Got Distribution?

The Growing Complexity of Distribution

 distribution-1ON THE SURFACE, distributing mutual funds appears to be a tremendous opportunity that is ripe for success.  This used to be the case, but as geopolitical and global economic events have transpired over the last 30 years, the challenges of managing money and selling investment product have grown in complexity. 

THE NEW REALITY is that the process of distributing investment product has become increasingly difficult as investor needs have evolved, regulatory oversight has expanded, and product proliferation has increased, all while distribution platforms have “rationalized” (eliminated) products.  Put simply, there is more product in the marketplace today competing against a high-bar for access at a limited number of “traditional” platforms.

BUT, BUT, BUT...for the manager that is thoughtful and strategic in their approach, the opportunity to raise assets is still alive and well.  Rather than limiting the ability for distribution of investment product, the current environment has increased the necessity of having such product and the value of leveraging a well-designed distribution strategy built around YOUR firm’s capabilities, business goals, and culture. 

KNOWING TODAY’S LANDSCAPE IS CRITICAL as the sheer size of the investment company market (~$51T in global AUM) suggests not only that the opportunity should not be ignored, but that a firm must understand the forces driving the market’s evolution:

  • Market Complexity – Markets have grown increasingly complex and diverse as has the distribution of product

  • Platform Rationalization – Rationalization has increased business stress for asset managers due to their lack of diversified asset flow

  • Institutional Approach – Asset managers have not evolved their distribution to meet a more institutionally-oriented marketplace

  • Inertia - Managers have relied on investment product that was “good enough” rather than building out superior solutions

  • Passive Investments - Passive solutions continue to proliferate but are still not well understood by the market

In spite of these challenges, a unique distribution opportunity has developed for the specialized investment manager...one that focuses on what they do best, and manage money in their style in order to stand-out and gain market share.  But a manager must also understand that performance is only part of the equation...in today’s marketplace investment products are no longer simply bought, but rather they are sold.

SO WHERE DO WE START?  There is a long list of items that a manager must consider before launching a new effort, but there are a few questions that the manager should ask at the beginning of the process:

  • Are there defined business reasons to enter the market as well as internal firm buy-in (e.g., grow the business, revenue diversification, client demand)?

  • What is the ultimate goal for our firm...grow assets, increase revenues, diversification of AUM, new markets?

  • Where is the appropriate region for our firm… the United States, the Americas, Europe, Asia, etc.?

  • Is our style in demand in the chosen market(s)?

  • What are the costs associated with distribution?

  • Which channels provide the best opportunities...retail, institutional, high-net-worth, sovereign wealth, offshore?

  • What kind of product vehicles...’40 Act funds, UCITs, SMA, hedge fund, sub-advisory, etc.?

  • Which distribution schemes should be considered...in-house, third-party, hybrid, etc.?

  • Is the firm ready and willing to invest in the effort...budget, marketing, resources, etc.?

The success of the effort will be measured not only by the performance of the investments but by the commitment and dedication of the firm to the effort.  To help ensure success, leveraging a partner, from the beginning, that makes clear what YOUR firm’s opportunity is, how you attack it, what success will look like, and when to expect it is essential in today’s ever-changing marketplace. 

AT GLOBAL RHINO it is our mission to bridge the gap between managing money and managing the business of asset management.  By leveraging nearly 60 years of collective experience across distribution and business management within the financial services industry, we tailor solutions, specific to your firm, that will drive the evolution of the business towards future growth.  Additionally, we will work to educate your partners on the board as to what distribution ultimately means for the shareholder and for them as trustees. Through an approach that spans consultation, manufacturing, and ultimately implementation; a partnership with Global Rhino is not “one size fits all.”  Rather, as new opportunities are often fraught with unique challenges, we partner with you to design strategies that reflect your message, your culture, and your brand. All of this starts, rather than ends, with an understanding of what distribution actually means, so when the time comes to begin, your firm is ready.

EVOLVE, GROW...CHARGE FORWARD!   Global Rhino

For additional information please contact:

Mark Baltimore, Co-CEO

Dina Tantra, Co-CEO


 

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