit it off with more insurers and banks, who target retail and mass affluent segments, it is moving upmarket. The new targets are private banking divisions of larger groups, who bring in customers with assets in the millions, rather than hundreds of thousands. It is a systematic, flexible, approach, because SEI can provide a huge range of operational and back-office services, in addition to asset management. But fund performance can be an issue. Will distributors and their customers be happy enough with the comfort the service provides, and choose these types of relationships in preference to blockbuster funds from DWS, GSAM or Merrill Lynch?