“You get five Brownie points if you get an invitation to speak and 10 if you turn it down,” said a cerebral chief executive of a European house in 2003, when asked why he had never spoken at this event that attracts the glitterati, literati and cognoscenti of global fund management.
As an outsider looking in, it was difficult not to empathise with him then. Now, however, I feel differently.
The first time I was invited to speak was in 2000. Not well-versed with “the new economy” rhetoric of the 1990s, there were suffocating moments as speaker after speaker shrugged off the preceding market spike as a blip in their new paradigm.
My nightmare came as I stood at the podium and questioned whether fund managers were ready to cope with the nascent bear market. From the tepid applause I received, I must have seemed like a card-carrying member of the kill-joy brigade. At any rate, it paled beside the thunderous cheers showered on those continuing to sell pipe dreams.
I was struck by the industry’s epic capacity for self delusion.
The ensuing bear market produced at least one unintended consequence: my street cred was restored and I have been invited back regularly since then.
As the markets continued to free fall in 2002, the old-style determined wishful thinking was replaced by collective masochistic repentance. A laundry list of wrong-doings went on full display at the event in that year. In hindsight, it marked the beginning of an honest introspection that continued in 2003-04.
Last year, winds of change were discernible. There was an implicit acceptance that fund managers can no longer count on history repeating itself: for things to remain the same, things had to change. That meant going beyond pious hopes and tackling the specifics of how to reinvent this industry in ways that meet the needs of tomorrow’s clients.
This week promises to take us further along this journey, if the previews of some of the presentations are much to go by. Some cover new topics, others provide a fresh slant on the old ones.
In his opening address on Tuesday, Giordano Lombardo, the deputy chief executive of Pioneer Investments, will consider how to grow the business – organically and acquisitionally – in a climate marked by formidable constraints. Under a pragmatic strategy, he sees organic growth coming from leveraging the strengths in the proprietary channels to get into third-party channels, and the other way round. He also favours a hard-nosed approach to acquisitions, based more on economics than egos, while turning the spotlight on execution.
Later that day, Robert Jenkins, the chairman of F&C, will cover the same theme but with a different focus. As a veteran of M&A, he will peer into the future with his practical telescope, homing in on the unsettling effects of mergers on alpha managers.
Combining two fund houses is not like connecting two oil refineries by recalibrating their stopcocks. They require a huge amount of emotional, physical and intellectual stamina.
The following morning will see Matthew Thomas, a KPMG partner, joining the fray with a stark reminder: practice what you preach. Fund managers must apply the same best practice governance standards to the day-to-day conduct of their own businesses as the ones they advocate for the companies in which they invest. Otherwise, they risk regulatory over-drive and heavy handed enforcement. Besides, good investment performance is only as sustainable as the practices that underpin it.
In the ensuing thought leadership summit, Todd Ruppert, president and chief executive of T Rowe Price Global Investment Services, will argue that the pace of innovation seems to be accelerating but it must generate value for clients instead of fashionable fads. Enhancing the customer relationship is where more innovation is needed, not necessarily in product composition. Many products are commoditised so the winners will be those that focus on a better customer experience.
On Thursday, Neeraj Sahai, global head of securities and fund services, Citigroup, will concentrate on strategic alliances. Driven by a host of factors, clients will increasingly demand more for less, he will argue. They will also demand complex products. Hence, a winning business model will turn the conventional wisdom on its head: grow the topline while reducing costs.
This will intensify the search for best-of-breed solutions across the value chain, and promote external alliances in front, middle and back office alike. Far from polarisation, there will be fragmentation.
The last day will concentrate on European distribution, a euphemism for a dog’s breakfast by common consent. It will be led by Mark Tennant, senior vice-president of JPMorgan, and Diana Mackay, chief executive of Feri Fund Information.
While the demand for cross-border funds has rocketed, punters do not get value-for-money. It is time to look at key drivers of sales, costs, and cross-border flows of mutual funds; duly examining how they can be reshaped through a new generation of distribution platforms.
So, these are some of the tasters. Doubtless, there are others just as enticing. Together, they amount to widening and deepening the subject range.
That is necessary but not sufficient. The assembled industry leaders also need to go from introspection to action.
Another year of navel-gazing is hardly likely to enhance the image of their industry.
If Monaco is too congenial for heavy stuff, at the very least, they must ramp up the quality of the debate, if only to reverse the balance of those Brownie points.
Bon voyage and have a fun forum.
Amin Rajan is chief executive of Create, a research consultancy