Asset managers battled over semi-free choice: a HK$12.5 billion prize

This article is a rewrite of a report from September 2012.

(Note: the original body duplicated another report in this batch; this rewrite takes the “battle for clients” angle, focusing on asset stakes and team strength.)

Even before the Employee Choice Arrangement took effect, asset managers were at war. JPMorgan Asset Management was confident of winning share with a four-pronged approach, estimating the scheme could bring nearly HK$12.5 billion in new assets — a 12% lift in assets under management. That figure alone showed how big the prize was.

Why was semi-free choice a battle for assets?

The new arrangement let employees move their contribution portion once a year, meaning trustees and managers with better performance, lower fees and stronger service could take clients — and assets — directly from rivals. One firm’s HK$12.5 billion estimate showed the whole industry was doing the maths: the switching wave would reshuffle the deck.

What was JPMorgan’s hand?

Beyond its four tactics, the firm held several cards: a decade-plus partnership with AIA (which handled trustee administration), a network serving BOC-Prudential, BCT, MassMutual and AXA funds, and a 750-strong team managing retirement and retail funds across Asian and overseas equity and bond markets.

Notably, the firm’s vice-president denied a split with AIA, calling manager diversification the industry trend — a remark that foreshadowed the next decade’s shift from single-manager tie-ups to multi-manager platforms.