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Martin Vogel (Waystone): Turning Pain into Opportunities 

WMartin Vogel Waystone_edited.jpg

While markets suffer, third-party management companies represent a natural way for asset managers to save time and money while reducing their risks. But Luxembourg needs to attract enough new talent to capture these new opportunities. Interview. 


How do you analyze the current market? 

When the market goes up, nobody really cares about costs, but over the past 12 months, the fact that markets didn’t do well - with drops in AUM – has led asset managers to discuss costs. Many in-house management companies are evaluating whether it makes sense to keep a local presence in Luxembourg with employees, expensive IT systems, and so on. We have seen a growing number of reasonably large in-house mancos contacting us asking for solutions to help them or even to switch to a third-party management company model. We also saw more consolidation in our industry, leading to a further decrease in the number of players. It will continue to shrink over time. Finally, several competitors are facing problems with the regulator or with their clients which leads to the latter looking around to change their third-party manco provider. But don’t get me wrong: Despite the difficult market conditions, the number of new asset managers entering the EU and Luxembourg fund market is growing, which translates into more AIFs than UCITS. Some may face problems raising money or may delay the launch of their funds, but Luxembourg remains very well-positioned for the future. 


“Luxembourg remains very well positioned for the future” 

Are promoters making the best use of their management companies?   


Surely not. Ultimately, the manco from an asset manager’s point of view should be an enabler, a supporter, and a right arm dedicated to managing everything: Risk, compliance, and so on. It is more a collaboration than a mere “check and control” relationship. When things work perfectly, the manco enhances the performance of the fund manager by allowing him to save time, and money and focus on his core business while leaving the rest to specialized professionals in Luxembourg. From my experience, the quality of the relationship depends largely on how the asset manager and the manco first sit together. When the asset manager is told by his law firm to work with a local third-party manco, the general feeling is often: “Oh no, here comes additional complexity.” On the contrary, when the collaboration starts in a balanced way, the management company has the opportunity to explore with the client the most efficient way to collaborate. A company like Waystone, which has all the right systems, and know-how – reporting, EMIR, marketing, Fatca – can discuss, on an equal level with its new clients and find a set-up generating more added value. I’ve said it for many years: In our industry, reaching a critical size matters. 


“We need to attract the right quantity of university finishers from LSE, Bocconi, and similar schools” 

What risks and opportunities do you identify? 

I do not think that the Taxe d’abonnement is a big issue for the business we have today. It would impact cash funds or ETFs, but we mostly deal with active management and AIFs. Indexation is also not an issue for us: To attract the best talent, you need to pay the market price, which grows with inflation anyway. What is much more important is our ability to attract the right quantity of university finishers from the London School of Economics, Bocconi, and similar schools. The ratio in Luxembourg between salaries, cost of living, and taxation is no longer competitive. In my eyes, Luxembourg must establish housing opportunities while reducing personal and corporate taxes, so that we can remain competitive. I sometimes hear that Ireland – where Waystone is active - could benefit from these issues, but they have similar problems. This is a competition between Luxembourg and cities like Paris, Madrid, Milano, Prague, and so on. We need small adjustments because the framework here and the way the industry players - including the regulator - play together is outstanding. That represents a huge competitive advantage.  

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