Germans latch on to open architecture
Fidelity’s deals with Deutsche Bank,Deutsche Postbank and Frankfurter Sparkasse show the market’s future. German banks are increasingly choosing external providers for open architecture solutions, but independent financial advisers (IFAs) are encroaching on the banks’ territory. Fidelity Investments, one of Europe’s best-known independent managers, has secured a deal to sell funds through 700 branches of Deutsche Postbank in Germany. With access to 10m customers, this is the largest post office-owned bank in Europe. Fidelity’s European Growth fund is the first product to be selected and promoted by Postbank. This follows a similar deal with Frankfurter Sparkasse, Germany’s second largest savings bank, which was described by Thomas Balk, head of Fidelity’s European mutual fund business as a “watershed event”. According to Mr Balk, “this sends a very strong signal to the rest of the German savings banks and institutions that the days of closed architecture are gone.” Fidelity – along with Franklin Templeton, Invesco and Merrill Lynch – was chosen as an external provider for Deutsche Bank customers last year. “German banks know that their clients can get open architecture from Deutsche Bank and if they don’t move in this direction, they will lose out,” said Mr Balk. “We have the lion’s share of the funds – we have collected $400m in one year, predominantly in European equity funds,” revealed Mr Balk. However, Deutsche Bank is also aware of the growing threat coming from IFAs, according to spokesman Michael Lemur, and has forged an alliance with leading German IFA Deutsche Vermögensberatung AG (DVAG). The IFA will offer clients in Germany and Austria access to the full range of Deutsche Bank investment products. Dresdner Bank has recently set up a financial advisory division and Citibank in Germany has spruced up its offering to include more advice. According to research company Cerulli Associates, the fact that German IFAs have embraced platform-based distribution is crucial to their success.
