The direct-to-consumer (D2C) market is not a viable option for the majority of asset managers because it is too competitive, according to Abraham Okusanya, founder of research consultancy FinalytiQ.
Speaking on a panel at ITAS Luxembourg, Okusanya suggested that asset managers have historically always outsourced client communication and to change this would be a culture shock. “Many fund managers are incapable of that,” she said.
While suggesting that the D2C market is a large one, and that a D2C platform can generate healthy profit margins of up to 20 percent, Okusanya pointed out that there is a lot of competition in the marketplace, and that fund managers will not be able to compete in a profitable way.
Ultimately, he said, this would put more pressure on profit margins, which is what the industry as a whole is striving to avoid.
Alan Hawthorn, global head of investor services at Aberdeen Asset Management, however, suggested that end investors are moving away from a ‘nanny’ pension system, and may benefit from direct communication with a fund manager.
A third panellist, Matthijs Aler, COO at Ohpen, a Dutch mutual fund and savings account platform, added that a new generation of investors may be likely to move away from traditional distribution channels, and that fund managers could benefit from bringing their product to these consumers directly.
Aler added that it is not necessarily fund managers’ branding that is the most important, but “the willingness to invest in marketing”.
Currently, fund managers are business-to-business experts, when they should learn to be business-to-consumer experts, he said, adding that this is the big challenge for them today.
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