The availability of choice and supply and demand are hallmarks of any customer marketplace, and asset management is no different, as the industry is quickly becoming one that offers as much variety as those that sell mobile devices or caffeinated beverages. With an expected peak of $3.7 trillion in 2020, the demand for multi-asset investment products is increasing across investor levels, and several firms are taking steps to not only develop these dynamic, globally-measured packages, but also deliver them at a greater level of internal efficiency and collaboration. As the sophistication of investment plans and the competition between firms offering them increases, advisors must differentiate themselves through the sales process itself, providing customers with a personalized and comprehensive experience.
Behind the Scenes
On the backend of this supply and demand exchange reside firms like Allianz Global Investors and Voya Investment Management, who are cautiously and methodically developing multi-asset products that can mitigate market volatility and hedge risk through more dynamic exposure. The construction of tailored, diversified solutions isn’t just an outcome of internal ideation aimed at industry competitiveness, but also a direct result of current investor sentiment and evolving behavior, as Paul Zemsky, CIO at Voya explains:
“We’re definitely seeing more competition. Plans have gotten more sophisticated – they know [they need to have] have allocations across the world in different capitalizations, different regions – into emerging markets, commodities, private equity, private real estate… any medium or large plans won’t tolerate a manager doing simple stock and bonds anymore.”
The latter part of Zemsky’s statement is not only indicative of the measure of product sophistication and customization investors are looking for, but also the manner in which these new packages need to be presented. A new advisory process—and content that clearly conveys the benefits and achievements of a firm’s particular multi-asset offerings—is necessary to resonate with each individual client.
Front of the House
Engaging and consulting clients about the multi-asset choices available to them requires taking a fresh, more involved approach on the part of advisors, and J.P. Morgan Asset Management and Russell Investments are very much aware of this. Each firm is employing its own relationship strategy, with JPMAM embarking on a six-city roadshow, connecting institutional clients and managers through informational sessions, and Russell focusing on outsourced CIO clients, utilizing its deep ranks of investment advisors as sales professionals. Yet because this demand for multi-asset products has substantially altered the traditional sales playbook, both firms are executing a training initiative that will help portfolio managers deliver the most impactful value for clients.
As Jed Laskowitz, co-head of global investment management solutions for JPMAM says about his firm’s roadshow sessions, “Those sessions aren’t about us talking. They’re intimate sessions of roughly 10 to 15 members to a session and we start by going member-by-member [to discuss investment issues]. All institutional clients are incredibly thorough in the work they do and so much of the work is up front around understanding the problem and understanding each clients’ circumstances.”
Northern Trust, adopting a model similar to JPMAM and Russell, is positioning itself as a relationship-based, multi-asset firm that encourages managers to have solution-centric conversations with clients, educating them on the conditions of today’s market so that sales conversion cycles can adjust during this transitionary period. “It depends on where the institution is and their evolution towards solutions-based investing. For those that have had experience structuring portfolios based on outcomes, it might be a 12- to 18-month sales cycle,” William Blair of Northern Trust says. “Then there are those prospects and consultants out there that haven’t had as many discussions and then it gets to be much longer than that. It’s about creating the partnership with consultants and also directly with the prospects that don’t use a consultant.”
Part of a Broader Trend
UBS recently announced its intention to merge U.S. and non-U.S. investment groups in order to scale efficiencies, align efforts, and broaden investment options for clients. The firm expects greater collaboration among advisors due to the merge, and looks to launch an entirely new platform across global markets in the near future.
Therefore, the notion of providing clients with additional investment choices and a more effective, personalized experience isn’t confined to the industry area of multi-asset offerings. There is a much larger, globally-present movement underway, one that harnesses the power of advantageous technologies and market demands in order to reduce costs and increase revenue. But as this transition can be logistically and organizationally complex, the firms that begin the process earlier will quickly gain an edge over peers.