Navigating the Evolving Landscape: Insights from the Funds Management Distribution Round Table 2024

Diversity and Inclusion at the Forefront

Camilla Love, our moderator, set the tone for the event by highlighting the importance of diversity and advocating for diversity in funds management distribution. She noted the diverse representation at the table across gender, age, culture, and ethnicity, underscoring the inclusivity of the discussions that followed.

In discussions on how to operationalise data insights for efficiency, attendees explored various technologies, including LinkedIn Sales Navigator and LinkedIn Helper for enhanced networking and prospecting. Ortto was mentioned for automating client journey settings, utilising AI to communicate more effectively and maintain quality. Power BI emerged as a favoured tool for mapping client journeys.

Attendees noted the trend of organisations investing in bespoke solutions tailored to their specific needs. Marketo and Hubspot were highlighted for marketing analytics, seamlessly integrating with Salesforce and leveraging AI within the Salesforce platform. These discussions underscored the importance of leveraging technology for lead generation and client reporting in a landscape where maximising efficiency is paramount.

There has been a sharp rise in the number of asset consultants across the retail channel post the Royal Commission. Attendees exchanged insights on the impact of this trend on the industry landscape and suggested the need for consolidation of retail asset consultants in this space over the next 3-5 years.

On the other hand, as superannuation funds take research capabilities in-house, we have observed the influence and demand for institutional asset consultants being impacted by this trend.

Conversations centred on fee compression and its implications for the industry, including cases of “out-pricing yourself” from competition. Examples of searches or research houses excluding firms due to high fee structures were shared, prompting reflections on pricing strategies in a competitive market.

The fate of traditional active investment strategies was deliberated, with discussions highlighting that these fund managers will need a very strong value proposition, strong performance, brand, and reputation to survive in a crowded market. Traditional equities and fixed-income strategies are the first to be in-housed by asset owners, in particular superannuation funds. They are also the first investment strategies to be taken passive by wholesale and retail investors. In this environment with a strong demand for alternative investments, squeezed margins, consolidation of the Australian institutional market, and fierce competition, not all fund managers will survive.

Attendees shared experiences of navigating fee negotiations amidst increasing difficulties. In one instance, a senior business development manager walked away from a mandate due to a misalignment between pricing and service models. Another example involves a large global fund manager losing business to competitors because of inflexible global policies that hindered negotiation flexibility.

These rigidities are impacting relationships and resulting in missed opportunities for further fund inflows. In the highly competitive Australian Equities space, some firms are taking drastic measures, such as shedding underperforming fund managers, to regain pricing power and restore balance. However, amidst this landscape, there are bright spots.

For instance, one investment management firm stood out for its successful fee negotiation strategy, leveraging customised Net Zero Environmental, Social, and Governance (ESG) initiatives to advocate for stronger fee agreements with both new and existing clients. This innovative approach highlights the importance of differentiation in negotiation tactics amid industry challenges.

Insights into global market trends, including growth in the USA wholesale market and the Middle East, were shared. Discussions also touched upon regulatory challenges, such as ASIC’s greenwashing focus, and their impact on operations, highlighting the need for stringent compliance measures.

In the quest to become more effective salespeople, sharpening our sales tools is paramount. While it may seem counterintuitive in a role where speaking often takes centre stage, mastering the art of active listening with clients is crucial. Understanding that listening and absorbing information can lead to a deeper understanding of clients’ key challenges, motivations, and drivers, ultimately strengthening and building relationships.

External learning opportunities, a given example being the Kellogg Entrepreneurial Sales program, can provide invaluable insights into asking high-impact questions that provoke thoughtful responses and reveal deeper insights. Additionally, engaging in team activities like reading books such as “Atomic Habits” and deliberately practicing its principles can lead to incremental improvements. Another example was investing in courses around building social capital, which can further enhance our ability to connect with clients on a deeper level, making us more effective salespeople.