Archive for October 14th, 2010

Knowledge is power… the rise of the Analyst

October 14, 2020

An Article by Roland Meerdter Managing Director at Propinquity Advisors

Roland Meerdter, Managing Director at Propinquity Advisors will speak at FundForum USA

Through the market turmoil and rapid evolution in the asset management industry over the last several years, one thing remains crystal clear. Decisions about the buying and selling of investment product are increasingly concentrated in the hands of manager research analysts.

Collectively, the global group of analysts who work within broker/ dealers, banks, RIAs, institutional consulting firms and other financial intermediaries are arguably the key client group for asset managers. Their opinions drive a sizable (and growing) percentage of the overall worldwide flows into and out of funds.

Given changes in regulatory environments, a fiercely competition landscape and the increased complexity of the investment environment, professional buyers using a highly sophisticated institutional selection process will eventually be the norm worldwide. Successful asset managers are structuring their organizations to prepare and capitalize on this development.

The strengthening role of the analyst is driving asset managers to reevaluate their approach to selling and supporting their products. Asset managers are using robust strategies for liaising with analysts and ensuring their needs are met.

Well-equipped and ultimately successful asset management firms understand the selection process and the mindset of the analysts who are responsible for driving a major portion of worldwide flows. They understand that developing strong relationships with analyst teams is a tremendous leverage point for their business.

These managers provide information and support that goes well beyond a factsheet and market commentary. They anticipate the need to support the analyst during shifting market phases and through changes in the investment product. They recognize that presenting to an analyst is not a sales pitch but a dialogue with a knowledgeable counterpart who a tremendous level of information at his or her fingertips.

Such managers recognize the particular challenges of the analysts’ job and seek to alleviate some of the pressure points through timely flows of information, with honesty and transparency.

Analysts tend to be a highly skeptical buyer group who work within an environment that is performance-driven, risk adverse and highly regulated – a complicated combination. Analysts don’t take kindly to being given the ‘hard sell’. They follow a structured decision making process and, in order to do so, need to have access to clear and concise sources of information about the investment product in view.

There are, as most recognize, already far more investment products available then are needed. Nonetheless, worldwide product proliferation is at an all time high. Further, the growing complexity of a new generation of products requires analysts perform sophisticated and careful analysis to get comfortable enough to render an opinion.

The converging of aspects of what once were called ‘alternative’ and ‘traditional’ are leading to an evolved playing field for managers and analysts alike. Complicating manners further, the commonly used approach to asset allocation and the theoretically tenets upon which it is based are being eroded at a rapid rate.

At the same time, the strength of ETFs, structured products, and a variety of other wrappers has pushed the competitive landscape for asset managers to new levels.

‘Post-crisis’, fund analysts are demanding even more from asset managers. The products they are interested in buying display attributes distinguishing them from successful products of the past. Innovative managers who can prove that they have the sustainable skills to develop and manage these products and service the sophisticated needs of analysts stand to gain; others will be left behind.

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Roland Meerdter will moderate a panel of Fund Selectors debating “What product attributes appeal to the post-crisis fund buyer and what really influences the buying decisions?” at FundForum USA 2010 on November 1 at 11.40 am.

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About Roland Meerdter, Managing Director at Propinquity Advisors.

Roland Meerdter is the founder of Propinquity Advisors - a consultancy providing asset managers with advice and guidance from the perspective of the professional buyer.  Prior to his current role, Mr Meerdter was the Managing Director and global head of fund selection for Deutsche Bank.  Over the last decade, Mr Meerdter has reviewed , analyzed  and interviewed thousands of managers around the globe.  He was worked extensively in both the US and Europe.  He is an industry thought leader in a range of tropics including fund research/ selection methodology, convergence of alternative and traditional investment approaches and global distribution.


Post Under: Fund Selection


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