Getting into position
Asked how Rothschild is positioning itself for such an industrial revolution, Laurens admits it is a work in progress.
“We are, of course, thinking about it very seriously. We have a fantastic brand, but we would need to build a lot of things that we don’t have at Rothschild today, including getting digital distribution,” he said.
But, while he says the firm has toyed with the idea, there are no actual plans to go into digital distribution.
“It is a bit far away from the firm’s culture, which makes such a move quite a challenge” he says, but he adds, there is a benefit to having a strong brand.
Financial services is a highly-exposed industry when it comes to digital disruption.
“Digital goes where you have costly human processes, where you have difficult access, when you cannot really also completely exploit the big data. That’s why I believe digital distribution will take a growing spot there. The question for asset managers is, ‘Do you want to be part of that? Do you want to be a digital distributor yourself?’
Most asset managers at the moment seem to be waiting to see how things play out before they take a position, says Laurens.
But, what it is doing s creating an opportunity for asset managers with strong brands to go directly to the customer more than before.
Disintermediation
“Disintermediation is a classic consequence of digital. It will happen in financial services. It already happens in banking to a large degree. and if it happens in a way that we can use it to exploit some of our strengths, we will try to be part of it,” he adds.
While the precise path remains undecided, Laurens is positive about the opportunities on offer in the current landscape, particularly given the low growth on offer.
Indeed, he says, the expectation of continued low-growth and, as a result, the prospect of low returns will not only continue to put pressure on fees and traditional ways of managing money, but also discourage people from saving.
The asset management industry has a fantastic opportunity to provide solutions to the question: How can I save for my retirement, solutions that are tailor-made.
But, he says: “it has to be a much different proposition than just optimising the return compared to a benchmark, or compared to peers,” he added.
That said, he is also quick to point out that the journey toward that has begun already within the business-to-business-to-client space where Rothschild is primarily focused. Evidence of this is the significant success it has had in providing wealth managers for new and different building blocks within the alternative UCITS space and the equal-risk contribution fund space.
“We are on the journey,” he says, “We are providing good products that can be bricks that are necessary in creating these portfolios. But, I think the step that nobody really has yet taken is to make sure you capture the individual’s data, to make sure you provide mass-customised responses.
“Mass customisation, two words which are antagonistic, but which are, for me the next frontier,” he says.
