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kasina Distribution Shifts Shaping US Asset Management
kasina Distribution Shifts Shaping US Asset Management
kasina Distribution Shifts Shaping US Asset Management
kasina Distribution Shifts Shaping US Asset Management
kasina Distribution Shifts Shaping US Asset Management
kasina Distribution Shifts Shaping US Asset Management
kasina Distribution Shifts Shaping US Asset Management
kasina Distribution Shifts Shaping US Asset Management
kasina Distribution Shifts Shaping US Asset Management
kasina Distribution Shifts Shaping US Asset Management
kasina Distribution Shifts Shaping US Asset Management
kasina Distribution Shifts Shaping US Asset Management
kasina Distribution Shifts Shaping US Asset Management
kasina Distribution Shifts Shaping US Asset Management
kasina Distribution Shifts Shaping US Asset Management
kasina Distribution Shifts Shaping US Asset Management
kasina Distribution Shifts Shaping US Asset Management
kasina Distribution Shifts Shaping US Asset Management
kasina Distribution Shifts Shaping US Asset Management
kasina Distribution Shifts Shaping US Asset Management
kasina Distribution Shifts Shaping US Asset Management
kasina Distribution Shifts Shaping US Asset Management
kasina Distribution Shifts Shaping US Asset Management
kasina Distribution Shifts Shaping US Asset Management
kasina Distribution Shifts Shaping US Asset Management
kasina Distribution Shifts Shaping US Asset Management
kasina Distribution Shifts Shaping US Asset Management
kasina Distribution Shifts Shaping US Asset Management
kasina Distribution Shifts Shaping US Asset Management
kasina Distribution Shifts Shaping US Asset Management
kasina Distribution Shifts Shaping US Asset Management
kasina Distribution Shifts Shaping US Asset Management
kasina Distribution Shifts Shaping US Asset Management
kasina Distribution Shifts Shaping US Asset Management
kasina Distribution Shifts Shaping US Asset Management
kasina Distribution Shifts Shaping US Asset Management
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kasina Distribution Shifts Shaping US Asset Management

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Slides from my Keynote Address at the Institutional Investor Institute Senior Delegate Roundtable in Aspen, CO on January 19, 2010.

Slides from my Keynote Address at the Institutional Investor Institute Senior Delegate Roundtable in Aspen, CO on January 19, 2010.

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  • [Research analysts - increased scrutiny of investment products] Decisions are data-, not relationship-driven; e-Business should develop online solutions to accommodate each distribution partners’ changing needs;
  • Show regions, wealth, mf growth, US investment Source si
  • Transcript

