Building a deeper direct client base in Asia is one of JP Morgan Asset Management's key aims in the aftermath of the global financial crisis.
"Before, most of the fund flows we received came through third parties, through intermediaries," says David Hsu, Asia-Pacific CEO of JP Morgan Asset Management. "Our focus now is how to reach out and communicate with our clients directly."
In the post-Lehman Brothers and post-Bernie Madoff world, fiduciary responsibility is becoming increasingly important. "Understanding our clients, giving them advice and executing that advice is very important," says Hsu. "The interests of the intermediaries are different from ours, partly because they are focused more on commissions whereas we are focused on capital gains for our clients."
Hsu -- who made the comments at a JP Morgan Asset Management conference for Hong Kong, India and Taiwan media last week -- says the renewed focus on the direct client base won't require a significant infusion of infrastructure and resources because the objective can be met mainly through e-commerce.
JP Morgan Asset Management clients in Hong Kong, Taiwan, and China already make use of the fund house's website to conduct research, seek advice, and place orders for fund units. In July, the service will also be available to clients in India. Eventually, it will also be rolled out in Korea and in other markets in Asia.
"Because of the internet technology, this is now possible," says Hsu. "Ten years ago, this method of communicating directly with clients would not have been possible."
JP Morgan Asset Management is also planning to aggressively strengthen its product offering in Asia, hoping to register more products in various markets in the region. "In Asia, we are already in all of the markets we want to be," Hsu says. "What we want to do is to strengthen our product offering."
Due to various regulatory constraints, the fund house could not be more specific with its planned rollout of products in various markets.
Hsu made note that post-crisis, the regulatory environment is generally "not that business-friendly anymore". Because of issues such as mis-selling of products, such as the Lehman minibonds, that left many retail investors in the dark, the regulatory environment for asset management firms is tougher, Hsu notes.
"In the past, if you wanted to invest in a fund through an intermediary, it would take you 10 minutes to do so," he says. "Now, it could take around one hour to two hours because of all the additional compliance requirements."
That would require a change in the way asset management companies and intermediaries do business, Hsu says, and this is another reason why he believes that increasingly, the industry will turn to e-commerce.
JP Morgan Asset Management manages more than $1.5 trillion in assets worldwide. The business manages more than $78 billion on behalf of Asian clients (including assets managed by joint ventures). It has offices in Hong Kong, China, India, Singapore, Japan, Korea, Taiwan and Australia. It has nearly 130 portfolio managers in the region, including the 78 that are part of its Hong Kong-based Pacific regional group. Its key investment strategies in the region are Hong Kong and Greater China equity, Asia ex-Japan equity, Asia absolute return, Japan equity, real estate, and infrastructure.
