Asset managers that sell funds through global wholesale distributors could be losing large sums of money due to poor rebate and commissions management, a consultancy claims.
Around £6 million (€6.8 million) in rebate overpayments and other inefficiencies is wasted by some individual firms every five years, according to estimates by Alpha FMC, an asset and wealth management consultancy.
The figures are based on a “typical” asset manager with about £50 billion of assets under management.
Overpayments, lost flow and uneconomic commercial terms are major drivers. As much as £2.6 million every five years may be paid out by a single firm “unnecessarily through simple overpayments which many firms are unable to claw back”.
Also, reduced flow and lower revenue can result for asset managers that repeatedly make late or incorrect payments to distributors and subsequently fall from favour.
Nick Dekker, director of distribution operations at Alpha FMC, said a root cause of the rebates issue is poor communication between sales, client services and operations teams.
More generally, it is the complexity of asset management models and market infrastructure that lie behind the problems – and the issue may only become bigger with an increase in remote working.
“The sad reality is that too many firms are likely to see increased delays to clients during this period of remote working, and errors which may go undetected for some time.”
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