AMCS and distribution system united by the same fate

SGR and distribution before and after the pandemic

Investire | May 2020

Before the pandemic, it was a race between AMCs: the number of financial roadshows, the most evocative locations, the best buffets and the most original gadgets.

For some time now, a feeling has been spreading that this might have a jarring effect on the climate of growing sensibility towards environmental, social and governance sustainability. After all, such shift in paradigm had already been triggered by the widespread desire for greater moderation, a desire fostered by the industry of asset management.

Then the pandemic broke out, leaving everybody more vulnerable, in need to come to terms with themselves. The lockdown and social distancing had two main consequences, one opposite to the other.

The first is the cancellation of some international events: the Olympics in Japan, the auto show in Geneva, the Milan Furniture Fair and the Salone del Risparmio. At the beginning, we felt deprived of something we believed we could not do without.

The industry of asset management has definitely been affected: in fact, the crisis and the first public appearance of the ECB newly elected president caused the largest stock market crash of the last fifty years.

Secondly, the emergency has elicited an incredible ability to react from AMCs. For a long time now, the world of managers and active management has been familiar with long-distance means of communication. Thus, with the attitude of those who do not let the opponent take the lead, the industry of asset management made a virtue out of necessity.

Soon, roadshow meetings have been converted into web conferences – instead of decreasing, the number of financial advisors who used to attend roadshow meetings and who attend video conferences today has increased by 34%.

Undoubtedly, the emergency and its repercussions on the market has made events relating to the view of managers and AMCs absolutely essential, more so than before, and this may have partly influenced the increase in the percentage of attendance.

Almost every AMC contacted by FINER admitted to being pleasantly surprised by the readiness shown by financial advisors in adapting to new communication channels. All AMCs are starting to reconsider their communication strategies and they all seem headed in the same direction: fewer local meetings, higher number of web conferences.

As for AMCs, the focus on the contents of the web conference and on the speaker will remain a key factor which will probably grow in importance given the lack of some of the main motivational factors to attend meetings – one among them, the pleasure of socializing with financial professionals and colleagues.

The significant budgets (hundreds of thousands of euros) linked to dozens of local meetings will soon be converted into subscriptions to digital platforms capable of hosting web conferences with thousands of financial professionals.

This new way of communicating is going to stay with us for a long time and has two significant consequences: on the one hand, competitive barriers are going to be lowered; on the other hand, the rules of engagement will be put into question.

In other words, if before the emergency a lot of money and personnel had to be invested for the organization of local events bringing together 3000 financial advisors, today almost anybody can organize such an event by investing less than a tenth of the effort for a good platform.

Moreover, the digital component will have repercussions also on the rules of engagement; wealth management platforms, risk assessment and asset allocation platforms built on goal-based planning are going to be a fundamental tool for the best financial professionals, but will replace the more mediocre ones.

Even if we will soon shake hands again, there is no doubt that the process, in many ways beneficial, triggered by the pandemic is now unstoppable: it will shake our habits and stimulate our imagination more than before.

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