2. Disclaimer The information and opinions in this document were prepared by FC Business Intelligence Inc. and its partners. FC Business Intelligence Inc. has no obligation to tell you when opinions or information in this document change. FC Business Intelligence Inc. makes every eort to use reliable, comprehensive information, but we make no representation that it is accurate or complete. In no event shall FC Business Intelligence Inc. and its partners be liable for any damages, losses, expenses, loss of data, loss of opportunity or prot caused by the use of the material or contents of this document. No part of this document may be distributed, resold, copied or adapted without FC Business Intelligence prior written permission. FC Business Intelligence Inc. 2015 www.distribution-in-asset-management.com RetailAssetManagement intheConnectedWorld With Contributions from: Andy Coleman, Director of Distribution, Cofunds Gareth Johnson, Head of Managed Investment Services, Brewin Dolphin Brett Williams, Managing Director, UK, SEI Wealth Platform Author Morag Cuddeford Jones Editor Marsha Irving Head of Financial Services FC Business Intelligence firstname.lastname@example.org
3. Retail Asset Management in the Connected World 3 Distribution in Retail and Wholesale Asset Management Conference & Networking Event 12-13 May 2015, London Breakthrough to a New Distribution Landscape: Bridge the Gap to Your Investor and Intermediary www.distribution-in-asset- management.com Andy Coleman, Director of Distribution, Cofunds Andy Coleman is responsible for sales and relationship management across both the retail and Institutional Cofunds segments. He has been driving the rollout of new products and services, including the implementation of the explicit pricing model, since joining at the start of 2012. He will be continuing this journey in 2015, through to the sunset of trail commission in 2016. Before taking up this role, he was Head of Distribution at AXA and was instrumental in creating and delivering to market the Elevate proposition. Gareth Johnson, Head of Managed Investment Services, Brewin Dolphin Gareth Johnson joined Brewin Dolphin in 2002 as a member of the Operations Department. He held various roles within operations at management level before becoming responsible for the Groups operational relationships with fund manag- ers and transfer agents in 2005. Within this role he helped to shape operational strategy and increase efficiency of the Groups fund administration. Gareth joined the Research Department in 2010 and is currently responsible for the groups operational relationships with fund managers, platform relationships and the management of the Managed Funds Service. He is a member of the CISI and of the Investment Management Associations Investment Funds Ops Committee. Brett Williams, Managing Director, UK, SEI Wealth Platform Brett Williams is UK Managing Director, SEI Wealth Platform.Brett is responsible for leading the U.K. Private Banks team and will oversee the operation and continued growth of the SEI Wealth Platform in the U.K. market.Brett has worked in finan- cial services for 30 years and joins SEI from LW2 Private Equity Partnership, where he was Partner. He has held various senior roles in the industry including CEO of Cofunds, CEO of Selestia, and CEO of Skandia U.K., following Old Mutuals acquisi- tion of the Skandia Group.
