Increased choice opens distribution channels
Strategists at Allfunds Bank, Spain’s largest fund distribution platform, believe the new regulations affecting investment funds could potentially lead to a huge expansion of the the universe of products they will be able to work with.
For Beltrán Parages, sales director at Allfunds, more products will mean a greater need to further develop their advisory services. “With more choice of products clients will need more support for selecting and following up funds,” said Mr Parages.
Mr Parages explained that the approach towards third-party distribution amongst Spain’s financial institutions has changed dramatically over the last few years. “We have seen a change in attitude within the different asset management teams. Before they used to see funds managed by international managers as a threat to their own activities and now they see it as an added value that allows them to move from managing everything directly to selecting specialist in specific niches.”
He added: “In many cases they see it as a way of selling their own products because if you package an attractive product with some of the quality of international managers you’ll probably sell it better than if you try to push things you are not good at.”
Mr Parages said that in Spain, and elsewhere, asset managers have come to the conclusion they have to contemplate some kind of open architecture but, at the same time, they don’t want to take it too far. “First of all they have to maintain costly internal structures but they also have to keep margins up. When you are not manufacturing something margins can be affected,” he said. “It is a question of combining both in an intelligent way that allows you to end up with better products and hopefully better margins.”
As the market grows and competitors start to show more interest in the Spanish market, Allfunds’ market share in the distribution arena could be challenged, but Mr Parages doesn’t seem too worried. “I don’t mind loosing market share as long as the market grows. It is more interesting to have a smaller market share in a big market than the other way round.”
He said that Allfunds’ presence in Italy and the UK is helping them to develop their already very large Spanish business, since larger revenues across the company means more money can be re-invested in improving services. Also, the experience of colleagues in other countries is helping them with new products back home.
