THE SEVEN SECRETS OF DISTRIBUTION

The Seven Secrets of Distribution, Strategic Insight Global's latest in-depth study on global fund distribution features survey results from more than one thousand interviews with professional fund buyers worldwide over the course of two years, and assesses the structural changes in fund and manager selection methodologies following the global financial crisis.

One thousand interviews with fund and wealth management executives over the span of two years have provided varied perspectives on fund distribution and how it is changing during this increasingly complex and still challenging period for the global investment industry.  Despite the various experiences and perspectives, some common themes from our discussions stand out, which have been distilled into seven key themes across four categories: product, marketing/information, strategic trends and client service. 

Most executives are familiar with at least a few of the “seven secrets”, as they are part of everyday distribution best practice toolkits.  But few in the industry have put them all together, and, moreover, they are changing rapidly with the emergence of new technologies and communication channels.  Most clients with whom SI has worked with have shared this framework and have found it invaluable in their competitive and strategic thinking and business development efforts.

On the product side, it includes a reduced number of blockbuster funds in a more guided architecture context, with current flows to simple and thematic funds.  Yet, selected “Newcits” funds are picking up net flows and CEOs expect absolute return and investment solutions to dominate the landscape in the years to come, initially via “bridge” products.

Information needs and thus marketing campaigns are changing rapidly.  Brand and how it is holistically presented to the public and specific client segments is paramount.  While distributors still love a good story, they are demanding more independent research and thought leadership instead of a sales pitch. 

A number of metatrends are impacting the industry in the coming ten years.  On average, small- and medium-sized firms are ready to go after new clients and geographies, while large firms are, for the time being, focused on damage control and client service in their domestic markets.

With an ever more complex industry, internal and external messages are lost in translation.  Companies that are able to effectively communicate both product details as well as what their firm stands for, are successful, but finding the right communicators is challenging and a war for talent is developing. Client service and the quality of (multiple) relationships were and are the line of demarcation between a blockbuster and being blacklisted.  As distributors reduce the number of firms they work with, they demand more customized support and tailored information.

This in-depth study closely examines these trends through distributor case studies, data on the best selling products, top investment categories and leading managers in various markets.  The seven secrets and related themes - and their combined significance - will become clearer from the commentary, charts, graphs and analysis.  They are very much on the minds of investment industry executives as they rethink distribution priorities to adapt to evolving competitive realities.

Note: 2005-2009; Money Market Funds excluded
Source:  Strategic Insight Simfund GL, MF