Wells Fargo AM outlines its plans for Europe
Mike Neidermeyer, San Francisco-based executive vice-president of Wells Fargo Asset Management, says the business is on track for European expansion, despite the macro headwinds facing the region.
Why Europe, and why now?
We want to offer European investors the proven products we have already managed in the United States. It is not a difficult transition because we are offering something we have proven has outperformance and meets clients’ needs. One difference is the different regulatory schemes in different regions. Fortunately, we have a lot of expertise tailoring for local needs and local regulations.
Where is your business in Europe at the moment?
We have six professionals based in London covering continental Europe. We are in the process of hiring two to three additional professionals, one likely in Germany, one likely in France and we are going through the process of making sure we have all the regulatory requirements for those offices. We recently launched six more Luxembourg-based funds which we think will have additional, broad appeal. We have the two teams in London, but we have 38 teams across the United States.
The Wells Fargo business model depends on independent subsidiaries, asset management subsidiary specialists, and a degree of reliance on adviser networks. How are you going to replicate this successful US model in Europe?
We talk about boutique investment teams, and what we mean by that is that the teams are very focused on a specific investment discipline, for example, large cap growth. That team is not about business or distribution, it is about managing money. Then we have a common infrastructure for distribution, product management, compliance and a really robust risk processes that help those teams.
Is the Wells Fargo brand well recognised at the moment?
Wells Fargo as a brand is very well recognised. In Europe, I think Wells Fargo Asset Management is not recognised because we have not been in Europe prior to 2008. This is a more recent effort for us. But in the US, we grew from 80th in 2000 to the top 20 today. We can envision progressing like this in Europe and eventually being a top 20 fund complex, but over time.
Does brand recognition depend on performance, or are there other strategies to build brand in Europe?
We think the foundation to serving clients is making sure you have risk-adjusted alpha and distinctive, risk-adjusted return. But we also benefit by the Wells Fargo brand – we are one of the best cap players and strongest financial services company on the globe.
How are you going to build your adviser networks in Europe?
What distinguishes us is quality. The industry is moving to more professional buyers, and most distributors now have capabilities where they are screened by quality, and it is becoming much more of an open menu.
The other aspect is that in the States we are used to very diverse external distribution. We sell 60% of our funds externally, and do it via a wide range of distributors.
In Europe, one of our advantages is that the Wells Fargo enterprise has the largest US-based correspondent banking business with European financial institutions. We have many partnerships through those financial institutions. We think those combinations of quality, our knowledge of how to distribute to a variety of clients and that linkage to many banks should really differentiate us.
Are there products you consider would appeal more in one market than another? Or are you looking at mainly cross-border distribution?
We are trying to optimise between our distinctive, superior performance products where they have the broadest distribution appeal.
So there are a lot of nuances, but generally our first set of products are those we think have universal appeal; emerging market equities, all cap and mid and large cap growth equities, US equities, a short-term high yield bond fund, precious metals.
Do you need some kind of resolution to Europe’s debt crisis to support your expansion plans?
No. We didn’t view our plans as contingent in any way on the economy or the market volatility, or market challenges in Europe. We actually view this expansion as just a natural evolution of who we were. As a top 20 asset manager in the US, we realised it was a logical extension.
See the full video interview on www.investmenteurope.net