Secrets to success for country cuckoos

Who has the advantage in European wealth management – a domestic player or a foreign one? This is a particularly pertinent debate in France, Germany and the UK, where other European and US houses are taking on local players. France was always considered to be closed to foreign fund houses and there has not been huge market penetration by outsiders, although the likes of Credit Suisse Asset Management (CSAM) and Goldman Sachs Asset Management (GSAM), have had some success in Paris, using French staff. The secret, say the Parisian representatives of both groups is for the market to actually begin believing that the groups are French. GSAM initially failed to realise this in the UK for many years, with its marketing campaign for large clients being led by its very high profile American duo of co-chief executives. Talented as the two were, they were known everywhere as “the Yanks” or “the Americans” and the group perceived as a foreign interloper in local territory. Although senior management remains heavily US influenced, it is the product line managers and locally raised distribution teams who are now in the firing line with clients. GSAM’s marketing brains have done all they can to bury the “US manager” tag of old. Now that distribution sensibilities are understood, success is gradually coming in Europe. State Street has learned a similar lesson about the importance of European markets, with three European directors recently appointed to its board. This is a welcome, if belated, recognition from US giants that they can no longer carry on introducing American systems and practices to the rest of the world, without sensitivity to local culture. In Germany, there are problems for local groups. Fund managers Deka and Union have always had the exclusive attention of local savings banks, to whom they are institutionally tied. But with a transfer of power to younger colleagues expected when the current generation of bosses retires, the policy of the banks is likely to change. Foreign managers are waiting in the wings for a much more open architecture from the sparkassen. The story is similar for large financial advisory players such as DVAG, currently tied to local manager and Deutsche Bank subsidiary DWS. Foreign managers do not have captive distribution through banking networks in Germany. But that also means they are not mired in local politics, so it can be an advantage. They still need to work hard to succeed and to demonstrate performance, brand, a broad product range and an innovative attitude to new opportunities. After all, some of those foreigners who enjoyed early success five years ago, but failed to provide the necessary service or broad palate of products, are barely mentioned today.