Our recent webinar provided marketers with a detailed overview of the all-important German market, providing ideas about how marketers should respond to the challenges that face asset managers operating there. Our expert guest speakers were Vincent Hooplot of Hooplot Associates, and Jan Altmann of 4asset-management.
Vincent began with the market overview, covering topics including: the German regulator, market characteristics, investor appetite, channels and challenges. He discussed how regulation is not as open to interpretation in Germany as it may be in other markets and there are stringent risk and reporting requirements that must be followed, highlighting the main regulators, BaFIN, Bundesbank and BVI. It’s essential therefore that Asset managers are fully informed on all requirements in order to fully comply.
Vincent noted that despite this, Germany is still an attractive market for asset managers, with good growth rates particularly for UCITs and AIFs. While home domiciled funds do take the lion share of the assets, some non-domestic players are beginning to get traction, because they understand and react to the dynamics of the market.
Whilst the largest opportunity is in the institutional sector, retail is also becoming more important, as it is reasonably open architecture and presents an opportunity for non-domestic players with good products. In wholesale, banks are dominant but they can be very demanding and only managers that can provide top quality distribution support will gain and retain business. Asset classes that are winning the most business now are multi asset, ETFs and real asset/property.
Vincent called out local language as a key challenge. Non-domestic players must deliver in local language and have a presence on the ground. This is especially important as Germany is a large, fragmented market, and it’s important to go and meet all the relevant customers. It is a very demanding and analytical customer base, and the clients favour asset managers that are able to clearly explain what they are selling. Finally, Germany has complicated tax reporting requirements and an understanding of, and compliance with, German regulation is a must.
Jan Altmann reiterated the importance of German language, particularly in the institutional space and went on to talk about the real competitors and challenges in the German market, namely, MiFID II, the rise of ETFs and Robo advisers. MiFID II, he said, leads to standardisation in the wholesale market, which strips another element of competition from traditional asset managers. Similarly, Robo advisers, of which there are 33 in Germany with one big player, have deep pockets for marketing and are expanding their business in the B2B space. Finally, ETFs continue to grow in importance, and with the support of a positive media image and the fact they will benefit from MiFID II, they are poised to take yet more assets.
So how do we as marketers respond to this? One way is for brands to build their digital competencies. This could be through partnering with a Robo or platform to leverage their digital capabilities. Building a content funnel and delivering through digital channels is also key to keep top of mind with customers. Jan also suggests that asset managers should think about launching ETF products to compete in that space. In short, marketing needs to become much more strategic to think about not only elevating their existing B2B channels, but heightening this by looking at some of the more recent challengers that are changing the shape of the asset management business, and responding to those effectively.
For anyone wanting to operate in Germany, or indeed as a refresher for those that are, this webcast is well worth a listen.