Building the ‘fund of the future’ – according to Jens Baumgarten
The asset management industry was spoiled with success for many years.
Macroeconomic trends such as the need to privately save for retirement, increasing accumulation and concentration of wealth, and a historically favorable stock market supplied the basis for a steady surge in margins.
Every asset manager profited from these trends, even those with non-competitive offers.
This party is now over.
Asset managers are facing new and unfamiliar challenges throughout the entire value chain.
The industry has been working hard to downsize product portfolios, differentiate sales processes, and create production and service structures that cost less – and major progress has already been made.
But is this enough to kick-start an industry that needs to regain the trust of its customers, who have been disappointed too often during the last few years?
Add to that, a general lack of confidence in the financial system and clearly, the journey to recovery still has some way left to go.
Customers deserve more; they need a new vision.
But asset managers see products, not customers.
In this regard, other industries offer some guidance. The automotive industry provides an excellent example.
Katsuaki Watanabe, former CEO of Toyota, explained his vision for the ‘car of the future’, in an interview with Harvard Business Manager in 2007: “I don’t know how many years it’s going to take us, but I want Toyota to come up with the dream car, a vehicle that can make the air cleaner than it is, a vehicle that cannot injure people, a vehicle that prevents accidents from happening, a vehicle that can make people healthier the longer they drive it, a vehicle that can excite, entertain, and evoke the emotions of its occupants, a vehicle that can drive around the world on just one tank of gas. That’s what I dream about.”
It would be wrong to dismiss the legendary cost-cutter, Watanabe, as a dreamer or ‘social romantic’.
If you filter out his marketing intentions, though, what remains is a leader whose vision for his company goes beyond annual profits.
He is a leader who understands that his firm needs to be striving towards fulfilling the demands of its customers.
After all, by consistently focusing on these demands, you give yourself the golden opportunity to develop considerably better products and services.
Of course, many asset managers are claiming this today.