Adverse conditions force restructuring

PWM has commented previously on the need for asset managers and private banks to organise their business in an efficient manner. Now bleak economic and operating conditions are forcing the hands of many players. Attention has recently focused on UBS, which has given greater autonomy to its three divisions. The idea is to prevent bad results in investment banking affecting sentiment among wealth and asset management clients. Varied response Reviews across the industry are varying from slight tinkering to fully fledged, root-and-branch affairs. Société Générale Asset Management (SGAM), the French house running E310bn globally, has in the past been a forward thinking player. At the end of the last century, its strategists built up an attractive and robust alternatives arm, while many competitors were twiddling their thumbs, wondering where the next inflows would come from. Similarly, it has expanded in Asia, doubling assets to $43bn over the last three years and vastly increasing revenues through an intricate understanding of local regulations, importation of some foreign practices and pioneering use of joint venture mechanisms. But there have been problems closer to home. The quality of products being sold through SG branches badly needed updating. The relationship with SocGen’s other provider Lyxor is also an uncomfortable one, with both both SGAM and Lyxor often competing for the same clients. Key to the challenges faced in SGAM’s HQ in the Northern Parisian financial suburb of La Défense, is how to recoup the E10bn of assets which flowed out in the first half of this year, much of it in traditional and dynamic money market funds and alternatives. Reshaping sales Laurent Bertiau, who enjoyed so much success in running the Asian business, has now been given the challenge of reshaping the global sales effort. He is visiting every product line and distribution channel to see how things are currently done and how they can be done better. The gifted amateur approach of “we will see how it goes” should become a thing of the past, he says. There will be a focus on a finite number of large distributors in each market. This is an approach Goldman Sachs Asset Management has been following for some time. But it is now being intensified. Sales staff are increasingly being monitored to make sure they are speaking only to bigger distributors. Germany and Italy have been identified as the key markets for expansion in Europe, despite being the countries that have suffered recent, massive outflows. As GSAM’s boss of European fund sales, Nick Phillips says: “Today, there is no easy market in distribution.”