Managers attack distributors
Fund managers react against PwC’s critical report by finding fault with the selection systems of distributors. Roxane McMeeken hears all sides. Fund manufacturers have hit back at a scathing PricewaterhouseCoopers (PwC) report which claims that European investment houses are missing the mark by bombarding distributors with too many over-complicated products. According to Fabrizio Gualco, head of Credit Suisse’s Milan-based asset management operation, it is the distributors and not the investment managers who are at fault. Credit Suisse is one of only a handful of foreign players who have been successful in the Italian domestic funds market. Mr Gualco denied that products were insufficiently tailored and blamed distributors for having “unprofessional” fund selection systems. He cited San Paulo IMI’s business model as the best solution. The Milanese house has hired Invesco to create portfolios from a universe of 300 funds. Not surprisingly, some of these are managed by Credit Suisse. The research which riled Mr Gualco came from Marc Saluzzi, lead manager in PwC’s European investment management practice, who said: “Investment managers need to change their focus from churning out new products to becoming more customer-centric.” Until this change occurs, Europe’s funds industry will remain in its stunted state, with less than 20 per cent of households invested in funds, said Mr Saluzzi, who called for fewer, simpler products. PwC has found that distributors are cutting the number of fund providers they deal with and their provider selection criteria are becoming tougher. “The distributor’s concern has shifted to which providers will best support their sales efforts,” stated PwC’s report. Mr Saluzzi added that in order to better serve retail investors, fund managers and their distribution partners would need to co-operate more closely. Over at BNP Paribas Asset Management in Paris, global head of funds distribution Marc Raynaud argued that rather than simplifying products, it is up to fund managers to educate intermediaries. BNP Paribas has been praised, even by competitors, for its efficient distribution machine, which pulled in over E1bn into guaranteed products from the French market this year. Mr Raynaud puts the success down to communication. “We have had plenty of success selling complicated products such as guaranteed funds to distributors, probably because they were well explained,” he argued.
