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Comment: Funds Boutiques, Asset Managers and Placement Agents - Mission Impossible versus Customized Service? (published only in German language) Brought straight to the point: “A placement agent – that’s the person who has to pass on the hot potatoes!” (Family Office Representative from the North of Germany). Placement Agent – an iridescent term for someone whose facets are unknown to many asset managers. The spectrum ranges from “placement agent light” to “placement agent plain vanilla”, from marketing service provider through to outsourced sales unit. The performance profile of the provider goes far beyond the bounds of standard sales services. While a service provider sees himself more in support or in a flowing transgression to direct sales, certain service providers see the core function of sales as being the point of focus of their positioning. With all of the advantages and disadvantages. Possible points of criticism of this service provider: solely “detached marketing” – attractive brochures but no customer contact, pure PowerPoint theory consulting or “verbal fact sheet approach”? In all fairness it must be said that many potential principals do not even know what a placement agent is. The points of criticism given as examples often stem from a certain amount of perplexity on the part of the customer, similar to the situation in the classic field of business consultancy. On the other hand, many funds boutiques and asset managers also naturally ask themselves where the usefulness of these external service providers is to be found. What can be more realistically expected? Professionalization and Product Policy In view of such statements, the positive aspects of this relatively new service are unfortunately often lost in the German finance sector. Thus, for example, specialization in one particular sector or, respectively, a target group or a field of activity is sensible in the case of a targeted approach to investors. It often the case that unrealistically high demands are made on service providers. Marketing, sales, PR – service providers live from good content and good quality – performance as a hygiene factor – in order to enter into a dialogue with investors. No provider of products likes to hear that he only provides “average + x”. Failure on the part of the service provider is pre-programmed, because he cannot convince any customer with an insufficient quality. Principals also often forget that, on the other side, there are institutional or semi-institutional customers, who can read, who can involve consultants and are critical readers of specialized publications. Positive reporting on specialized funds advisors / funds boutiques, which set up funds in investment companies such Universal-Investment, Alceda, Hauck & Aufhäuser etc. and which are responsible for the investment strategy, promotes professionalization of institutional investors. In particular, the activities of the Association of Independent Asset Managers in Germany (VuV) as a possible quality benchmark necessitate consideration in the institutional segment.

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Communication, Long-term Thinking and Mission Impossible In the case of “footsore” products (where there is a weakness in performance or an investment class is currently not in the focus of investors) it is often forgotten that a long-term dialogue with the investors and potential investors should be at the fore – in certain circumstances this can mean for some customers that crisis communication and asset under risk discussions with investors have to take priority in critical situations. Many asset managers as principals of placement agents place their focus on a short-term increase in turnover, while the importance of long-term solid customer relations is often neglected. This can lead to the situation in which the placement agent is faced by a completely unsolvable task. Opportunistically controlled sales actions, which are lacking in long-term thinking and which can often lead to risks for reputation can lead to more damage than use. Which investor really enjoys tenacious discussions with certain sales people? The communication setting Sales/Investor is subject to strain, when it comes down to the question of “Why haven’t you purchased our funds?” A not truly erroneous thought in this connection: Perhaps relations management should take priority over product sales because this will not function over a long-term period in any case. Seen from this aspect, the reward modalities for the service promised should also be examined. Especially in phases, in which markets are characterized by dynamic movement, good communication is indispensible in order to prevent drops in resources. Good Prospects A development is taking place in Germany. Competition is the driving force which, so to say, is bringing the whole of the industry to the attention of the customer. It is to be hoped that for all concerned, the right asset manager meets the right service provider. Full service providers, niche providers, modules and projects – the customer is king. Every Jack has his Jill!

Feedback, additional thoughts, experience or any kind of dialouge on such context is most welcome, please contact: info@markus-hill.com or Mary Daute (Asst. Manager) phone: + 49 17 66 33 66 094

Markus Hill

Markus Hill (MSc in Economics) is an independent asset management consultant based in Frankfurt, Germany Professional experience includes SEB Bank and Credit Suisse Asset Management. In addition, he worked as head of sales and PR for a German fund boutique. Since 2005 he specialized in the management of mandates, sales, marketing, and PR (consulting, "introducing"). Markus is also involved in selecting themes in the specialist areas of target funds with a multi-management aspect, fund boutiques and mutual funds for institutional investors (product scouting, fund selection). Furthermore he is actively engaged in cooperation with the market-leading Private Label Funds/Master KAG in Germany (Universal-Investment) promoting the idea of independent asset management and was the Co-Initiator of the first all-German Consultant survey in 2005 and the first "UCITS-survey" in 2003. Market entry into Germany, behavior of fund selectors and fund providers in German asset management industry are often discussed by him, e.g. in his asset-management-publication MH-Focus.Through many articles, columns and presentations (national and international) he has become a highly recognized expert in the German asset management industry. "Industry multiplicator" is a term often used by journalists and clients to describe his style and personality. (Markus Hill/ MH Services assigned in the role of Media Partner for: UCITS Alternatives Conference in Zürich, September 2011)

Markus Hill MH Services email: info@markus-hill.com website: www.markus-hill.com phone: 0049 (0) 69 280 714 mobile: 0049 (0) 163 4616 179