Building the future of the institutional investment industry.

NAV Shapes

How can investors manage the uncertain transition to net zero?

A shared vision - AMX and Carne Group

NAV Shapes

Slow to catch up? Moving the institutional service to a retail experience

, Oliver Jaegemann


Slow to catch up? Moving the institutional service to a retail experience


Trustees are used to getting a good retail experience, backed by developments in technology, and expect similar standards to apply to their working lives. Oliver Jaegemann discusses how to improve the institutional client experience.


Tricky customers


Institutional investors have never been easy clients for asset managers to service. They have always negotiated hard on fees as well as asking for ancillary benefits such as foreign exchange hedging and securities lending, and for the infrastructure behind this to be of institutional quality.


Recently pension schemes and insurance companies have become even more demanding. They now expect much greater transparency. They want greater clarity on the ongoing costs of investment, including management and transactions charges but also around transparency on issues such as ESG risks.


A retail-institutional service gap


Additionally, institutions are also demanding better customer service. In the past, they were content for changes to take weeks or months to execute. But they are less patient today. Trustees are used to getting a good retail experience, backed by developments in technology, and expect similar standards to apply to their working lives.


Using a retail investment platform, it’s possible to reposition your personal portfolio in a matter of minutes. It can take a pension fund six months to do the same. Once the decision to change the allocation has been made, it shouldn’t take that long.


Cost transparency


Understanding fees is just the first hurdle in the search for improved transparency. Once institutions have implemented new frameworks, like the cost transparency initiative, to better understand their investment costs, they will need to think about how they will then use that information.


If they communicate expenses to scheme members, their stakeholders will want to know how trustees are managing those costs. And asset managers will need to explain when higher costs are justified because they expect that strategy to provide better returns.


Not only do institutions expect greater visibility of costs, but they also want to ensure their investment vehicles are tax efficient. That means ensuring they use structures which minimise the impact of tax drag on investment performance.


Embedding socially responsible investing


They also expect more insight on asset managers’ social responsibility such as how managers voted in annual and extraordinary general meetings. That voting record should also reflect their engagement policy with executive committees on environmental, social and governance issues.


Institutions are no longer content for responsible investing to be a box-ticking exercise. They want a coherent strategy which changes corporate behaviour. Investment managers will increasingly be expected to be effective campaigners who can work in concert with others to initiate positive social change.


Meeting client demands


Cost transparency, improved tax efficiency, greater social responsibility and better customer service – that’s a lot of demands from institutional investors for asset managers to satisfy.


The larger managers are using their scale to find a technological solution to these problems.


For smaller managers it’s more challenging. Some are re-examining their business model from the bottom up: they are thinking about what they are good at and what should be outsourced. For example, can they provide the necessary data to clients or should they let another specialist firm do that? Where are the untapped distribution opportunities and how do we manage the costs associated with these?


At AMX we think this problem should be addressed holistically. An institutional investor may have assets allocated with anything from five to 15 fund managers, and they expect all of those managers to provide the same service levels.


That’s where an institutional platform can help. A platform can make it much easier for asset managers to meet the stringent service requirements demanded by institutional investors. Using technology effectively, and with a user-friendly front end or portal, the drive for transparency can be underpinned by a positive customer experience, with data and analysis provided in a streamlined, cost effective and consistent way.


Photo credit: Pippa Rudling

Continue Reading

What does 'going digital' really mean for pension funds?

James King,


Super Linear: Digital marketplaces and the science of cities

Jonathan Greenwold,


© 2023 AMX. Rights reserved.