By Douwe Miedema, European Wealth Management Correspondent
LUXEMBOURG (Reuters) - Small asset managers refraining from large-scale selling of products from rivals say they are benefiting from the credit crisis as clients look for a tighter control of investment decisions.
Small banks now routinely sell financial products manufactured by large asset managers, offering clients a choice between "home-baked" products and often more complex financial tools produced by investment banks.
But the phenomenon - known as open architecture - is getting a rethink now that clients flee into less complex products from a provider they know.
"Especially in these uncertain times you control the entire process from A to Z. With your own funds you (have) that much more control," Guy Wagner from Banque de Luxembourg, said at the Reuters Fund Summit.
Small asset and wealth managers have long been perceived to be struggling, as clients become financially more savvy, asking for the full gamut of financial products including hedge funds, private equity and structured products.
But the trend was now back to basics - even for institutional investors with deeper pockets.
"We see the trend for institutional investors, on the one side they go to small groups if they can show outperformance, otherwise they go to ETF's," said Marcel Schnyder, a portfolio manager at Liechtenstein's LGT private bank.
ETF's -- or exchange traded-funds -- track any given index of asset prices, offering wealthy institutional investors the advantage of by definition never underperforming the market.
Private investors, even if they are very rich, are much less tolerant of losing their money.
"We see our clients a lot. You tend to be a bit more conservative. We do not just launch funds because they sold very well. We never launch on themes," said Banque de Luxembourg's Wagner.
"Open architecture, I think to some extent the idea has been oversold," he said.
Open architecture has been used indiscriminately, says Peter Branner, whose job at Fortis (FOR.AS: Quote, Profile, Research, Stock Buzz) (FOR.BR: Quote, Profile, Research, Stock Buzz) it is to select products from rivals to sell on to its own clients, be they institutional or private.
The bank had found the solution in advising clients which rival products to buy, something it calls "guided architecture".
"What you really need is somebody who tells you what to pick. In this supermarket of (hundreds) of bottles of Coke, which one should I take," he said.
(Editing by Keith Weir) Continued...
© Thomson Reuters 2009. All rights reserved.
| India Investment | Nov 23 - 25, 2009 | Country Summits |
| Global Finance | Nov 16 - 19, 2009 | Financial Services / Exchanges |
| Health | Nov 09 - 12, 2009 | Health |
| Autos | Nov 02 - 4, 2009 | Autos |
| Middle East Investment | Oct 26 - 28, 2009 | Country Summits |
