With changes to remuneration structures affecting fund houses, life insurance companies, IFAs and the clients, BNP’s head of external distribution said it has become “more complicated from a regulatory point of view”.
“We don’t know how this is going to work out yet. Cost has become ridiculously important, and is the first question we get asked now, before questions about the underlying investment,” he said. “I think this has gone too far.
“However, it’s logical that the discussion is going that way to deliver the right outcome for the end-client. We’re all going to have to chip in.”
The four asset management chiefs also argued that greater communication between life companies and asset managers is needed to help companies drive sales into the right markets.
“Transparency is the buzz word in this whole industry, we should be embracing it across the book because we can partner better with [international life companies] if they give us transparency,” said managing director of Investec Asset Management Richard Garland during the panel debate.
“Our only interest is to know where the assets are, because we all have the same challenge,” he said. “It’s making sure our interests all align.”
BlackRock’s Tony Stenning agreed, saying: “We don’t need to know which IFA it is [selling the product], we just need to know what region it came from.”
Meanwhile, HSBC Asset Management’s chief executive Andy Clark said there is a dichotomy between global life companies and global asset managers.
“In terms of the clients we deal with, it can be hard work for global asset managers as they can often have lots of levels of bureaucracy,” he said. “This means that we don’t necessarily see the underlying clients or our client. I think there is a big issue there.”
This means that we don’t necessarily see the underlying clients or our client” he said. “I think there is a big issue there.”
Talking about the ownership of large insurance companies, Garland said if the firm is committed holistically, then having a big parent company that is also committed to the offshore life industry is fantastic. However, he argued that most of the time it doesn’t happen that way.
Kramer said this could be turned the other way: “If large insurance companies are owning small offshore life companies and not doing much with them, then the question is why?
“There must be value in the companies, and if large insurance companies don’t see it, then who is seeing it?”
Stenning pointed to ongoing changes in the expat market business model, with a greater interest in multi-asset funds: “In the past this was pretty much unheard of because there was more interest in single-strategy higher-risk funds within portfolios.
“Expats want more centralised business propositions,” he said.
Stenning also highlighted that asset managers have to abide by certain sanctions, which mean they have to do certain due diligence checks on distributers. He said failure to do so could have “serious ramifications” on the business.
Expanding on this, Garland said: “The onus is coming back our way now and we have to be far more cautious and aware of the source of the assets.
“From our view point, we don’t have unlimited resources to do that, so asset managers end up having to focus their efforts on a small number of groups which they’re comfortable with. The big get bigger all round.”