With increased globalization in the money management arena comes a genuine interest by asset managers to market their services and products beyond geographical boundaries. The drive to look for cross-border distribution capabilities has been a focus for a long time by European money managers seeking to offer their services to an American institutional clientele. More recently, there has been also a growing interest by US investment firms to look for outlets in Europe to provide their services.
There are different ways to gain access to foreign markets: organic growth on one side of the spectrum – an acquisition on the other side, or establishing a strategic alliance or joint venture. All can be effective in achieving the objective of increasing the base of assets under management. Structured effectively a cross border alliance can be an ideal way of entering respective markets. However, the success of any alliance between two partners is clearly determined by the strong commitment of both on every managerial level. In a cross-border alliance, problems can be accentuated by cultural differences, as well as by communications issues caused by distance. FS Associates has an intricate and intimate understanding of the vast cultural differences that exist between money management entities in the United States and in Europe. A thorough comprehension of the nuances in this area can make or break strategic alliances in the money management arena.
The most effective way in assisting money managers in their endeavor to seek foreign distribution is by working very thoroughly and systematically. Our consulting assignments consist of two interchanged phases.
US money managers seeking to find European based clients need to know the nuances and intricacies of each individual country’s investment management arena in order to be effective and successful in gathering assets.
Phase One: Benchmarking the Client’s Capabilities, Definition of Specifications, and Recommendations on Strategies The goal of Phase One is to identify the priority areas for the client’s focus order to match its strengths in products with the marketplace’s demand for those products. FS Associates focuses on analyzing and comparing the client’s services and products with the competition that is already selling in Europe, including benchmarking of products, performance and business structure. Once this phase is completed, we provide the client with a very concise SWOT analysis (Strength, Weaknesses, Opportunities and Threats), the conclusion of ourfindings and our recommendations all leading to an Action Plan that will enable the client to implement these recommendations.
Phase Two: Implementation of Chosen Business Development Strategy During this phase we will actively assist the client in implementing the determined business development strategies of the previous phase. The aim of Phase Two is to build brand awareness for the client. Should the client decide to market its services organically we will introduce the organization to potential direct investors or “gate-keepers” such as consultants and other financial intermediaries. If however, the client feels that a strategic alliance may be a more effective way to get access to assets FS Associates, will find such an entity. We will work with the client and the selected partner(s) to assure that the implementation operates smoothly. At the end of Phase Two the client should be able to use the existing internal marketing infrastructure to follow up with these prospects and turn them into clients.
Conversely, foreign managers attempting to enter the United States with the aim to offer their international and global investment products to the largest, most sophisticated and most demanding marketplace need to have a clear marketing strategy on how to tackle this market. A clear and realistic assessment of the firm strength, weaknesses, opportunities and threats taking into consideration the investment capabilities and business structure is the necessary prerequisite to enter the US marketplace successfully.
Phase One: Providing an Overview of the Market Environment, Assessment of the Client within the US Marketplace and Recommendations on Strategies We will offer to the client an overview of the US institutional marketplace for the product range that the client intends to offer. The focus will be on marketing to institutional investors and the different distribution channels available in order to market to them effectively. We will analyze the current and potential future interest by different classes of institutional and retail oriented investors for the investment services the client offers. We will also look at the competition and the economics of entering the US marketplace, comparing the revenue generating side with the cost structures of the different existing distribution channels. During this phase we will need to understand the client’s operations and capabilities in depth. We meet with the clients at their head office in order to become intimately acquainted with the organization.This will include an analysis of the client’s investment style, philosophy, products and services in the context of US market demand. Furthermore, we will also need to become more familiar with the client from a business viewpoint as well as your overall administrative infrastructure. Upon completion of this phase, we will provide the client with a conclusion and recommendation that will enable him to assess how to most effectively enter the US market with an expectation of profitability.
Phase Two: Focus on the Defined Parameters for the most Appropriate Marketing Infrastructure and Assist our client in Finding the Professionals or Entities to Distribute the Products Depending on the outcome of our assessment of Phase One we will fine tune and assist the client in implementing the most appropriate marketing infrastructure. We may recommend an organic solution, a strategic alliance with a US manager, lacking the client’s expertise but offering an existing well functioning marketing infrastructure, or even an acquisition.
FS Associates’ detailed proprietary knowledge base helps asset managers to gather the necessary market intelligence to ascertain the most effective and efficient ways to exploit the increasingly important potential for foreign distribution capabilities.
Within the past few years FS Associates has advised institutional clients such as pension funds in finding less well known investment management firms to assist these institutions in managing their assets. Among some of the assignments were the following: