One year after Scudder re-branded its fund product line, the DWS Scudder fund family is experiencing strong sales momentum, according to Philipp Hensler, head of DWS Scudder Distributors in New York. The organization expects further growth in 2007, when it plans to add more sales staff and build on its recent success by introducing structured note and mutual fund products.
“It’s amazing in a year when we are rebuilding that we could get so much traction in so many different Morningstar categories,” says Hensler of 2006. DWS Scudder has about 25 funds with four or five stars in 20 categories, he notes. “It’s not about just renaming the company, but also about re-launching Deutsche Asset Management’s aspirations in the United States, re-focusing the business and pushing up sales — which have increased 30 percent via wholesalers on average. That’s pretty impressive, and we are proud of that.”
In 2005, such a scenario was somewhat in doubt. Deutsche Asset Management, part of Deutsche Bank of Frankfurt, Germany, bought Scudder in 2002. But, as Philipp admits, “It took Deutsche Bank a while to figure out who they wanted to be with Scudder in the United States.”
Axel Schwarzer and Hensler came to the United States from Europe in mid-2005 to begin the heavy lifting. “It was a year of transition,” Hensler says of ’05, and also one of focus. “Deutsche Bank made a big commitment to the U.S. market and said, ‘Let’s be a global leader in retail asset management,’ which means moving from the number seven spot worldwide into the top five. Thus, you have to succeed in the United States.”
DWS is the third-largest mutual fund player in terms of assets in Europe and the top player in Germany. Its asset-management team includes more than 700 investment professionals worldwide. “We are now leveraging our global muscle to bring this strength to the United States to help advisors be more successful at what they do,” he shares.
A major factor in DWS Scudder’s recent success was its fall road show, which is referred to as its “global rock star campaign.” The road show stopped in 15 cities, included 38 events, attracted 1,044 advisors and 1,209 clients, and lasted about eight weeks. The emphasis was on the organization’s global funds, as well as its capabilities in real estate and commodity investing.
Sales grew by $163 million, when comparing 60-day sales after the campaign with those from before it, the company says; global product sales grew about 200 percent. “We saw a nice increase in sales, but we also saw a nice change in the perception of us within the financial community,” adds John Telling, who runs the 15-member wholesaling team in the West. “And that should help us in 2007.”
Supporting this effort will be continued growth in DWS Scudder’s wholesaler network. “If you want to be the most trusted name globally in the retail space, you have to aggressively invest in people,” Hensler explains. “We’ve been able to attract some of the top talent in the industry, because they see how powerful this organization can become and have joined.”
The fund family added several people at the start of ’06 and then more in July; it recently picked up two top-performing executives, Richard David Jamieson Jr., and Jason P. Caruso. It has split its wholesaling force into three channels: wirehouse and regional broker-dealers, independent and bank broker-dealers, and the RIA/investment-only/institutional arena. “We have seen double-digit sales growth in these channels” and overall sales increases of 34 percent — to $100 million per wholesaler, according to Hensler.
In addition, the organization rearranged its sales territories and “strengthened the key-accounts team as we view the relationships to the home offices and gatekeepers as instrumental to our overall success,” the executive says. “We have doubled the headcount in advanced sales and further added to our retirement-plan business.”
Its U.S. sales team now includes 75 external wholesalers and 37 internal wholesalers, as well as a 17-member key-accounts team. The group added more than 20 people in ’06.
And there’s more hiring on the horizon. “I believe we were the most aggressive firm in terms of hiring people in 2006, and we are not done yet,” explains Hensler. “We will continue to upgrade our sales force and strengthen our coverage model.”
In terms of products, the company says its best-selling funds — several of which are new — include: the DWS Global Thematic (SGQAX) and Global Opportunity (KGDAX); Dreman High Return Equity Fund (KDHAX) and Dreman Small Cap Value Fund (KDSAX); DWS RREEF Global Real Estate Securities Fund (RRGAX); DWS Disciplined Market Neutral Fund (DDMAX), Long/Short Value Fund (LSVLX) and Long/Short Growth Fund (LSGAX).
In November 2006, the closed-end Dreman Value Income Edge Fund (DHG) raised more than $1 billion; the offering was led by Morgan Stanley. “This was a very innovative fund launch for us, and it appealed to a wide range of advisors,” says Hensler.
To boost sales in early 2007, DWS Scudder plans to introduce both a rollover campaign and launch several structured notes, securities that promise some principal protection and potentially better returns than some bonds, and structured-product mutual funds. The structured products push could prove to be a challenge, Hensler admits. “Structured products are not well known in the United States, though in Europe they’re the hottest thing on the market.”
Members of the DWS Scudder team, like Telling, say that the launch of these products gives the firm a good opportunity to show financial advisors how it can add value to their practices. “This is a big year in terms of introducing structured products in the United States, delivering our global expertise and working with advisors to distinguish ourselves as innovators,” he says of ’07.
This really comes down to properly training the sales force and advisors to ensure that clients receive “the appropriate communication” and information, Telling explains. And its part of the general move within the industry for wholesalers to serve more as consultants in helping advisors meet clients’ needs for retirement and other financial planning, he says.
As Hensler concludes, these structured-product launches are being supported by advanced educational efforts for the DWS Scudder sales force and the advisors they serve. “It’s not just a product push, but a holistic strategy,” he says.