Changing investor needs and the shift to “open architecture” are altering relationships between asset management organizations and the investment fund distribution platforms they rely on to sell products to end investors, according to new research from Greenwich Associates.
In an open architecture system, investment fund distribution platforms like broker/dealers, bank trust departments, defined contribution record-keepers, third-party administrators and variable annuity insurance companies offer products from many competing asset managers, as opposed to selling only proprietary funds.
The ongoing industry move to open architecture allows, and in many ways requires, distribution platforms to focus their efforts on delivering best-in-class asset managers to investors and potential investors in every asset class.
In response to these demands, a new class of professional buyers is emerging at investment fund distribution platforms, and these buyers are exerting a growing influence on asset flows.
“The end goal is to attract assets to the platform, and the increased use of open architecture means platforms must take a smarter and more strategic approach to manager selection and thoughtful recommendation in order to create demand pull among investors in addition to supply push,” says Greenwich Associates consultant Lori Crosley.