Successful International Distribution – Part 1
By Daniel T. Allen, CEO, Aliier
I often get asked what it takes for an asset manager to be successful distributing internationally. A specific manager’s answers will certainly vary by circumstance but there are some general principles which every asset manager thinking about expanding their footprint internationally should consider. Broadly, these principles can be defined under the two general categories of access and distribution. I will address international market access first, as without proper access your international distribution efforts will certainly fail.
It isn’t just about how much you are willing to invest or the time you devote. A few years back, I was in Sydney speaking with a small asset management firm that had spent over USD $2M over a period of just over two years trying to open the U.S. market and had not only failed to get any AUM out of the U.S., they didn’t have any prospects going forward. Without good market intelligence they had floundered around in the dark, spent a ton of money, and had never even started to raise new AUM. It became clear in our discussions that after a very expensive education, they had finally just gotten to the point where they were starting to know enough about the U.S. market to finally get started. There are many stories like this one just as there are many others who waste their time, and the time of others, doing too little to get the job done while naively thinking that they are serious about distributing internationally.
Successfully distributing internationally doesn’t have to cost a fortune but it also cannot be done for nothing either. The key is to strike a balance that realistically matches your capabilities and resources with the market realities you will face. In this first of a series of articles, I will address Access and then, in follow on articles, we will get into various topics surrounding distribution.
What is Access?
So, what do I mean by proper access? In some markets around the world there are limited marketing exemptions that permit a manager to go have a few meetings and talk about their strategy with institutional or professional investors. This is fine and good while you are trying to determine if you want to approach an international market, but this type of what may be called helicopter marketing, is highly unlikely to generate any meaningful assets for your firm and, in fact, can be damaging to your brand long term if you attempt to rely upon it too much. It gives the perception that you are passive and not serious. On the other hand, throwing money at a market like our friends from Sydney is a great way to learn a lot of painfully expensive lessons, increase your firm’s business risk, and often still not get the job done either.
The first thing to remember about access is that just because something may be permitted, doesn’t mean it will work especially well. Access must be established in a way that not only meets ever changing regulatory and compliance requirements but must also be in line with the customary way business is typically done in each market. In most markets that means having someone on the ground, with the local accent, who represents your firm. It means establishing yourself or working with an entity that has authorization to operate in that market. It also means creating materials and presentations that are customized to your new market. It means being available for conference calls and web presentations at odd hours due to time zone variances so you make it easier for consultants and investors to consider your strategy.
Successful access is not just a regulatory and compliance box you tick but rather something that must be carefully woven into and throughout your distribution effort.
Copyright © 2019 Aliier, LLC. All rights reserved.