Fidelity has recently established a Hong Kong-based hub for regional client service. The new division is at the heart of its post-financial crisis strategy for growing its institutional business, says the firm’s Carlo Venes.
It is the nitty-gritty sort of work – client reporting, performance measurement and other functions that require some level of client interface – that Fidelity sees as the new competitive battleground.
“Asset gathering-companies often ignore the servicing side,” says Venes, head of institutional business for Asia ex-Japan. “But in Asia, institutional business is all about client retention. It can be a very sticky business if you service them well. You capture their own growth, naturally.”
According to an estimate by AsianInvestor magazine, based on the average percentage of global AUM sourced from Asia-Pacific, Fidelity is the second-largest independent fund manager active in the region (after BlackRock). The calculation suggests that, by September 2009, the firm managed $153 billion of regional money, including retail and institutional. Fidelity declines to publicise its own figure.
The platform, although operational in nature (it is managed on a day-to-day basis by Asia COO Carol Vahey), also includes systems for client education and knowledge transfer. Asian investors are particularly demanding in this regard, and also know that they can pick and choose from among many asset managers eager for their coin.
Moreover, after the Lehman Brothers collapse, investors have quickly learned to scrutinise fund managers’ risk systems, custody relations and other types of exposures or important, if unglamorous, work.
The new service division is also meant to help Fidelity’s institutional sales team, led by Venes, to get out of the work of education and client training. The team under Vahey is charged with developing its own client contacts at an operational level.
By creating a single IT and management unit in Hong Kong, the idea is to create efficiencies and economies of scale across the region.
Venes says, however, that it will take several years before the success of the servicing platform becomes measurable in the form of higher levels of client retention, given the gradual pace of winning or losing investment mandates.