Immanuel Kant once noted that "experience is understanding awareness", but an interesting question is whether experience always has a positive influence on the actions of players in the market, or whether, under certain circumstances, they ignore experience. The German investment market has become increasingly attractive for foreign asset managers in the last few years. Some of the driving forces behind this could be; the ‘UCITS theme' reducing administrative and regulatory hindrances; the professionalisation of investors there, and the development of an independent service provider industry, with marketing, PR, placement agents, and so on. Either way, for some time now, investors have recognised that good asset management talents can be found outside Germany. New funds have been launched by investment companies such as Universal Investment, Hauck & Aufhäuser, HSBC Trinkaus and other ‘promoters' of funds that are independent of banks. They, too, have shown that the market in Germany is of interest. The same applies to established, group-dependent companies such as DWS Investments and Union Investment, which follow the market for foreign asset market expertise attentively. Whether it is "smaller" or "larger" managers coming from abroad, the experience they gain often displays a great deal of similarity. Domestic providers, at a ‘micro level', also require this wealth of experience. There are naturally successful entrants to the market, however, it is of interest to know that this is without claim to completeness: which factors can present possible stumbling blocks for market entry? Markus Hill (MSc in Economics) is an independent asset management consultant based in Frankfurt, Germany Professional experience includes SEB Bank and Credit Suisse Asset Management. In addition, he worked as head of sales and PR for a German fund boutique. Since 2005 he specialized in the management of mandates, sales, marketing, and PR (consulting, "introducing"). Markus is also involved in selecting themes in the specialist areas of target funds with a multi-management aspect, fund boutiques and mutual funds for institutional investors (product scouting, fund selection). Furthermore he is actively engaged in cooperation with the market-leading Private Label Funds/Master KAG in Germany (Universal-Investment) promoting the idea of independent asset management and was the Co-Initiator of the first all-German Consultant survey in 2005 and the first "UCITS-survey" in 2003. Market entry into Germany, behavior of fund selectors and fund providers in German asset management industry are often discussed by him, e.g. in his asset-management-publication MH-Focus. Through many articles, columns and presentations (national and international) he has become a highly recognized expert in the German asset management industry. "Industry multiplier" is a term often used by journalists and clients to describe his style and personality. (Markus Hill/ MH Services assigned in th

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Consultant Markus Hill on how foreign groups can enter
Germany
Immanuel Kant once noted that "experience is understanding awareness", but an interesting
question is whether experience always has a positive influence on the actions of players in the
market, or whether, under certain circumstances, they ignore experience.
The German investment market has become increasingly attractive for foreign asset managers
in the last few years.
Some of the driving forces behind this could be; the ‘UCITS theme' reducing administrative
and regulatory hindrances; the professionalisation of investors there, and the development of
an independent service provider industry, with marketing, PR, placement agents, and so on.
Either way, for some time now, investors have recognised that good asset management talents
can be found outside Germany.
New funds have been launched by investment companies such as Universal Investment,
Hauck & Aufhäuser, HSBC Trinkaus and other ‘promoters' of funds that are independent of
banks. They, too, have shown that the market in Germany is of interest.
The same applies to established, group-dependent companies such as DWS Investments and
Union Investment, which follow the market for foreign asset market expertise attentively.
Whether it is "smaller" or "larger" managers coming from abroad, the experience they gain
often displays a great deal of similarity.
Domestic providers, at a ‘micro level', also require this wealth of experience.There are
naturally successful entrants to the market, however, it is of interest to know that this is
without claim to completeness: which factors can present possible stumbling blocks for
market entry?
Underestimating the market potential - with the handbrake on
Foreign managers from the USA, Canada and Australia often regard Europe as one single
entity and, because the managers share the English language with the United
Kingdom, they tackle the European market, initially at least, from London.‘Hit and run entry',
preferably coupled with local European administrative ‘building sites', is a well-known
method of approach.
As far as Asia is concerned, many managers over there currently regard their own market -
Singapore, Hong Kong and so forth - as being more attractive.As a result of insufficient
knowlwedge about the market or a negative appraisal of the market, it is often forgotten that
Europe and particularly the German-speaking community of Germany, Austria and
Switzerland, forms a very attractive market in which to sell.
Not only the sheer size of the market appears to be attractive.
The variety of sales channels or, respectively, the target investor groups, also make it
attractive.
Success can still be achieved rapidly, in certain circumstances, even if a group approaches the
project of ‘German Market Entry' with limited resources.
What is often forgotten is that only a small part of the market potential is actually used.

