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Managers intensify focus on institutional investors across Europe, says Cerulli

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Asset managers are boosting sales teams to target European institutional clients as investors continue to fight shy of illiquid assets and high fees in the wake of the global financial crisis, according Cerulli Associates. 

A new Cerulli report – European Marketing and Sales Organizations 2014 – reveals that Managers plan to either increase or maintain the number of salespeople for these specialised teams. Not one manager surveyed by Cerulli plans to decrease headcount. A total of 33% of managers say they will increase the number of salespeople to target the United Kingdom institutional market. And 22% will hire more people to target this channel in France, Germany, Benelux, and the Nordics. 

Cerulli’s research also finds that fully 100% of managers in its proprietary survey targeted institutional investors in Germany in 2014. And 83% also aimed for these clients in both the United Kingdom and Switzerland. 

At the same time 78% and 72% of managers surveyed also pitched to institutional investors in Benelux and the Nordics respectively. And 67% also targeted France and Italy, while 33% tried to woo Spanish investors.

But the institutional market is fraught with hurdles. It is highly competitive and demands exhaustive pre- and post-sales support, and managers must be prepared to commit the resources to make headway.

"It is the most clinical, data-heavy, numbers-focused, and cautious channel," says Barbara Wall, Europe research director at Cerulli. "And given the long-term investment horizons, the institutional market is not the most dynamic. Allocations do not change in a week. Steady and cautious are the watchwords," she adds.

The institutional market incorporates traditional pension funds, from the supersize compulsory AP schemes of the Nordic region and the sector-wide schemes of the Netherlands, to the range of European corporate and personal schemes.

It is no surprise that strategic aims and sales resources do not change much. European countries, particularly the eurozone nations, need to address debt-to-GDP sustainability. Cerulli believes that the best way to do that is to slash state pensions in favor of personal and work-based schemes. 

"Reforms to pensions, particularly state, quasi-state, and workplace schemes in Germany and Switzerland address sustainability concerns," says Angelos Gousios, a senior analyst at Cerulli. "But despite concerns about regulatory complexity, both markets still hold strong opportunities. The United Kingdom does, too: it has a relatively high level of workplace provision-and is a major global asset management center," he adds.

The institutional channel is most likely to have a dedicated country-level sales team to support it. Institutional can be grouped by region, but only to a degree. Market size by assets and players is the determining factor, rather than a common language or culture. Compulsory Nordic schemes, Dutch industry schemes, and UK company schemes get the biggest allocations of staff. Real cross-border is a distant dream.

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