Alain Dromer, CEO of Aviva Investors (pictured), explains to Fiona Rintoul that its parent insurance company should inspire confidence in the big boutique …
It’s fair to say that now is probably not the best time to launch a new investment business. But when I meet Alain Dromer, chief executive of freshly hatched Aviva Investors, he is unfazed.
First, he says, this is not really a launch but a final implementation of a strategy already in place. The parent company, Aviva plc, the world’s fifth largest insurance group, announced back in September 2007 that it would combine its asset management businesses, which include the UK’s Morley, Romania’s CertInvest and Ireland’s Hibernian Investment Managers. Indeed, Dromer was hired from HSBC to integrate the businesses and create a global asset management firm.
“We’ve already been working hard, and have already been on the road to becoming Aviva Investors,” says Dromer.
Another reason for optimism, says Dromer, is that Aviva Investors is in the favourable position of having the backing of a strong and interested parent.
“Asset managers with the stability of long-term commitment from their shareholders have a favourable position and that is not often achieved these days.”
He has a point. The asset management subsidiaries of banks and insurance companies may traditionally have been viewed as rather dull. But, let’s face it, these days who needs excitement?
“In the sort of market we are in today, being supported by an insurance company and being able to define solutions and products together with an insurance company is a huge benefit,” agrees Dromer.
He also points out that asset management is key to everything an insurer does, which might not be the case with, say, a bank. While some parent companies are trimming their asset management divisions, Aviva is investing in its.
“We are the heart of everything that happens in the group,” says Dromer. “Everything an insurer does has an investment element. It’s difficult to imagine an insurance company not paying attention to the asset management element.”
Multi-boutique structure
In any case, Dromer has a plan to create the “best of all worlds” at Aviva Investors. A graduate of the Ecole Polytechnique, one of the most prestigious of the French Grandes Ecoles, and the Ecole Nationale de la Statistique et de l’Administration, Dromer began his career in France. There he became head of asset management at Credit Commercial de France (CCF) where he developed a multi-boutique structure and founded Sinopia.
He is now implementing a multi-boutique structure at Aviva Investors. To this end, Aviva has separated the alpha and beta parts of its business, and given the all-important alpha generators full autonomy in terms of their investment strategy.
“There is no global CIO for the alpha business, no global equities CIO, no fixed income CIO,” says Dromer. “If you want to attract highly talented people, they are best left in peace. Autonomy is key. Managers must be empowered to deliver their conviction.”
The idea of giving managers the freedom they might enjoy within a boutique is not new. But where Dromer feels Aviva Investors has something else to offer is in combining that structure with the firm’s intended global reach and product platform.
“There are not that many truly global players,” says Dromer. “A lot of competitors say that they are global, but they are not. We are now embarked fully upon this project of becoming global.”
Whether Aviva Investors itself is truly global, or will become it, can be debated. In Europe outside the UK, the firm is present in a mildly eclectic selection of countries: France, Luxembourg, Romania, Ireland, Poland, Germany, Spain and Italy. Outside Europe, it has offices in the US and Canada, and in Australia, China, India, Singapore and Taiwan. There’s nothing in
Latin America or Japan, and for the moment, the company has decided against entering these markets.
“Don’t expect us to be everywhere,” says Dromer. “We are diverse but focused. Everything we do will be carefully measured, compared and prioritised to achieve the maximum chunks of success.”
The firm has some key areas of strength where it wants to grow, for example Central and Eastern Europe, where it can piggyback on brand awareness created by the parent company, and China, where it is the number two foreign player. But for Dromer the global nature of the firm resides perhaps more in the creation of a consistent worldwide platform than it does in blanket coverage of the globe.
“What we want to do is create one global firm, where people know that the key thing is the clients,” he says. “They can deliver to their clients the full range of products, solutions, capabilities that exist anywhere in the world.”
As well as having a universal product platform that draws on all of the firm’s capabilities, this vision involves centralising “those functions that can be centralised” both across geographies and across the investment ‘boutiques’ and beta factories. At the same time, Dromer is aware of the global/local dichotomy.
Need-based solutions
“A large organisation comes with some potential drawbacks,” he says. “People immediately say scale can be an embarrassment or being global can be an embarrassment. We have analysed everything we do, not only in investment but in all the different functions and asked: does it benefit from being global and big or is it better left alone? There are parts that benefit from being global and parts are better left close to the market and the clients.”
Equally, Dromer doesn’t want Aviva Investors to try and be all things to all people in terms of its investment capabilities. Although the firm plans to expand its capabilities as opportunities arise, it has no plans to be a universal provider.
“We want to create client need-based solutions, rather than saying, as is a tradition in this industry, ‘We have a very good product based on X’,” says Dromer. “We prefer to start with the client need and design what we hear the market is asking for by combining different components – those we do well and those we believe are better acquired.”
Ultimately, however, Dromer believes the key to success for Aviva Investors will be to follow the mantra: know thyself.
“It’s very important to know who you are and who you are not,” he says. “We are the subsidiary of Aviva. Some
people have said this is not an advantage. I believe everyone now recognises it is a great benefit in today’s market.”
© 2008 Funds Europe
