by Kathryn Morrison
The consensus of the opening panel of NICSA this morning in Florida seemed to be “doing more with less,” and finding creative solutions for producing the same results with smaller budgets than in the past.
However, Brian Caffney, CEO of Allianz Global Investors Distributors LLC, implied that some fund firms were making bad decisions in cutting back their operations. He said that in the past, mutual fund companies would just hunker down and ride out the hard times of bad markets. He added that his home office allowed him to keep his sales force because his clients needed more help than ever from the Allianz team. In his opinion, the lesson from fund industry history is that companies who continue to invest in their businesses when times are tough will come out ahead when the markets turn around. He said Allianz is seeing this concept play out.
John Calamos, Sr., Chairman and CEO of Calamos Investments, said companies need to split the treatment of expenses. On one side, technology helps deliver a commodity and it should be done as cheaply as possible. On the other side, you are facing clients and you have to do what is right by them. Investors need to know who you are and what you think. They pay you to advise them, despite the compliance frustrations of doing so.
Steve Miyao, CEO of kasina (sic) said the market instability has changed attitudes. He said firms had learned that they have to be more competitive and it is critical that they be able to scale.
Mike Roland, COO of the ING Funds said for fund companies to survive they must 1) be able to scale 2) have core asset classes that are sold at lower fees 3) have differentiated products and most important of all, they all have to have good performance.
Calamos said it is easier to build a mutual fund today than it was in the ‘70s when his company had to do their own fund administration. He said now a fund company can outsource the accounting, the back office, everything. He said it makes it easier to “put your energy into performance.”
Gaffney reminded the fund executives that we are “peddlers of information.” He said it is important to be the first to market with good perspective.
