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Multi-manager investment structures for European wealth managersProduct Type: Market Research ReportPublished by: Datamonitor Published: March 2004 Product Code: R313-6588 Description IntroductionThis brief analyses the developing multi-manager trend and the implications for European wealth managers. It assesses key drivers, the major advantages and disadvantages of different multi-manager structures, competitive activity in this area and the strategic options for wealth managers, including the future opportunities and barriers to further development. Scope Squarely focused on the implications of multi-manager investment structures from a wealth managers perspective Includes competitive examples and case studies of key initiatives by wealth managers' in this area Covers both fund-of-fund and manager-of- manager structures with a primary emphasis on the manager-of-manager approach. European in focus Reasons to Purchase Full analysis of the pros and cons of multi-manager structures allows wealth managers to objectively assess their suitability to their business Outlines the emerging competitive landscape, allowing wealth managers to identify their place and in the increasingly complex competitive picture Report Highlights The declines in asset valuations have created a substantial amount of pressure to achieve a stronger and more consistent level of investment performance. Increasingly demanding customers have also become more explicit in highlighting their dissatisfaction with being tied to one investment manager across a relatively narrow range of asset classes. In reality if wealth managers maintain control over strategic asset allocation (the major factor influencing investment performance) then they are in fact the ones who will most determine the future value of clients’ investments. While they should not undermine the use of third party investment managers this fact needs to be clear. For those that ascribe to the fully integrated wealth management model that covers all asset classes (and there are many advocates) then it is clear that to some extent third parties will have to be included into wealth manager offerings, but Datamonitor does not believe that the MoM route is by any means the only one wealth managers can take Reasons to Purchase Offers a future focused view of the strategic options for players adopting a multi-manager approach and for those seeking longer term alternatives Table of Contents TABLE OF CONTENTSTHE DEVELOPING MULTI-MANAGER TREND 6 Introduction 6 Definition of multi-manager investment structures 6 Market drivers 8 Advantages and disadvantages for wealth managers 10 Investment performance and risk 10 Business focus and capabilities 13 Costs, revenues and prices 14 Client interpretation 16 A shift to a mixed approach? 17 COMPETITIVE DYNAMICS 18 Wealth manager uptake 18 The role of manager-of-manager specialists 18 Wealth Manager Case study 1: Coutts 21 Wealth Manager Case study 2: HSBC Republic 23 Wealth Manager Case study 3: C Hoare & Co. 24 Emerging Competitive Landscape 26 Future drivers and barriers to development 26 The developing manager-of-manager value chain 27 Product substitution 28 STRATEGIC OPTIONS FOR WEALTH MANAGERS 30 The decision to adopt manager-of-manager structures 30 Key considerations 30 Longer term alternatives to manager-of-managers 31 Options for incorporating manager-of-manager stuctures 32 Selecting the strategic approach 32 Key transitional risks 34 APPENDIX 36 Definitions 36 Research methodology 36 Further reading 37 Datamonitor Global Wealth Service: Reports 37 Datamonitor Global Wealth Service: Insight Reports 37 Datamonitor Global Wealth Service: Competitor Tracking 37 Related Savings & Investments SPP Reports 38 Datamonitor Financial Services Consulting 38 Datamonitor’s Global Wealth Model 38 SPP writing team 40 LIST OF TABLES Table 1: Russell’s alliance/distribution agreements in the retail and private banking sector, February 2003 19 Table 2: Wealth markets that have been modeled using the Global Wealth Model 39 LIST OF FIGURES Figure 1: Overview of multi-manager investment structures 7 Figure 2: Key drivers behind the multi-manager trend 8 Figure 3: Range of 1, 3 and 5 year performance of UK multi-manager funds as at end February 2004 12 Figure 4: Example imagery from Coutts’ “Dream Team” campaign 23 Figure 5: Clients need to be convinced that wealth managers still add the majority of the value 28 Figure 6: Wealth managers must establish their strategic positioning in terms of scale and investment management capability 33 |
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