Thursday, July 19, 2018 Stamford, CT USA — U.K. investment managers working to maintain and enhance profit margins in the face of growing downward pressure on management fees could learn some lessons from Bridgewater Associates—the 2018 Greenwich Quality Leader in Overall U.K. Institutional Investment Management Service.

“Several powerful trends are combining to drive management fees lower in the U.K.,” says Greenwich Associates consultant Mark Buckley. “Bridgewater Associates and other leading managers like Insight Investment and Baillie Gifford—the two runners-up for the title of 2018 Greenwich Quality Leader—are pushing back against this trend with an effective focus on client service.”

Best-in-Class Client Service is Key Differentiator

Asset managers trying to maintain profitability in the face of these trends have two main weapons.

First, managers can cater to investors’ growing demand for higher-fee specialty products. Corporate pension schemes are expecting their portfolios to outperform markets by 98 basis points (on the basis of five-year expectations) and local authorities are banking on 123 basis points of alpha. To achieve these levels of outperformance, U.K. plan sponsors are shifting assets from active U.K. and global equities into infrastructure, real estate, private debt, other real assets, and alternatives with higher alpha potential.

Second, managers can work to preserve fee levels and margins on existing mandates by providing best-in-class client service. Asset managers cannot afford any shortcomings in client service basics, such as reporting, responsiveness to client inquiries and requests, and formal review meetings. Leaders in the industry, like Bridgewater Associates, provide clients with valuable intellectual capital and strategic advice, and are increasing the value they provide to clients in informal interactions.

Click here for the full Greenwich Report and list of 2018 Greenwich Quality Leaders in Overall U.K. Institutional Investment Management Service.