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This may be an advantage in regards to the sales targets of the head of international business
development.
However, the foreign asset manager envisages a longer-term, more fruitful scenario.
Budgets and resources could often be increased for sales tasks, in order to be in a position to
take up the opportunities in Germany quickly.
Misjudging the Potential for Market Penetration
Closely linked to the mis-judgement of market potential, in cases of many foreigners trying to
enter the German market, is so-called "tonnage thinking". In this, the approach is taken that
large investors such as big corporates, pension funds and insurers, large funds of funds and
banks will automatically bring 'large turnover'.
Or alternatively that "the consultant, as the first person to contact, will put everything in
order".
Another common misjudgement of managers is sometimes, "If I am registered on a marketing
platform, then the investors will automatically take notice of me".
It is often forgotten that registering on platforms is no replacement for speaking with clients.
Strategic partners of a certain size have, by dint of their size, the power in negotiation, and
there is no certainty that inclusion on a ‘preferred partner' list or on a so-called ‘watch list'
will replace active selling of assets in Germany.
Consultants are recognized knowledge centres. However, foreign fund providers often forget
that many consultants are dependent upon their own customers actively issuing mandates. The
managers do not appreciate the struggle between the time-consuming task of filling out RFP's,
as opposed to the high pressure on margins in beauty contests.
Here, too, a more comfortable path appears tempting - of asset manager lists, which could
possibly be supplemented with additional sales activities.
A similar theme is found in platforms on which sales partners can order funds. This sales
approach is clearly passive.
Naturally, here, one should remember to do one thing, but not forget to do the other.
Personnel Employment, Milestones and Target Groups
Many foreign asset managers naturally place their focus on their domestic markets.
The task of tackling foreign markets is put in the hands of their head of international business
development, or the hands of a regular sales employee as a special project.
Naturally there are differences between boutiques with assets of a certain magnitude, and
companies which may manage group-wide funds of hundreds of billions of dollars.
Even the most involved, internationally-active sales employee - both at boutiques and at far
larger firms - quickly reaches his limits here. Travelling, meetings, reporting, follow-up
telephone calls and visits all take time.
An even greater risk exists in cases where markets are entered using a ‘part time' employee
(‘project work'), namely the risk that much of the potential in penetrating the market is
wasted.
Many companies are overtaxed simply by the number of umbrella fund managers, banks,
family offices, corporations (the list goes on) spread across the various investor addresses in
Germany's decentralized structure.
In the event of there not being enough personnel employed to fulfill a market entry project, it
is often difficult for a foreign manager to sell success to colleagues inhouse. Making a certain
number of trips, or holding a number of discussions - many perhaps combined with a pure
‘fact finding' mission - does not on its own constitute a long-term market entry strategy for
asset management sales.
And how can milestones be defined and achieved when, over a longer period of time, only
one toe is put in the water?
Reaction Management, Expectations and Priorities
From the aforementioned potential stumbling blocks, one can often see interesting reactions
from foreign fund providers trying to enter German-speaking Europe.
If too much is expected in too short a time, sales projects are greatly stretched out in time and
investors in Germany then wonder why attractive asset managers are not paid attention to'.

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Perhaps the leaders at the foreign manager have not done the necessary ‘homework'.
Or the internal promoter of the project called "German Market Entry" has a difficult task
within their company, as a result of their company constantly changing priorities. One
prevalent example at the moment may be that Asia is now more interesting for sales than
Europe, and that includes Germany!
The task of sales in Europe then understandably proceeds in a stop-start fashion.
Another kind of reaction that can be seen is that a poor strategy is pursued, with the efforts
behind it doubled.
A good example of this is the provider which packages an average performing hedge fund in a
UCITS wrapper, and believes that German investors would appreciate products of this type.
The taking of responsibility, revising of decisions and changing direction are all areas that can
be done far better by asset managers in future.
Conclusion
As described earlier, there have been many successful market entrants into Germany.
For this reason it is even more interesting to note that the above points, chosen in no particular
order, are always of importance for those entering the market.
The experiences described show that there are several critical factors to get right to enter the
market, but they are often not considered, or only parts of them are considered. Perhaps this
has something to do with the fact that many people wish to, or even have to, learn from their
own mistakes.
Another possibility is that some distrust exists among foreign managers in regards to internal
or external know-how and support.
There is, however, a simple rule for making good use of experience, which can converted into
doing business cleverly.
KISS - ‘keep it simple, stupid'.
Time is a valuable resource, and preparation requires time. In the case of projects such as
entering new markets, it often helps to step back, take a deep breath, pause and analyse.
Because good preparation often creates the basis for long-term sales success in Germany.