Small partners clipped from Schroders list

Funds house cuts back hundreds of ‘less lucrative’ distribution agreements in order to improve service for bigger customers. Independent funds house Schroders is terminating a raft of its distribution agreements in Europe. Massimo Tosato, managing director of Schroder Investment Management International, said the firm was cutting ties with hundreds of smaller partners because they are “less lucrative” and “it is difficult to provide them with a good service”. Of Schroders’ E136bn under management, 60 per cent is from wealth managers. The majority of this comes from private banks and the wealth management department of large retail banks. A lesser portion is from insurance companies and independent financial advisers (IFAs). Mr Tosato said: “We have thousands of distribution agreements in Europe, but now we want to focus on core relationships. “For years we have been building hundreds of agreements. We have deals with 2000 UK IFAs, for example.” The plan is to strengthen those that bring in “a couple of million euros a year”, possibly by forging joint ventures, and to “cut off relationships that are marginal and take away our people and time resources, which we could be using to service bigger customers.” This should leave Schroders with a streamlined number of distribution partners, “in the hundreds”. The firm is meanwhile honing its ability to produce products that can be white labelled. Last year it signed a deal with Standard & Poor’s to develop a fund of funds service that will combine S&P’s fund research capacity with Schroders’ investment skills. The firm also hopes to “diversify into growth funds and work with different levels of risk”, revealed Mr Tosato. This follows value-bias related performance problems.