Plan to broaden your business in Taiwan Institution market? NIC, the experienced consultant in the industry, shares the critical 5 things you should know from previous insights and the coming one. Previous: 3rd: Walk Through The Regulation System and Constrains
Fund sales dynamic is overlaid from various eligible sales system
In previous NIC Insights, we share a lot about the opportunities in mass market, lifers and pensions, and we also share the regulation related with Master Agency system and Private Placement Agent.
For Master Agent system, offshore managers usually focus on the mass retail, assigning Master Agent who would help to build up distribution channel in banking system or investment-linked policy in insurance companies. The aggregate market is up to $113Bn which is too big to ignore. However, the competition is so severe, and the existing brands have built solid reputation and hard to compete for new comers.
Beyond the Master Agent system, private placement agent maybe suitable for managers who only want to develop institution business in Taiwan. Table 1 below depicts the fund sales and distribution mechanism in Taiwan.
Procedures of fund selection can be varied largely in different institutions
Private placement to Institutions
Before the fund is successfully sold to the investors, a long process is required, and many entities and people are involved. The product evaluation of the institutional investors is more direct, but professional. Management style and company culture crucially determines the investment selection process
For new managers which have not selected to the counter party list, the first step is to find out the anchor product. Introduce the fund house, capabilities and managers, is not easy as imagine, especially for the complicated organization structure for insurance companies. Identified the most efficient way is very important for managers, including understanding client investment requirement and regulation restriction. As profession as clients are, they really don’t want to spend time to explain their thinking to managers who is fresh new in this market.
Third party distribution like SITE IPO fund or PP Fund
If the product is distributed through the third parties, the procedure will be much long. The product onboarding procedures can be widely differed in different distribution vehicles. Let us take examples from SITEs.
Offshore fund managers usually can cope with SITEs from two different aspects: IPO funds and private placement funds. IPO funds may matter more divisions and people to determine before a specific product is decided to be sold. The procedure of Private Placement fund is comparatively simplified but similar to that of IPO funds.
The on-boarding procedure begins from the proposal of Product Design department are very normal. The proposal should be evaluated, discussed and passed through the product committee, in which the committee members are composed by staffs represented from various departments, i.e. General Manager, Product Design, Business Development, Compliance department, and sometimes Risk Management department, etc. In the organizations adopting the top-down approach, the company outlook and business directive will matter more. In some organizations, the very basic bottom-up approach to deliver information from the entry level staffs is a MUST, instead.
The wrong approach would cause the opposite effect accordingly. Importantly, as we mentioned, bank is usually the most important distributor. The opinions from the bank, particularly the custodian bank which usually acts as the major distributor of the fund, will play a significant role, crucially relating to the success of the fund sale.
There is not easy way to build up new business, and different distribution system has different level of resource input and output estimation. A on-boarding procedure is ready for your reference. Just Contact Us if you would like to get the full version of the procedure or to make a plan here!