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New Study assesses cross-border value

EUROPE - European and US asset managers view the establishment of local marketing offices in other countries as an expensive but effective option for cross-border selling, according to a new study.

The report, Cross-Border Distribution of Asset Management Services by Telos GmbH of Wiesbaden, Germany and FS Associates of West Orange, New Jersey, was based on an underlying survey of nearly 70 European and US-based asset managers.

“The survey and report were a cross-border joint venture between Telos and ourselves,” said Fernand Schoppig, President of FS Associates. “We eat our own cooking. We believe in the advantages of cross-border alliances.”

The participants, who ranged from large globally oriented firms to small niche players, participated in survey and provided insights into their cross-border distribution initiatives.

The responses indicated that foreign marketing activities would become increasingly significant in gathering assets under management.

The study outlines the obstacles that many participants identified as factors limiting their ability to sell cross-border.

It found that managers were both self-assured about their strengths – emphasising the quality of their staff and performance results – and open about their weaknesses – highlighting a lack of adequate distribution channels as a primary concern.

But being open about weaknesses and resolving them were different matters, the study found. It noted that managers were using several strategies, including working with consultants, to improve access to clients.

While the majority of money managers are quite satisfied with their cross-border marketing efforts, only a handful stated that they were fully satisfied. And the report found that there was substantial room for improvement

Speaking the local language of the countries where they market was a basic requirement in addition to possessing a strong network and being well versed in the marketing of financial products and client servicing, the report stated.

“However, just a working knowledge of a language was not adequate,” stressed Schoppig. “This is a major misunderstanding, especially by American firms that don’t give this aspect enough recognition. Just speaking the same language is not enough, you have to be attuned to a market’s cultural norms and nuances.”

In general, large players considered it less of a challenge to build an acceptable internationally oriented marketing infrastructure than their smaller competitors, Schoppig added.

The study found agreement by both US and European money management firms that despite the challenges and risks associated with cross-border marketing, it was an important part of a money manager’s overall sales strategy. It concluded that the potential for greater activity and creation of strategic alliances was within the grasp of those who reach out proactively.

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