The European pensions asset marketplace is becoming the target for US internet-based groups keen to offer manager search and other services on-line. InvestorForce and eFrontiers are two that have already declared an interest in crossing the Atlantic.
InvestorForce’s managing director, Frank Minard believes his service can become “the indipensible workspace for institutional investors worldwide”. It will help investors take control of the issues they face as fiduciaries, he says.
“It is the our manager search facility, ‘Search Exchange’ that gets most attention from money owners,” he says. This enables plan sponsors to go through a database of 1,400 managers, with over 3,500 investment products, according to criteria they set. “There is an eight-step process the manager can go through from start to final selection of the finalist,” he says.
Minard believes that the whole selection process can be done through the web-site.
The present database is largely US, but does include products sold in the UK and continental Europe, Minard says, but he is believed to be looking for a European database. The data is fully accessible to plan sponsors free of charge, while investment managers have to pay a fee to access it. In addition, where a search is completed through the system, the winning manager agrees to pay InvestorForce 5% of the first year management fee on the mandate.
At eFrontiers, president Steve Cohen says: “Coming to Europe, both UK and continent, is a priority for us. But it is a build, buy or partner decision for us.” About 10% of the registered user base is from Europe. “We haven’t announced user base numbers but it is growing significantly and running 50/50 between plan sponsors and asset managers.” There is one transaction in the pipeline initiated by a European plan, he says. “We are not going to land in Europe, with our US business model, but we think our technology is scalable and localisable.”
Cohen says the Mobius database that eFrontiers’ users have access to is the leading one for institutional products in the US, covering 1,400 managers there. “We have become the internet platform for Mobius, making it easy to use.” The real benefit of the system is the process, which is similar to issuing an RFP, but is very streamlined, he says. These are sent out anonymously to the selected short list, then prior to making a selection perhaps meets the finalists.
“We get paid by the firm winning the assets, a commission of 5% of the management fee in the first year, 2% of second and 1% of the third year’s. Investment managers view it as an alternative distribution channel, with a reduced customer acquisition cost.”