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It has recently appointed Seiichiro Yamamoto as head of its retail business in Japan. Yamamoto is already the managing director responsible for institutional business development, a role he will maintain.
AllianceBernstein sees some synergies between the two roles.
Selling to wholesale distributors such as banks, brokerages and insurance companies is similar to selling to institutional investors, in terms of the need to compete on product and service. The difference, suggests Yamamoto, is that wholesale channels involve a greater emphasis on relationships. AllianceBernstein will concentrate on building distribution relationships with financial institutions for which it already manages money, while bringing in the same marketing and brand-building used at the corporate level in the US and other markets.
ôIÆm running the retail side because of our ability to leverage our relationships with financial institutions and our proven capabilities at the level of institutional investors,ö Yamamoto says.
In Japan, open architecture remains limited û financial groups wonÆt sell products manufactured by rivals û and executives tend to rotate among jobs. So yesterdayÆs client at the institutional level may well be running a wholesale channel today, underlining the notion that an investment managerÆs institutional and retail contacts are often the same.
ôClients donÆt segregate retail and institutional business û only fund management companies do, which means theyÆre not really client-focused,ö Yamamoto adds.
Retail now makes up a very small portion of AllianceBernsteinÆs business in Japan, accounting for roughly $5 billion of its $50 billion of locally sourced assets under management.
Yamamoto says, however, the firmÆs success should not be measured by asset accumulation. ôOur goal is not AUM, our goal is to be admired as a provider of retail investment products,ö he says. He adds the firm is well known in Japan for its institutional business but its retail brand is not recognized.
AlllianceBernstein is one of a number of global fund management companies known in Japan (and Asia in general) for institutional business, but which are keen to enter the retail market, which is growing faster, which accepts higher fees, and which can often be more inert (ôstickyö). In Japan, Barclays Global Investors, State Street Global Advisors and UBS Global Asset Management are just some of the big institutional players that have recently adjusted their business models to chase wholesalers.
The firm has seen others succeed in the Japanese retail space by promoting niche products such as global income funds, infrastructure and utility funds, and emerging-market products like Bric funds. AllianceBernstein intends to follow a longer path by repeating the core products that are the foundation of its institutional business: global and Japanese equities and bonds, growth and value styles, and blend products.
It is also looking to introduce targeted-date funds, long-term (out to 30 years) funds that provide asset allocation and investment, and which are aimed at the retirement market. Yamamoto also says the firm will step up its efforts at investor education for wealth managers.
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