Shining light on the sub-advisory landscape
Our special thanks go to the panel of 40 plus decision makers in private banks, life insurers, wealth and asset managers that have contributed to this 8th annual sub-advisory study. They filled in extensive questionnaires, responded to in-depth interview questions and participated in our annual roundtable.
The targets of our survey have been, as in the past, European institutions that already employ sub-advisers, as they have a greater understanding of the topic. They gave valuable insights into the trends and developments of this activity.
To understand the key barriers to sub-advisory and potential growth, we also questioned a few institutions that currently prefer to distribute off-the-shelf third-party funds. This exercise gave us insights into an alternative model of sub-advisory, which takes place when a distributor, which often can count on a sizeable distribution network, wants to launch a bespoke product to meet client needs but does not have the fund infrastructure.
In this case, they can ask a specific manager to add that new fund to the manager’s Ucits’ family, often promising the manager a certain asset flow to make it a viable solution. This is for example the strategy adopted by UniCredit Private Bank with some of its strategic partners.
This hybrid form of sub-advisory is quicker and hassle-free, as the work falls on the asset manager to launch and seed the product and go through the regulation process rather than the organisation doing the distribution. Like the pure sub-advisory model, it offers the possibility to gain access to a specific manager that does not have a presence in Europe (see SEB Wealth Management p13).
The tables below summarise some key results, but refer to the traditional model of sub-advisory, executed through segregated mandates.
