AGI’s new problem solver speaks out

James Dilworth, new CEO at Allianz Global Investors Europe explains plans to overcome challenges facing the industry and its clients.

James Dilworth (pictured) has become chief executive of Allianz Global I­nvestors (AGI) Europe at one of the most ­challenging times for asset managers and their clients in the region.

European investors, both institutional and retail, probably feel the crisis most acutely: it is their region that is at the centre of the maelstrom.

Retail investors face an extremely uncertain economic environment, as well as austerity measures that will force them to take more ­responsibility for their own retirement.

Institutional allocators face the same unclear climate, together with the requirement to meet liabilities, despite high volatility and ­widespread losses in risk markets, and extremely low returns from some of their ‘core assets’ in ‘safe’ asset classes.

In its autumn Risk Monitor survey, Elizabeth Corley (whom ­Dilworth is replacing as she becomes AGI’s global CEO), said: “2008-09 was not all of the Great Financial Crisis, but merely its opening act.”

Against this backdrop, the asset management industry is dealing with some challenges of its own. Dilworth says the industry often sold return products to retail investors, based on “forecasts that did not then come true”. Partly as a response to the disappointments that followed, retail investors are now looking more for safety than return promises, he says.

Europe’s institutional buyers had taken recommendations, often from consultants, to move away from the more generalist, balanced model of asset allocation they had used in the 1990s and look instead for the best managers for each asset class.

Many of their advisers suggested to use more strategic asset allocation. Then, entire asset classes fell sharply and revealing correlations in extreme market environments. Losses in areas as diverse as long-only equities and hedge funds destroyed immense value in portfolios during the last crisis.

Over the whole of the past decade, investors in MSCI World Index (global shares) lost 4% of their money. In 2008 alone, they lost about 43% of their value.

Solutions

Dilworth says: “Twice in ten years, investors found their hard-earned investments significantly diminished. At AGI, we focus on client needs, not on the distribution of a ‘flavour of the month’ product. You have to design your business around what clients are actually asking for, and deliver solutions to their problems.”

Proper solutions will be different for each group, indeed for each client, even if the problems each group faces cross borders.

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