Over recent months I have had the opportunity to speak with many senior leaders from the European headquarters of some of the largest asset managers globally, most of them based out of the UK. This fact, the strength of the UK within the European and even global asset management industry, has been especially remarkable, undeniable. As a serial expatriate, I have come away with a reinforced sense of respect for my home country. Yet these discussions have also left me with a question about diversity. Not about gender diversity, but about cultural diversity.
Is the gravitational pull of London creating a cultural myopia within asset management firms?
There can be no doubt that London remains the firm favorite for many US-based firms for their expansion plans into ‘Europe’ and thereafter their launchpad towards the continent. Ease of access, language and the extensive talent pool in London are all strong and rational arguments for this. However, with the UK acting as a bridgehead for so many international firms into Europe, I cannot help but be surprised by how the clear majority of board members and senior managers appear to be of Anglo-Saxon origin and how few of those people seem to have spent time living and working in the markets that they are responsible for building their businesses into. My question: with such reliance on the talent pool of one country and the resulting lack of diversity of thought, experience and cultural sensitivity, how can you successfully be sure to bring the voice of the European client base into the board room?
Years ago, I worked for a Unilever firm in Paris called Lever Industrial. Our team was made up of people from France, England, Germany, Italy, Switzerland, Austria and the Netherlands. Clients from across Europe had a voice at the table, represented by people with deep experience of their needs and the specificities of their markets. This experience was ensured by establishing a base of strong local talent and enhancing it with frequent expatriation meaning that ‘international’ was at the heart of all senior leader’s careers. Moving into the world of asset management was to be a rude awakening; the simplistic and Anglo-Saxon-led view of Europe (‘just translate the English headline, after all, we know how to do it here…’) struck me as myopic in the extreme. Since then, some progress has been made. After all, we are talking about nearly 20 years ago, so one would hope so.
Recognizing the complexity of Europe
The simple fact is that Europe is diverse. Geographically speaking it reaches from the polar cap to north Africa and the Atlantic coast to the plains of Hungary. Religiously, Europe is composed of followers of Islam, Catholicism, Protestantism and more. Temperatures range from the freezing winters of Sweden, to the raging summer furnace of Spain and Greece. To simply call it Europe, or ‘The Continent’ is a gross oversimplification that does not do justice to what it takes to be successful across the region. And here’s the rub, how can you successfully service clients from such a diverse geography? How do you make sure that you are able to hear, listen to and digest the diversity of customer need? What is the right degree of complexity to embrace when the focus today, is on strict cost management? How should you balance local responsiveness and central synergies?
For me, it all starts and ends with people. In a recent conversation, a colleague of mine of central European nationality, working for a very large US asset manager, was commenting on what a big and positive step it was for his firm to employ someone from Continental Europe to the EMEA management board. That’s one person on a board of eight to ten people within a division that is looking for significant expansion and development into non-UK Europe. How can the voice and diversity of continental European clients ever be heard in such a configuration? The cultural biases will be all but deafening.
With consolidation in both UK institutional and retail distribution, shelf space declining as more firms bring in guided architecture and concentrate their supplier partnerships, competition from passive further shrinking the addressable market, growth and expansion on the ‘Continent’ is once again high on the agenda of many UK-based asset managers. Indeed, I would argue that ability to address and manage the complexity of Europe will become a key factor for the success, if not survival of many firms over the next business cycle.
Working harder to internationalize the talent pool
There is no doubt that London is the European powerhouse for asset management. However, as it looks to navigate Brexit and prosper further, I would argue that firms based in London need to work harder to find ways to bring diverse cultural experience into their organizations to enable the voice of customers from across the full spectrum of their clients to be heard. Such diversity of experience takes time to build, from expatriation ensuring mixed experience across markets in both local office and headquarter environments, to foreign-local hires, to structurally building multi-national teams responsible for driving decision taking. However, over time, such approaches will help to deconstruct cultural biases and bring diversity of thought and experience through-out the organization.
In conclusion, I strongly believe that having strong multi-cultural leaders with mixed in-country experience of managing both local and central functions across a variety of markets and ensuring that leadership teams and working groups include a broad spectrum of people who have lived, worked and breathed the same air as the customers they serve can only benefit the competitivity of firms and London as a whole. It’s taken 20 years to get where we are today, lets see if we can accelerate the next step!