Half of institutional investors favour managers who offer them more customisation, a recent Coalition Greenwich report has found – leading to additional mandates and higher profits for providers.
Customisation allows investors to differentiate themselves from competitors and improve client relationships, but can also increase complexity and heighten costs, warn report authors Christopher Dunn, head of investment management for Europe, and Marlie Vredenburgh, senior relationship manager.
Favoured examples of customisation include having a single point of contact through a dedicated account manager or customised obligations included in the investment agreement. Particular demand is seen for bespoke investment reporting and customised service level agreements, according to Coalition Greenwich’s study.
Globally, 65% of institutional investors state that customisation from asset managers is important. This figure is highest in Asia (ex-Japan), with 83% of those polled stating that it is an important factor. By contrast, Japan-based managers showed the least interest – with just 43% seeing it as important. The US was just slightly ahead, with half of those polled valuing the offering.
By firm type, insurance companies are more likely to seek customisation from asset managers. Coalition Greenwich suggests that this is due to their complex balance sheets and liability structures. Corporate pension funds are less invested in the service.
Half of those surveyed stated that they would award additional mandates to asset managers offering customisation, with institutions based in Asia and Canada the keenest to do so. Banks were also found to be more likely to favour asset managers providing customisation.
Such providers are also more likely to be included in requests for proposals (RFPs), according to around 40% of institutional investors globally.
Asset managers offering customisation may also be able to receive more lucrative contracts from investors, and get access to senior decision-makers.
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