Natixis Investment Managers has beefed up its distribution team as the asset manager prepares for rugged market conditions amidst dislocation driven by internalisation and increased specialisation.
The doubling of the sales headcount marks one of Natixis' biggest expansions locally and happens just as the asset manager renews its push outside superannuation to include retail investors.
This was underlined this week when the $1.2 trillion asset manager expanded its AFSL license to target retail clients, affording broader access to strategies from its global asset managers.
Natixis IM country head of Australia and New Zealand, Louise Watson, called the retail AFSL an "important milestone."
The asset manager is responding to the growing importance of retail investors as a distinct distribution channel, in addition to institutional clients.
This is in addition to the demand from financial advisers for access to its global strategies.
Natixis has built a distribution platform that can partner with not just the super funds but also the rapidly growing advice businesses and the consultants who support them.
Watson is also responding to the growth of the pension fund's internal investment teams.
Growing internal teams
One of the greatest opportunities for the larger, more diverse global houses, is to partner with those super funds that are growing their internal teams.
This has prompted the country head to expand her own team.
"We hear from Aware Super, and other asset owners that they are still growing their investment teams and the teams that support those investment functions," she says.
"With the investment teams being so large and increasingly specialised, we have organised ourselves to communicate effectively across whole-of-portfolio partnerships.
Incidentally, while super funds will still be a big driver of income for the big asset managers, many are seeing their income dwindle causing them to more fiercely target other channels.
But as income from traditional sources has shrunk, so too has the pool of distribution specialists.
All of this is challenging the way investment managers interact with clients.
There has been a big shift in the skill set of sales people driven by clients investing in more niche, less liquid asset classes requires specialist knowledge and support throughout the due diligence phase.
And it's not just the super funds.
Watson is seeing a demand for diversity in asset management strategies across wholesale, retail and institutional funds.
"All are contemplating how to efficiently diversify beyond traditional asset classes," she states.
Moreover, she goes on to say, that there are multiple challenges at play when considering how to add illiquid investments such as private equity, real estate and alternative debt strategies while managing fee budgets, transaction costs, liquidity budgets and accurate asset valuations as well as the fund's overarching macro view.
"Distribution teams must have the skills to assess more complex assets in order to help clients identify investment opportunities with strong risk-adjusted returns.
"We're finding that capital raising takes much longer; it requires more flexibility and patience. People often lack the technical investment knowledge to have those discussions across multiple jurisdictions or the deep market knowledge to tailor solutions for those clients."
Asset management staff don't just talk to a single contact anymore; they engage with multiple stakeholders across asset classes.
A partnership approach will mean dealing with investment chiefs, heads of strategy, retirement, asset safety, member outcomes and sustainability - distribution staff have to manage many stakeholders over long periods and need deep expertise across the whole portfolio.
"These days, it's not just about presenting a new fund, protecting your fee base and hosting a few lunches - the role of a distribution executive has evolved considerably,"
"Our distribution people are working closely with clients to progress those discussions in a much more technical and thoughtful way."
The message is clear: if distribution people cannot conduct those conversations, she adds, it will be hard for asset managers to keep pace with the growth in superannuation funds.
Essentially, firms that cannot innovate, who cannot put the client's need at the heart of all discussions and continue to rely on the old ways of distribution are at risk of being squeezed out.
So instead of focusing on candidates who have worked in distribution roles their whole careers, Watson is open to candidates with diverse backgrounds and skill sets.
The country head notes that more people are coming to the distribution side with asset consulting experience or portfolio management experience, bringing technical insights to a client conversation.
Watson has not always been in a distribution role.
She started her career life in investment banking.
Previous roles include director of equities capital markets at Man Group for three years and J.P. Morgan for about the same time.
Having first-hand experience in international markets brings more depth to the conversations she can have with clients.
The country head looks for this in the hiring process to find individuals who are future-ready.