Platforms not uniform – Fund Forum
Panellists in a discussion on platforms as a distribution tool for asset managers and an offering for fund buyers have rejected any idea that the concept of a platform’s use is uniform across Europe.
Holly Mackay, managing director of The Platforum sketched for delegates at the Fund Forum conference in Monaco yesterday a picture of how different nations’ platform users treated the Continent’s platform industry.
In the €112bn Italian fund platform market, she said users wanted a “custody and fund administration tool”, and fund platforms acted as “paying agents for foreign funds”. Banks selling funds in Italy could negotiate their own terms, so fund platforms were there primarily to do “low margin work up to 10 basis points”, she said.
To the north, Germany’s use of platforms is more fragmented by user type, as large banks, regulated investment advisers and private banks all use platforms in the local, €108bn business-to-business platform industry. For platforms in Germany, work is about satisfying administration and custody – as it is in Italy – but then also investment management and commercial agreement functions.
In France and Spain, commercial agreements are a key task for platforms, Mackay said. In the bank-driven market of Spain, she said simply: “If you want to sell funds in Spain, you have to talk to Allfunds.”
Mackay said Italy and Spain had the most institutional-style fund platform market, with France’s and Germany’s sitting somewhere between institutional and retail, and the UK being mainly retail, “though some institutional platforms are emerging”. In France, by contrast, more retail platforms are emerging serving IFAs, for example.
A retail market such as the UK needed more hand-holding from platforms, and all the aforementioned services from a platform, plus tools and services and a sophisticated web portal.
In the future Mackay foresees more use of offshore platforms by Europeans “and we will see more providers work in multiple jurisdictions”.
She also foresees more guided architecture offerings as half of advisers in the UK are “not fund pickers, they use models, and 15% use third party discretionary fund managers, while 12% are working with multi-managers”..
At the same time, some large distribution players in Germany – Feri for example – are becoming fund managers, she added.
Borja Largo, global partnerships director at Allfunds, said his group was seeking to expand from its dominant position in Spain, by opening an office in Zurich and enhancing its offering in Luxembourg and “getting into the German market through Santander”, while considering how best to tackle Scandinavia and Asia, too.
Thomas Albert, managing director at Oppenheim Asset Management, said his firm’s concentration on the family office segment where clients typically committed many millions of euros, meant the firm had to provide a more bespoke level of service via its platform – and would have to in order to be successful against larger players such as Aviva, Skandia and Allfunds. Service for him meant handling succession planning issues, for example.
Structures could involve insurance wrappers, or clients are the co-portfolio managers within a structure, Albert added.
“Also, we really look down into all the asset classes, like private equity,” Albert said. “We select funds and provide the wrappers if that meets our clients’ needs.”