Stepping up from equities to funds
Per Torpare, deputy head of asset management and saving products, and Roger Jansson, head of research and asset allocation at Nordnet explain how the company is building up its funds presence in Nordic markets.
Nordnet is a relatively new player in the Nordic funds market. The core of its activities since it was founded in the 1990s has been to serve as a platform for online equities trading.
However, the customer base and its requirements are changing over time, and the company has responded by developing its in-house activities.
It not only acts as distributor and manufacturer of collective investments, but also provides a services platform of tools and advice on how to engage in self-selection, alongside relying on selection capabilities of investment professionals.
Moving on from the corporate history poses particular challenges, according to Per Torpare, deputy head of asset management and saving products, and Roger Jansson, head of research and asset allocation.
Jansson says: “We were pioneers in online broking in the Nordics. We come from a base of equity-focused customers who knew what they wanted and sought good pricing.
That is still the core, but we are getting more customers who are not as engaged or knowledgeable, more ‘average’ retail customers, for whom funds are a growing area.
“As we grow as a company the proportion of knowledgeable and active clients will decrease. Therefore, the need to help customers will increase.”
The company has high hopes for the pensions space, where it wants to take market share in workplace pensions.
That means customers who are not as actively engaged or knowledgeable about markets, need more help.
“When we started, our argument was: ‘Come to us, we have 1,000 funds on our platform.’ This was seen as unique and different. Today that is not a good sales argument. Having a lot of funds on the platform means people have to sift through them.
“We have an open platform that has brought in a large number of funds. Partly, it is the volume argument, but it also speaks to customers who want to bring their business to us. The more funds we have on the platform the greater the chance they can easily switch to us.”
Nordnet’s fund selection activities are exclusively focused on clients in the Nordic region.
It has retreated from previous presence in both Luxembourg and Germany. However, Nordnet is careful to note that this is a region of four distinct markets.
“We have to respect the differences between markets. There are issues affecting the range of funds, possibly different regulations or differences in the pension markets,” Torpare (pictured below) adds.
An open mind
The selection process overall is approached with an open mind, but with some ongoing changes to attitude.
Jansson says: “We have been open to funds, because historically this was to our benefit. But perhaps we have become more selective in a couple of ways.
One is around the issue of getting on our platform. We are more restrictive than previously, although less restrictive if there is particular demand among our clients or business partners for new funds.