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The Importance of Understanding Flow Drivers for Sales Teams
Understanding flow drivers is crucial for sales teams in asset management. It involves analysing complex data patterns, market trends and client behaviours to gain actionable insights.
Recent advancements in data reconciliation, analytics and AI have expanded our ability to process vast amounts of information. However, many sales teams still struggle to fully leverage these capabilities to understand flow drivers effectively.
The potential benefits of better understanding flow drivers are clear, but asset managers face several significant challenges. We have identified six key obstacles that sales teams frequently encounter when trying to decipher and act upon flow data:
1. Deciphering Omnibus Flows
Large omnibus and platform flows require time-consuming research to identify underlying client moves. This is particularly important for funds flagged as having high redemption risk. Sales teams struggle to pinpoint specific clients driving significant movements in a timely manner, often missing critical windows for engagement.
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2. Distributor Country Breakouts
Flows from major global banks or distribution partners are often presented in aggregated form, with limited breakdowns by country or client type. This opacity leads to internal sales disputes and complex credit agreements. Without granular insights, sales teams struggle to align their strategies with actual market dynamics.
3. Institutional Cash Flows
Deciphering net new investments, particularly after initial mandate funding or alongside regular portfolio activity, presents a significant challenge. This complexity can lead to misinterpretation of client engagement and growth, potentially affecting relationship management strategies and resource allocation.
4. Sub-Advised Flow Blindspots
Flows from sub-advised distribution partners often lack detailed breakouts, making it difficult to understand their origins. When information is provided, it's typically infrequent and not systematically reported. This lack of visibility hinders targeted sales efforts and accurate performance analysis, especially for country-level sales split allocations.
5. Mismatched Client Flows
Inaccurate client attribution in CRM or Client Master systems can lead to significant confusion and misinterpretation of flow data. Transfer agent accounts for strategic distribution partners may be accidentally mapped to the wrong client record in a global hierarchy. Often, flows are attributed to just one, frequently incorrect, definition of client (e.g., Clearstream instead of the actual sub-distributor or end investor). This oversimplification fails to capture all the roles on the money, such as Discretionary Fund Managers (DFM). These misattributions can result in skewed analysis, misdirected sales efforts and missed opportunities for targeted client engagement.
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6. Model Portfolio Complexities
The influence of model portfolios adds a layer of complexity to understanding flow drivers. These portfolios can drive substantial flows based on allocation decisions made by centralised research teams or third-party firms, often without direct sales team involvement. Changes in model portfolio compositions can lead to large, coordinated flows across multiple funds or strategies. Sales teams struggle to anticipate and interpret these movements, as the decision-making process behind model portfolio changes may not be transparent. Moreover, flows driven by model portfolios often don't respond to traditional sales efforts in the same way as flows from individual investor decisions, requiring a different approach to client engagement and retention strategies.
Empowering Sales Teams
Overcoming these challenges requires a multifaceted approach. It involves not just implementing advanced analytics tools, but also addressing data quality issues, fostering business change, providing ongoing training and securing strong executive sponsorship.
By tackling these challenges head-on, asset managers can empower their sales teams to make more informed decisions, enhance client relationships and drive growth in an increasingly competitive landscape.
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