The current market environment is making distribution more difficult for fund managers, but they will need to adapt if they want to stay relevant, according to speakers at Fund Forum International in Berlin.
Speaking on a panel on cross-border distribution and next-generation technology platforms, Borja Largo of Allfunds Bank suggested that different countries are each taking a different approach to regulations such as the Markets in Financial Infrastructure Directive (MiFID) II, and that “this will make fund distribution more difficult for fund managers.
He went on to say that the quality of the product on offer will become more of a priority, and that the balance between product and price must be right, otherwise clients will look for cheaper alternatives.
Another panellist, Thomas Albert of Oppenheim Asset Management, addressed initiatives around robo-advisors in the business-to-consumer (B2C) space.
He argued that while robo-advisors can improve efficiencies in theory, and could be helpful in the business-to-business space, helping investment managers and portfolio managers, in the B2C space, any advisor has to be able to take responsibility for its advice.
He said: “There are some good initiatives and good ideas, but it will be a long time [before] this changes in the B2C space.”
SWIFT’s Valérie Letellier laid out three main reasons for fund managers to strive towards more efficiency, noting that there are already initiatives paving the way, and saying: “Even if it’s not yet there, those organisations, practices and cost reduction initiatives are geared towards that direction.”
Firstly, efficiency is required for meeting regulatory requirements. Second, it allows fund managers to concentrate on areas that create value for their clients.
Finally, Letellier noted that fund managers are operating in a changing environment, where there are new entrants and potential game-changers emerging.
She told attendees: “You need to adapt to that simply for the reason that if you do not do so, somebody else will.”
Letellier stressed that through cost control and risk control, managers will have to adapt to the revolution, finding new ways to improve efficiency and returns.
Optimisation is: “Finding an alternative way [with] the best cost effectiveness, or with the highest achievable performance, under the current constraint.”
