International 14/12 – Dot-com rush still holds lessons

Financial service providers should not be complacent even though the pendulum has swung against dot com businesses according to Advent Software chair Stephanie DiMarco.

"One year ago financial services groups were running scared as new players competed against them in the online world but the momentum has now turned," DiMarco says.

"As a result some older style groups will revert to being complacent and will be killed as the urgency that the dot coms brought will stay on as the world market changes."

The comments come as part of DiMarco's visit to the Advent Australian users conference, and she says the road ahead is not obvious even though the tech wreck has cleared.

The reason for this is that the extremes which dictated the differences between the old and new economies have disappeared and as the two types of business merge it is unclear who will survive.

"While new companies are nimble and can easily to respond to changes, older style businesses have core customers and skill sets," DiMarco says.

"There are opportunities for both groups and the winners will be those who are cost effective but also innovative."

However DiMarco says a number of hurdles lay in the way for many business such as ability to go online and the desire to actually do so.

"It is really dependent on the business as some are more easily ported to the Internet while some are just not suited to making that move," DiMarco says.

"However the biggest problem is will the company culture allow innovation and the intentional breaking of rules. To get value from the new model means breaking well established rules and this can be painful if they have been lucrative."

DiMarco says that the age of electronic transactions begun back in the 1960's when broking and trading houses started to use technology to drive their businesses.

However DiMarco points out that many of these houses crashed as they didn't have systems in place to exploit the new technology or did not use them properly.

"It was the start of the curve in transaction volumes and the old ways broke down along with those who insisted on using them. In the end they either closed down or merged with those who pushed ahead."

Scudder name change

Scudder Kemper is to change its name to Zurich Scudder Investments in the new year. Scudder Kemper chief executive Edmond Villani says the new name allows the group to capitalise on Zurich's status in the global financial services arena, according to US-based Financial Planning magazine. Zurich will adopt the new Zurich Scudder name for its institutional business worldwide, but will keep the existing brands of Scudder Investments, Threadneedle Investments and Zurich Investments in the US retail market.

CFP moves into HK

The CFP Board of Standards has struck a deal with a Hong Kong financial planning association to create a CFP certification program. A CFP Board representative signed a license and affiliation agreement with the Institute of Financial Planners of Hong Kong (IFPHK), a professional self-regulatory organisation established by Hong Kong companies.Under the terms of the agreement, IFPHK can grant use of the trademarks Certified Financial Planner and CFP to planners within Hong Kong who meet standards of education, examination, experience and ethics.

Then there was one

Eureko has pulled out of the bidding leaving Prudential as the only bidder for one of the UK's oldest life assurers, Equitable Life. Eureko, an alliance of European insurers, pulled out of the bidding after Equitable refused the group exclusive negotiating status. Prudential remains the favoured bidder not least because it could use some of its estimated £6bn-£8bn of surplus assets to rebuild Equitable's finances. CGNU, the UK's largest insurer and Aegon, the Dutch insurer have already pulled out of the bidding, apparently put off by the extent of Equitable's financial liabilities. Equitable put itself up for sale mid way through this year after losing a test case over its controversial treatment of holders of guaranteed annuity options.

Four months at No 1

Vanguard has emerged as the hottest US fund manager for the second half of 2000 taking the number one spot for inflows in October for the fourth month in succession. The group pulled in $US2.6 billion in net inflows in October. Vanguard has had $US16.5 billion in inflows since the start of the year, moved up a notch in the rankings of best-selling fund groups for the year, stealing second place from Putnam Investments. Which dropped to third with net inflows of $US16.1 billion for the year. Janus Capital remained the number one selling fund group, with $US37 billion in net inflows for 2000.

Henderson recruits

Henderson Global Investors has recruited two high profiled technology managers to boost its status in global the technology sector. Former Scottish Equitable Paul Kleiser and Stuart O'Gorman are set to join Henderson's technology team. Kleiser and O'Gorman will join Henderson's existing technology team and will have responsibility for Henderson's technology funds. These include the Australian AMP Global Technology fund, the UK OEIC fund, and the Horizon offshore sub-fund. Group chief investment officer for international funds, Iain Clark, says the experience the pair will bring will ensure that Henderson "retains and builds" its position as a leading global technology manager.