4. 4 Retail Asset Management in the Connected World Distribution in Retail and Wholesale Asset Management Conference & Networking Event 12-13 May 2015, London Confirmed Speakers: David Ferguson, Founder & Chief Executive Officer, Nucleus Nick Hungerford, Founder & Chief Executive Officer, Nutmeg Roger Miners, Chief Marketing Officer, Allianz Global Investors Christian Pellis, Global Head of External Distribution, Amundi Asset Management Andrea Favaloro, Global Head of Sales and Marketing, Generali Investments Europe Shoqat Bunglawala, Global Head of Product Development, Goldman Sachs Asset Management Simon Ellis, Global Head of Client Segments, HSBC Asset Management Steven de Vries, Head of European Retail Sales, Henderson Global Investors Scott Stevens, Head of Marketing, EMEA, BNY Mellon Asset Management www.distribution-in-asset- management.com As customers find the online management of their day-to-day finances increasingly challenging, is there now scope for web and mobile chan- nels to change the landscape of investment product distribution? If the end of 2014 was a period of intense change in the investment market, 2015 shows no signs of cutting the pace. The big news in the UK is the ability from April 2016 for retirees to access their pension funds, releasing an anticipated 5m cash-rich investors into the market1 . Regulations such as FG15/1, clarifying the boundaries and exploring the barriers to market development2 , released by the Financial Conduct Authority in January are once again causing companies to question how to best reach customers. And whilst wrestling with the concept of what does and does not constitute advice, providers of investment products and the plaftorms they market through are also exploring the opportunities that direct channels on web and mobile could present. Digital and finance are already proving to be happy bedfellows, with consumers increasingly comfortable with transacting online and evidence to suggest they want to deepen their financial relationships through this channel. A recent survey by Cisco discovered that the majority of consumers want a more personalised banking experience. Notably, it has been suggested that the retail distribution review (RDR) will create anadvice gap. Professional Adviser reported research by Schroders that revealed 49% of advisers had segmented their clients by size and 18% had admitted to asking small clients to leave their practice in the past. Of those, 69% had an invest- ment pot lower than 50,0003 . On the other hand, FT Adviser reported that the chief executive of the Personal Finance Society, Keith Richards, stated that 2014 was the year whenthe need for professional advice was stronger than everand the same article reported research from Towers Watson that indicated there was in fact a surplus of financial advisers to the tune of 5,000: Modelling data suggested 25,000 were needed across the UK while 31,000 were qualified to do so4 . But, in a climate where a potential advice gap looms, 67% of consumers in the aforementioned Cisco survey would welcome more financial education from their banks while 73% want advice on increasing their savings, the same number as would welcome an assessment of their financial status5 . Even for those most engaged in financial affairs, the potential to mismanage wealth is still great and the idea of managing complex matters with a couple of clicks on a phone is unlikely to become reality. Revealed in The Wealth Management 2015 report from Raconteur, Claire Trott, Head of Technical Support at pension provider Talbot and Muir noted:Though the reforms are simple on face value, the financial 1 http://www.moneywise.co.uk/news/2015-03-16/5m-pensioners-will-get-to-cash-poor-paying-annuities 2 http://www.fca.org.uk/your-fca/documents/finalised-guidance/fg15-01 3 http://www.professionaladviser.com/professional-adviser/news/2384409/advisers-back-rdr-but-admit-advice-gap- is-growing-research 4 http://www.ftadviser.com/2014/12/18/ifa-industry/companies-and-people/pfs-fca-are-addressing-the-ad- vice-gap-mrgGQfpvVkE7UgmJ3n1trO/article.html 5 http://raconteur.net/infographics/banking-customer-experience, accessed 16.03.2015
5. Retail Asset Management in the Connected World 5 Distribution in Retail and Wholesale Asset Management Conference & Networking Event 12-13 May 2015, London Breakthrough to a New Distribution Landscape: Bridge the Gap to Your Investor and Intermediary www.distribution-in-asset- management.com circumstances of HNWIs are more complex and getting it wrong could prove very expensive.6 So how are product, portfolio and platform providers managing the dual needs of freedom to interact online with an ongoing advice requirement, impacted by wavering consumer willingness to pay for it? How is digital disrupting investment? I dont see digital as being a big game changer. Managing your bank account online is zero risk, as is managing your mortgage. When it comes to managing a sum of money that you are going to invest the mentality of the investor is entirely different. Youre out of your comfort zone,warns Andy Coleman who looks after sales and relationship management across retail and institutional segments of Cofunds.Digital will alter the industry but I dont believe it will fundamentally change it. If I take myself out of the financial services bubble and think about how I inter- act with things in my everyday life, theres a lot you can take from retail and were spending time understanding the customers journey. We have our typical clients, but also the 21 year-old who is beginning their investment journey,states Gareth Johnson, Head of Managed Investment Services, Divisional Director, Newcastle at Brewin Dolphin. Taking the lead from retailers outside