Michael Corbin is an international trade specialist for asset management and private pensions in the International Trade Administration’s Manufacturing and Services unit. In nearly fourteen years of service his portfolio has included asset management, hedge and sovereign wealth funds, insurance and private pensions
The U.S. asset management sector has long been one of the great success stories of U.S. business, both at home and abroad. U.S. companies accounted for nearly half of the world’s $85.2 trillion in assets under management in 2011. U.S. asset managers are increasingly looking abroad to secure future business and take advantage of developing growth opportunities in the sector.
Why look overseas?
A month ago I had a conversation with an executive from a fortune 500 investment company. He told me that the U.S. market has become saturated, with many individuals receiving payouts rather than paying into the system. He explained that we also are witnessing a major shift globally from defined benefit plans to defined contribution plans. In a defined benefit plan, the employer promises to pay a certain monthly benefit upon retirement based on a specified criteria (e.g., age and years worked). In a defined contribution plan, individual accounts are set up for participants and benefits are based on the amounts credited to these accounts (through employer contributions and, if applicable, employee contributions) plus any earnings on the money invested in the account. In the vast majority of the developing world, defined contribution systems are the default pension schemes.
The need for greater cooperation
Manufacturing and Services’ (MAS) Office of Financial Services Industries (OFSI) has seen an increased demand for assistance to companies seeking to secure greater market access and increase brand awareness. Just in the past few months OFSI’s asset management related work has included:
- Collaborating with U.S. Embassy in Kuala Lampur, Malaysia and the Principal FinancialGroup as it unveiled a new agreement to manage private pensions in Malaysia. The agreement will allow CIMB – Principal to establish a collaboration with employers to systematically introduce their employees to Private Retirement Schemes (PRS) and encourage greater retirement savings. A signing ceremony on 21 November publicly highlighted this historic agreement and market access success for an American asset manager. (photo included)
- In June I participated in a conference in Russia where I presented an overview of the U.S. insurance and pension systems to their membership and select regulatory officials and discussed steps Russia needed to take to accede to the OECD Insurance and Private Pension Committee.
- OFSI provided critical analysis and recommendations to a U.S. insurer requiring immediate assistance regarding potential legislation impacting the Polish pension market.
- OFSI, Embassy Lima in Peru, and the Investment Company Institute collaborated to organize a conference call between major U.S. mutual funds and insurers and the Peruvian Supervisory Authority. The Peruvians specifically requested U.S. expert opinion on their new pension reform before the scheduled public announcement in December.
These examples highlight how the International Trade Administration’s MAS unit is working with U.S.-based asset management firms to expand U.S. financial services exports and their business in foreign markets. We anticipate the need for MAS’s services and expertise to grow as will opportunities and successes for U.S. companies.