Last updated: 12:57 / Tuesday, 12 May 2015
Research by Cerulli

European Managers Fine-Tune Expansion Outside Home Markets

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European Managers Fine-Tune Expansion Outside Home Markets
  • Cross-border managers plan to increase their sales efforts in Italy, France, Spain, and Germany during 2015, according to research by Cerulli Associates
  • Competition in Europe is stiff and managers must be more strategic to sell outside their home market. So asset managers are establishing roots in selected countries
  • By opening branches on target territory managers can develop closer ties and enhance understanding with distributors

Almost two-thirds of managers polled by Cerulli said they intend to increase their sales efforts in Italy - compared with 37% of last year's respondents. And 43.2% of managers we surveyed plan to target France - compared with just more than one-fifth of managers polled for last year's report. More managers than last year also plan to increase sales efforts in Spain and Germany.

Competition in Europe is stiff and managers must be more strategic to sell outside their home market. So asset managers are establishing roots in selected countries.

Franklin Templeton reaped the rewards of setting up branches in Rome, Florence, Milan, and Padua. Net inflows every quarter since have been between €800 million (US$972 million) and €1.5 billion, according to Assogestioni.

"This was a shrewd strategy that paid off," said Barbara Wall, Cerulli's Europe research director. "Many foreign managers launched funds in Italy, trying to sell them, either from a distance or by opening a branch in Milan. But sales is a local game and success is more likely if a firm has people on the ground-and not just in Milan," she added.

By opening branches on target territory managers can develop closer ties and enhance understanding with distributors. This is more effective than making regular presentations as part of a road trip.

Angelos Gousios, associate director with Cerulli in London, and one of the main authors of European Distribution Dynamics 2015: Preparing for a New Era, said: "In our talks with Italian wealth managers they frequently say lack of time hinders theirwork. They do not have time to go to events. Having a branch down the road where they can pop in informally and discussmarket developments over coffee is more attractive."

Another significant advantage to having a local presence is that a manager can tailor its message according to regional variations in disposable wealth, attitude to risk, and product choices, for example.

This and several other new findings make up the fifth iteration of Cerulli's European Distribution Dynamics 2015 report.

European Distribution Dynamics 2015: Preparing for a New Era also:

  • Examines the impact of low rates of return in the French market: Low returns for money market funds and euro-contract investments are gradually pushing French investors out of their liquid positions toward long-term active products.
  • Assesses the prospects for distribution in Germany: Fund selection centers on risk minimization and potential newcomers must adjust their message to make headway. Striking a deal with key allies in Germany is the best insurance for a newcomer to the market.
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