    • 1. Distribution Shifts Shaping the Future of US Asset Management Mike Ma Institutional Investor Institute Senior Delegate Roundtable Aspen, CO January 19, 2010
    • 2. Today’s agenda
      • There is unprecedented opportunity for institutional-oriented asset managers to succeed in post-crisis market
        • Part I: State of retail distribution today
        • Part II: Signs that institutionalization of retail is happening
        • Part III: Why this makes sense to act upon in 2010
    • 3. State of Retail Distribution
    • 4. The retail distribution challenge today
      • External wholesaling has been the primary vehicle by which assets are grown
      • The model has struggled to scale
        • Assume 20 meetings a week and quarterly advisor visits by a very large force of 100
      Source: kasina, Aligning Distribution: The $500M Challenge, 2007
    • 5. Two problems with the external wholesaling model
      • How do you know you are reaching the right advisors today?
      • What do you do about the ones you are not touching?
      Source: kasina, Aligning Distribution: The $500M Challenge, 2007
    • 6. How have retail organizations tried to respond?
      • Cost-cutting through lower cost distribution models and technology
      • Adjusting compensation to get better efficiency from external wholesaling model
      • Creating institutional-like sales functions in national account organizations
    • 7. Cost-cutting: Lower-cost distribution models
      • Hybrid Wholesaling has been the post-crisis rage
        • Replace a traditional external and internal wholesaler pairing with one resource that can fill both roles
          • Will travel only 30-50% of the time at 1/3 the cost of a typical external wholesaler
        • Some success has been shown in this area in examining 10 implementations of this model
      Source: kasina, The Truth About Hybrid Wholesaling , 2008
    • 8. Cost-cutting: Using technology to drive sales
      • kasina found that advisors who use an asset manager’s Web sell more on average
        • Those covered by wholesalers sell 25% when they use the Web site
        • Those not covered by wholesalers sell 45% more when they use the Web site
      Source: kasina, “Your Site Can Sell, Too”, 2008
    • 9. Adjusting compensation
      • Most organizations have an over reliance on gross sales
        • Questionable linkage from net sales/profit to gross sales
        • Offers poor cost forecasting
      • Still changes are small and incremental due to cultural inertia
    • 10. Adjusting compensation
      • Few firms are allocating a higher percentage of compensation to activity-based compensation
        • Again, changes are still small
      Source: MF Wire
    • 11. Retail Distribution is Focused on Tactical Reform
      • Cost cutting through lower cost distribution models and technology
      • Adjusting compensation to get better efficiency from external wholesaling model
      • Creating institutional-like sales functions in national account organizations
    • 12. Institutionalization of Retail
    • 13. Investment decisions are being centralized
      • Retail distributors will promote product and wrappers, such as the UMA
      • Despite short-term backlash against research analyst recommendations, advisors:
        • Spend, on average, only 17% of their time on investment management
        • Will forego investment-related activities to focus on client service
      Source: kasina, Evolving Distribution Amid Bad Markets, 2009
    • 14. Institutionalization of retail distribution
      • Distributors’ investment decisions are data-, not relationship-, driven
      • Research analysts have become the gatekeepers to the distribution platform:
      • National Account functions are expanding to DCIO and sub-advisory
      Source: kasina, Cracking the Code, 2007
    • 15. Key Accounts Strategy Is Requiring a Split of Roles
      • Increasingly, firms are separating the job into two roles to assist with:
      Source: kasina, Beyond Key Accounts, 2005
    • 16. Case Study: International Stock Funds Source: Morningstar Direct Fund Flows Update, December 2009
      • Let’s look at product development of the one traditional equity class that showed inflows this year
    • 17. How do stars affect eventual market share?
      • kasina examined the market share impact of all international and global fund launches since 2000 before they were given a Morningstar rating
      Source: Morningstar Direct, kasina analysis Eventual Morningstar Rating
    • 18. A counterintuitive result
      • Why does four-star beat five, and why does one-star show positive change?
        • Professional buyers are exerting their influence looking for value and story
        • Be a rule-maker or a rule breaker, do not be stuck in the middle
      Source: Morningstar Direct, kasina analysis Value buying Story
    • 19. Summary: Institutionalization of Retail is Happening
      • While early, organizational developments at distributors and asset managers are in their early stages
      • Professional buyers’ influence is beginning to change the way the that products are bought and sold
    • 20. Why Act In 2010?
    • 21. There are significant reasons to act today
      • Institutional organizations are well-positioned to capitalize on this opportunity
        • Retail organizations are trying to do what you do
        • Global and internationalization efforts can be accelerated and diversified
        • Technology is making it easier to promote your brand
    • 22. Few have done well
      • For all the press and coverage, only a few success stories exist
        • They are all new entrants to the intermediary retail space
    • 23. Institutional brands matter
      • Dimensional could no longer ignore the grass-roots demand from the retail market
      Source: MF Wire
    • 24. Institutional organizations are already institutional
      • Institutional organizations are already better staffed and trained to handle institutional-like queries
        • Biggest challenge is the gross sales mentality of traditional retail organizations
    • 25. Consolidation creates quality and capacity
      • Growth of institutional outsourcing is upping demands and talent of institutional teams
      • Fewer accounts to service can free extra capacity for retail focus
      Source: Casey Quirk Investments Outsourcing Survey 2008
    • 26. Global Implications of Institutionalization
      • Most of the traditional distribution infrastructure is not optimized against opportunity
      Source: kasina, Distribution Summit, 2008
    • 27. Mergers create single point of entry
      • As mergers continue to evolve, institutionalization is becoming a clearer ally to global growth
      Source: kasina, Distribution Summit, 2008
    • 28. Regional footprints are cross-channel
      • Institutional resources are being deployed first in a region with retail endgames in mind
      But no matter where the investor is, the firm has tried to stay true to a simple mission: to help investors reach their objectives by being the highest-value provider of investment services -- Bill McNabb
    • 29. Your audience is growing … and listening online
      • LinkedIn attracts more profitable advisors than average asset manager Web sites and their own firm intranets
        • “ Banned” sites like Facebook and Twitter are up and coming and are likely to increase with a more mature regulatory environment
      Source: What Advisors Do Online 2009, kasina
    • 30. Technology makes it easier to build a brand
      • Some of the best are just starting their efforts
    • 31. There are significant reasons to act today
      • Institutional organizations are well-positioned to capitalize on this opportunity
        • Retail organizations are trying to do what you do
        • Global and internationalization efforts can be accelerated and diversified
        • Technology is making it easier to promote your brand
    • 32. Closing
    • 33. Anyone recognize?
    • 34. “ None of the songs were suitable for commercial release”
      • Traditional distribution channels failed Wilco and the public
        • Yankee Hotel Foxtrot went Gold
        • Wilco has gone on to sell over a million records and continually sells out shows
      • The public became educated and thirsty for good music and was willing to find it
        • Brands matter and can be created by musicians small and large
        • Technology was a critical component to success
      Source: http://en.wikipedia.org/wiki/Yankee_Hotel_Foxtrot
    • 35. Thirsty for new ideas, and willing to work for them
      • The institutionalized retail channel is open to new ideas and ready to seek them out
        • Retail and institutional channels are merging
        • Traditional retail channels are struggling to match the demand
        • Institutional organizations are well positioned to capitalize on this opportunity
    • 36. Thank You. For more information, please contact: 581 Avenue of the Americas, 5th Fl New York, NY 10011 Mike Ma Principal e-mail: [email_address] phone: +1 646 257 4470 fax: +1 212 349 7413

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