of the finance sector, interviewees for this paper identified a range of consumer behaviours that they considered influential in developing their own approaches. The accessibility of information, the ease of making contact, the showrooming and price comparison capability at home, in-store and on the move are all making themselves felt in retail asset management. Weve been talking about the sort of innovation that needs to take place. Its around the consumers experience and we have looked at how leading retailers from all sectors interact with their clients. The experience they have with Amazons 1-click for example, orclick to call. If thats their experience with leading e-tailers, why should they expect anything different with investment management online? Johnson suggests. The sense is, however, that1-click to investis not the route the sector will be taking: Digital will change asset distribution in so far as instead of people buying at some point they will buy any time they feel like it. The True Potentialimpulse savepropo- sition is an interesting development. I dont think it will be the case that everyone will turn into day traders, but people will want to invest with no particular pattern. Whats really important is that consumers will simply want to be able to look at the details of their investments whenever they want to,explains Brett Williams, UK Managing Director of SEI Wealth Platform. ImpulseSave will allow customers totop upexisting investments via mobile or web with a view, as True Potential puts it,to turn spenders into savers7 . However, 6 http://raconteur.net/finance/what-pension-freedom-means-for-the-rich accessed 16.03.2015 7 http://www.tpllp.com/impulsesave/
6. 6 Retail Asset Management in the Connected World Distribution in Retail and Wholesale Asset Management Conference & Networking Event 12-13 May 2015, London Confirmed Speakers: David Ferguson, Founder & Chief Executive Officer, Nucleus Nick Hungerford, Founder & Chief Executive Officer, Nutmeg Roger Miners, Chief Marketing Officer, Allianz Global Investors Christian Pellis, Global Head of External Distribution, Amundi Asset Management Andrea Favaloro, Global Head of Sales and Marketing, Generali Investments Europe Shoqat Bunglawala, Global Head of Product Development, Goldman Sachs Asset Management Simon Ellis, Global Head of Client Segments, HSBC Asset Management Steven de Vries, Head of European Retail Sales, Henderson Global Investors Scott Stevens, Head of Marketing, EMEA, BNY Mellon Asset Management www.distribution-in-asset- management.com adding a few pounds here and there 40% of all top ups in the first six months were less than 10 - to boost an ISA is not as significant a step as considering whether to move ISAs into different types of investment. I see people self-serving up to a point but when it comes to tax planning they genuinely start to struggle,Coleman, states, adding:Relationships continue to be key here because there is a level of trust that is entirely different to buying house insurance online. Digitals role in bridging the advice gap As we have already seen, there is some debate as to whether new regulations will cause a genuine advice gap due to lack of advisers, or whether there will be some segments of the investing community who will try at least initially to opt out of paid-for advice. Asset management companies are keen to address these segments for the following reasons: 1. These segments do not exclude high net worth individuals (HNWIs) who may have some financial knowledge and feel they can self-serve. But ultimately they will probably need advice and/or management. 2. Low value segments who are not immediately valuable have the potential to become HNWIs in the future and the company they choose today at low to zero cost may have the potential to dramatically increase this customer groups returns later on. 3. A large volume of customers who would not have previously considered investing are coming to market because of pension regulation changes. While much of their growth comes from existing customers, deaccumulation is inevitable and new customer groups are needed. A new brand for a new segment? Moving on from serving a traditionally small, select group of HNWIs to consider volumes of smaller investors is not just a question of using digital technology to reduce cost per acquisition. Many investment products are considering their brand perception. There are emerging pockets of investors that have always been around but theyre coming into the managed environment. We feel that brand is very important here in terms of being able to access that market,Johnson notes. Our board are quite advanced in their thinking about brand and what a product launch looks like. But we have to be cognisant that a client with 3m is different to a client with 15,000 in terms of their awareness of the market. Do we look like a 15,000 customer company?Johnson asks. In this case, the answer may well be yes as he continues:Its an evolution for a different type of client and we do have a service in the pipeline. Its not our typical client group, the engagement is different but its something were keen on pursu- ing. Firms need clear rules on which to base judgement so were reviewing FG15/1 to see how we can serve that market.
7. Retail Asset Management in the Connected World 7 Distribution in Retail and Wholesale Asset Management Conference & Networking Event 12-13 May 2015, London Breakthrough to a New Distribution Landscape: Bridge the Gap to Your Investor and Intermediary www.distribution-in-asset- management.com Equally, new entrants into the market are going to have to consider how they are perceived by the customer and whether their current brand positioning is appro- pri...