Spreading the Goldman gospel

It is often moving to see an old campaigner coming back to his former haunts, scenes of triumph and early challenges. But for Lloyd Reynolds, now head of Asian sub-advisory business for Goldman Sachs Asset Management and previously the US group’s head of marketing for international funds, following stints at JP Morgan and Schroders, there is more a sense of pragmatic purpose, rather than wistful reminiscence.

His most recent visit to his old London stomping grounds, where together with his then team boss Alex Fletcher, he once plotted the success of Goldman’s European third party funds and outsourcing business, was to accompany a Malaysian delegation.

In preparation for the signing of an alliance with a major Malaysian bank, GSAM’s Kuala Lumpur team was in London for an injection of “Goldman Sachs DNA”.

The Malaysian wealth management market has been advancing rapidly, with the sister fund management companies of Alliance Bank and CIMB using external houses to sub-advise clients’ funds. Pacific Mutual and RHB are also involved in this market.

Singapore’s DBS Asset Management, India’s Reliance Capital and CIMB Principal – a joint venture between CIMB and US firm Principal Financial Group – have all been authorised by Malaysian authorities to sell Islamic products. Goldman Sachs was granted fund management and corporate finance licences by the Securities Commission at the end of last year.

After having cut his teeth briefing staff on distribution agreements with banks including Germany’s Deka, Italy’s Mediolanum and France’s Natixis under the guidance of the avuncular Mr Fletcher, Mr Reynolds is now adopting a similar partnership approach, spreading the sub-advisory gospel through his own teams across Asia ex-Japan.

As banks across Thailand, Korea, Singapore and Taiwan follow broader, post-crisis international trends, and shift from a model of multiple product suppliers to a handful of trusted advisers, GSAM wants to be there to build a deeper relationship.

“They are moving away from open architecture to a more guided approach by having a partner or perhaps two, three or four partners,” says Mr Reynolds.

The uncompromising culture he has grown up with at Goldman suggests that GSAM must always be one of these partners, and that the number should be kept to a minimum.

“We need to create a sustained advantage that cannot be duplicated by competitors,” he adds.

With Asian banks trying to capture new wealth being created by a fast-expanding middle class, rather than rely on existing relationships, European-style, GSAM aims to partner those institutions who want a deeper relationship than putting a range of products on a bank’s shelves.

This sometimes intrusive approach of getting Goldman’s tentacles deep inside the distribution machinery of its partners – a practice heavily identified with Mr Reynolds – was met with varying reactions in Europe. It was generally tolerated at the turn off the Millenium by Abbey prior to the UK bank’s purchase by Spain’s Santander.

But it did not go down so well at Natixis, where Goldman was seen as self-aggrandising. The attempts by GSAM staff to seize the initiative in Italy were given short shrift by Ennio Doris, the Veneto villager-turned funds boss, fond of dishing out folk wisdom to his tied sales forces at Mediolanum.

It is just this approach, often rejected in Europe, which Mr Reynolds hopes will pay dividends across Asia. In Malaysia he expects GSAM to act as advisers in sales, client relationship management and research, as well as investments in the new partnership.

“Our Asian clients more fully engage with us than in Europe,” he says. “They can see we want to be a more helpful, younger partner. They want to make quick progress so they are much more open to us working with end clients and distributors. This is not an arm’s length relationship; it is much more inclusive.”

The key difference between European markets was that Goldman was often seen as a competing brand, even by regional banks in Continental Europe, who were fiercely protective of their own funds franchise and sometimes spooked by competition from so-called “partners”.

“In Asia, they know they have the local brand strength,” says Mr Reynolds. “They do not see us as a threat, but as another set of talent to put in front of clients.”

Lloyd Reynolds, GSAM