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Asset managers counter gatekeeper concerns

In the second article of a two-part series on selling mutual funds to private banks in Asia, fund management executives give their thoughts.
Asset managers counter gatekeeper concerns

Product selectors at private banks in Asia have made it clear to AsianInvestor how they feel mutual fund managers could sharpen up their sales approach* – and the latter have thoughts of their own on the subject. 

The central issue remains that private banking in the region is immature, said the former Asia head of a big US fund house. “It’s a brokerage-type model, an asset-gathering machine.”

Moreover, while private banks insist they want to be offered specialist product, some suggested such comments may be taken with a grain of salt.

“Gatekeepers would say we don’t bring them the right product,” the unnamed fund executive added. “But even if we do, private banks have become very rules-based in terms of how they sell. They don’t want to get into trouble. They’ve got to have a certain amount of assets and track record.”

His firm aims to work more on tailored ideas for private banks and has raised a lot of assets with certain products. “But that’s the exception rather than the rule,” he said. “Big banks say they want to be very innovative and creative, but their own processes get in the way.”

Even private bankers themselves have admitted to AsianInvestor in the past that their segment can be "lazy" when it comes to fund selection.

Other issues for fund managers seeking to get the products on platforms in Asia are access, communication and speed of approval.

“Retail banks encourage you to speak to their salespeople to encourage more discussion,” said Virginia Devereux-Wong, Asia head of wholesale distribution for Standard Life Investments. “But private banks in general have more of a funnel structure.

“So while we might train and present to the [relationship managers], we’re not often encouraged to speak to them directly,” she said, speaking at an AsianInvestor conference in May. “We may have built relationships with private bankers over the years, but it’s not really the rule of the game to speak to them [about products].”

Davy Yuen, Hong Kong head of wholesale distribution at Natixis Global Asset Management, agreed that Asian fund salespeople are encouraged not to speak directly to a private bank’s headquarters. “[Doing so] can upset people,” he said on the same panel.

This may be standard practice worldwide, but it’s a bigger problem for Asia-based businesses, as they have to go through extra hoops to get Europe or the US to approve products.

Still, things are much better than they used to be on that front, said Andrew Hendry, managing director for Asia at M&G Investments.

For instance, some global private banks have put in place Asia custom lists containing more than just one or two Asia ex-Japan equity funds, he noted. They might also offer, say, a Hong Kong equity and a Singapore equity strategy.

“The most enlightened ones have devolved product selection to the region,” added Singapore-based Hendry. “It’s a slow evolution and, through the financial crisis, resources have been undermined. So they may decide they can’t have four fund analysts in Asia.”

AsianInvestor's inaugural Fund Selector Forum will take place in Hong Kong on November 12; please click here for more details.

* The full feature on this topic appeared in AsianInvestor’s inaugural Fund Selector Report, which has been sent to a selected list of recipients this month. For more details or to obtain a copy, please contact Rebekka Kristin at [email protected] or +852 2122 5203.

¬ Haymarket Media Limited. All rights reserved.
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