New clients for product factories
High net worth overlords at the US banks are focusing on product design and distribution in Europe.
Wealth managers are attacking Europe on three fronts. Providers in the first quarter of 2002 are embracing customer relationship management, distribution, and, not before time, product development. According to a recent Andersen Financial Services report, asset managers need to look very carefully at their “core value proposition” of managing customer relationships. Many managers, according to Andersen, are not harnessing the power of customer relationship management (CRM) systems. Others don’t even have them. And there is no shortage of new entrants to the market with money to spend on both staff and technology-led platforms. US giant State Street, for example, is tackling the high net worth market on the back of institutional, technology-led expertise. The Boston bank’s Office of the Family Advisor will be based on an existing institutional model of integrated financial planning, investment management and trust services. Its Wealth Manager Services group is already reaching into the US and Europe, anticipating the migration of institutional assets to private retail holdings. Anglo-US firm Amvescap has pledged a similar commitment to wealthy investors. Existing players run the risk of losing key staff to these free-spending new entrants. Rothschild Asset Management has kick-started a promised series of appointments by luring William Simpson from Barclays Private Bank as a senior investment manager. Multi-management specialist Frank Russell has poached Vincent Barnoiun from Schroder Salomon Smith Barney to run private banking services. The importance of distribution, meanwhile, is underlined by the decision by SEI, Russell’s key competitor in Europe, to move Goldman Sachs and Paribas veteran Alex Kerschen to oversee distribution strategy in Europe. And State Street has appointed Gus Fleites as head of relationships with key distributors. Mr Fleites reports to John Serhant, overlord of the bank’s high net worth activities. While the likes of State Street perceive technology as a valuable tool, the Internet is no longer seen as conferring competitive advantage. Instead, the key differentiator is product development. Asset managers still see high net worth individuals as relatively conservative, but Andersen’s research reveals increasing demand for higher risk and return. This new generation wants customised versions of IPO offerings, tax advantaged products, separately managed “wrap accounts,” private equity partnerships and alternative investments of all shapes and sizes. And if individuals cannot satisfy this greater need for performance, whatever the risk, through their existing managers, then they might just look elsewhere. Andersen Financial Services concludes: “Asset managers that are willing to offer customised, higher-return investment opportunities will find a growing pool of HNWIs eager to take up these offerings.” Product manufacturers and distributors have been forewarned. Yuri Bender
