Asset Managers Struggle to Differentiate

The consultant spoke with 23 senior executives from some of the largest asset managers in the U.S. and found that 45% noted the importance of improved product development and 36% listed the importance of improved distribution through Sales and National Accounts when competing in the marketplace. A press release on the study said the results showed that just as most executives seem concerned about the same issues, they are responding to these issues with ideas that are echoed widely by their peers.

“The Morningstar nine style boxes are overcrowded with copy-cat products,” Sean Carroll, a manager at kasina, said in the press release.

Firms are not only competing for product shelf space, they are also competing for the same distribution opportunities, the study found. As with the Morningstar boxes, the large distributors like Merrill Lynch are overcrowded, making it impossible for every firm to succeed in that system, kasina noted.

The study, “The Future of Distribution: Stay the Course or Innovate?” examines key opportunities asset management leaders can develop for future growth in an increasingly competitive market.

According to kasina, firms will need to:

• Think Outside the Box: Given the overcrowded market, firms must develop innovative products with no existing competition to command higher fees.
• Use Segmentation to Improve Distribution: Firms should use segmentation to identify unique opportunities while capitalizing on new roles, such as hybrid wholesalers.
• Decide Now: Should We Go Global? As foreign markets grow faster than those in the U.S., firms must make a commitment to going global.

More information about the study can be found at www.kasina.com.