Asset Management

Recent Developments

Before the recent crisis, the stock markets had been experiencing generally positive developments in their performance over a period of four years. Over this period, impressive growth rates were achieved not only in the development of the investment fund market. The market for derivative instruments had also gained considerably in size and significance.

The global trade volume for such financial instruments had grown from approx. ten billion US-$ to around 160 billion US-$ in 2006. Forecasts predict this volume of trade in derivatives to double again from today’s high levels to approx. 340 billion US-$.

Aside from these trends, the following relevant developments can be observed in the German markets in particular:

• Exchange-traded index funds (passive ETFs) will gain in significance. Their current, low share of approx. five percent of the markets will grow to double-digit figures over the coming years.
• With this increasing significance for index-linked products, which reflect the performance of the market (beta-performance), investment companies will redouble their efforts to launch alpha-products that produce sustainable performance above market averages.
• Material investments in agricultural, forestry, real estate or infrastructure assets will gain a stronger foothold in the portfolios of, in particular, institutional investors.
• The European MiFid directive will increase product and pricing transparency for funds and certificates for the retail customer.
• Issuing surcharges will continue to decrease while trailer fees will increase, with issuers and distributors placing more emphasis on the benefits for the customer as a consequence of the MiFid directive.
• The withholding tax that has been in force since January 1st, 2009, will have a positive impact on the relevance of fixed-capital products.
• The simplified regulatory framework will allow the German funds markets to compete more effectively with the Luxembourg markets.
• Independent financial advisors will continue to see increasing demand as a distribution channel for funds and certificates.
• On a procedural side, the extent of non-automated processes needs to be reduced further. Great room for optimization can still be made out at the interface between the funds and their distribution channels or transaction banks.
• Processes will continue to be standardized, not least in the continuing development of harmonization across Europe.

Our Consultancy Services/Interests

When it comes to asset management, Kienbaum Management Consultants assist customers with all questions along their entire value creation chain. A selection of our competencies includes:

• The evaluation of the attractiveness and turnover/revenue potential of asset management markets.
• The design of investment product strategies and concepts.
• Pricing strategies for different target groups.
• Reviews of investment processes.
• Sales strategies for different distribution channels.
• Strategies for cooperation partnerships (e.g. for tapping into or developing new markets or middle / back office processes).
• The service quality in the management of distribution partners.
• The optimization of transaction processes.
• Overall benchmarking for investment companies.

Client Portfolio

A Selection of Our Clients

• DWS
• Deka
• Allianz Global Investors
• Union
• Kepler
• Capital Invest
• Templeton
• Fidelity
• Meag
• Pioneer
• Lloyd Fonds
• Schroders
• Barclays

Sample Projects

Sample Project 1: Europe Strategy for a Leading German Investment Company

Background Situation
The investment company planned to expand its business activities into selected European markets. This strategic decision required an evaluation of specific potential target markets. At the same time, the enquiry was to establish whether a cooperation partner should be chosen for entering into the selected markets.

Our Consultancy Approach
We investigated ten relevant European investment markets, with separate analyses for retail and institutional business. After an internal comparison of the target markets, a number of options for entry into three prioritized target markets were given and evaluated.

Project Results
Development and evaluation of alternative cooperation models for potential partners in the three prioritized target markets.

• Due diligence for potential partners along their value creation chain in asset management, including full strength/weakness profiles.
• A business case study for each target country and preferred cooperation partner.
• A model approach for managing the cooperation partnership.

Sample Project 2: Overall Benchmarking at a Capital Investment Company

Background Situation
The capital investment company in question has produced below-average performance with its stock funds, whereas its pensions funds topped the benchmarks in the markets. In light of this situation, the owners of the company as well as its directors requested a comprehensive comparison of the business with its competitors, focusing on the following objectives:

• Benchmarking with selected companies in asset management for specialized and public funds.
• Identification of strengths and weaknesses in comparison to the markets and benchmark competitors.
• Proposal of operational interventions and an action plan for the sustainable maintenance of the company’s viability and competitiveness.

Our Consultancy Approach
We conducted both a strategic and an operational benchmarking for approx. 60 investment companies. The strategic benchmarks included the following, wider aspects in addition to the analysis of quantitative key performance indicators (such as investment yields or operational profit margins):

• How does the company’s overall profitability rate in comparison to its competitive environment? 
• Which strengths/weaknesses can be identified in comparison to other domestic or international providers of different sizes?
• Which conclusions can be drawn for the direction of the company?

The operational benchmark was conducted in the areas of research, portfolio management, marketing/sales and funds administration/reporting as well as in central functions, such as HR management.

Project Results

• A strength/weakness profile for 25 strategic and around 125 operational criteria for the company, with the company’s position being contrasted to the top and worst performers in the benchmarking portfolio.
• Development of a prioritized intervention portfolio.

Sample Project 3: Strategic Due Diligence at an Investment Fund

Background Situation
The supervisory board of a major German investment fund was considering the option of selling the business to one of its preferred partners. On the initiative of this preferred partner, the fund was analysed and evaluated on a strategic level as the potential object of this transaction.

Our Consultancy Approach
After the survey of the status quo, the risks of a sale to a third party were investigated both from the point of view of the company and its preferred partner. In a second step, a strategic competence profile was developed for both institutes to aid the evaluation of synergies in terms of its investment approach, product portfolio and brand, and potential revenue and cost synergies were forecast by way of three business development scenarios.

Project Results

• A forecast of the impact on the company value in the predicted market scenarios.
• Short evaluation of potential transaction structures.
• Assessment of alternative organizational models.


Sample Project 4: Optimization of Bulk Processes at a Closed Fund Provider

Background Situation
After a period of strong growth, the company was faced with inefficient bulk processes and an unsustainable organizational structure. The objective of this project was to optimize the existing processes, to document these processes and to design an adjusted organizational structure.

Our Consultancy Approach

The Kienbaum Management Consultants team

• documented the current processes in documentary and procedural analyses as well as live-mapping workshops,
• developed initiatives for optimizing bulk processes and used these for formulating an optimization concept,
• designed an adjusted organizational structure to suit the bulk processes and the company’s structure, and
• prepared an implementation concept with due consideration for available resources.

Project Results

• Identification of “quick wins” for easily achievable optimization potential.
• Documentation of current and target processes, supported by checklists for all processes.
• Optimization of the target processes (standardization, automation etc.).
• A future-proof organizational structure.

Consultant Profiles

Prof. Dr. Jens Kleine

Experience:

• Twelve years of consultancy experience at Mercer Oliver Wyman, most recently as a partner, in Financial Institutions and Risk Enterprises.
• Since 2004: Professor of Financial Services at the Steinbeis Hochschule, Berlin.

Jens Wöhler

Experience:

• Almost four years as head of the business process sourcing and business development department at the DAB bank AG (Unicredit Group).
• Five years of strategy consultancy at Mercer Oliver Wyman (most recently as a Principal / Senior Project Manager).
• Two years as corporate press officer for corporate affairs and investment banking at UBS.