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Kia-ora (again) Myles Baron-Hay

BT Funds Management executive vice-president Myles Baron-Hay outlines his plans for the company.

Monday, July 27th 1998, 12:00AM

by Philip Macalister

Myles Baron-Hay is developing a habit of surprising the funds management industry in New Zealand. His first big surprise was in 1989 when he was appointed to head Armstrong Jones' New Zealand operations. Then he was just 26 years old and had no experience in the industry.

His abrupt departure six years later to return to Australia and the family's construction business also was one out of the blue. Now he has returned to New Zealand to take up the position of executive vice president with BT Funds Management.

While his return has been positively received in New Zealand those most surprised are likely to be the people at BT's biggest and closet competitor Armstrong Jones.

The big questions people are asking is why has he returned to the funds management industry and why New Zealand, as opposed to Australia?

The answers are simple and straightforward. Baron-Hay went back to the family construction business and found it wasn't the area he wanted to work in.

"Quite frankly it just wasn't me," he says. That business has recently been on-sold.

That sale process though coincided with former BT Funds Management general manager Graeme Fowler being promoted within the organisation and returning to Australia. While Baron-Hay wasn't looking for this job, the people at BT were looking for him.

Baron-Hay says he was approached about the position and decided to apply for it as funds management was is a business he really loves.

As for New Zealand: well that's love too. Baron-Hay married a Kiwi and living in New Zealand means they can be close to her family.

There have been many changes in funds management in the past two years, including the rationalisation of fund management and financial planning firms, the evolution of master trusts, the move by some planners into asset management and technology actually providing some solutions.

Baron-Hay says the changes, rather than being a hindrance, are likely to accelerate and have a positive influence on funds management.

While the industry may have changed significantly, Baron-Hay hasn't. He remains a perfectionist and his management philosophy remains unchanged.

He likes to surround himself by experts and create the environment for them to realise their goals and aspirations, while his role is to ensure the company is heading in the right direction.

One of the big changes under Baron-Hay's leadership is that he intends to get closer to the advisers and the investors. One of the criticisms of BT in the past has been that it's perceived to be arrogant or aloof.

Since joining BT Baron-Hay has spent hours talking to advisers and finding out the lay of the land.

His goal is to do things better than the competition and gain market share.

He wants to grow the market and convert the non-savers, those latent investors, into savers.

Research shows that about a quarter of New Zealanders are prepared to take some form of advice, and 50 per cent are not interested in advice. Baron-Hay describes the latter of those as an "untapped market".

"It's full of potential assuming they are individuals with the initiative to invest," he says.

The decision by BT to target this market is bound to produce a chorus of people saying 'our predictions have come true, BT is going direct'.

Baron-Hay though puts it into perspective. This decision is made against the backdrop of a more mature, and less threatened advisory market, the understanding that companies have to make their own business decisions, and the acknowledgement, as mentioned before, some advisory firms have significantly changed the way and the areas they operate in.

Any moves BT makes to cater for this unadvised market will be done "mindful of history and relationships."

"We are not going to prejudice the relationship we have with advisers," he says. "We are not going to turn our backs on the advisers. They will have an absolute commitment from us."

He says New Zealanders are acknowledging the need to save for their retirement, they are willing, but as yet they don't seem able to do so.

BT clearly sees growth in both the advisory and the non-advised market.

Baron-Hay is putting the industry on notice that BT is going to vigorously compete for market share.

The areas to possibly compete are price, product, service and distribution.

Baron-Hay says competing on price is stupid, as margins already are very tight. Likewise competing on products isn't smart, as managed funds are essentially a commodity and easily replicated.

Service is the big one. "That's very important to us. We want to practice customer delight."

Service, he says, remains the cornerstone of the business and one of the few areas fund managers can differentiate themselves. Yet it is an area that is immensely difficult to get right and is hard for opponents to replicate.

BT acknowledges distribution is also a critical issue however it hasn't resolved what it will do in this area.

Further organic growth will continue, but buying distribution remains an option. However any acquisitions would have to offer BT some strategic value. Baron-Hay says the company will also be looking at the use of technology to grow its market share, particularly with the non-advised market.

Baron-Hay considers the current market conditions bear a resemblance to 1989. Then the market was depressed, people were still reeling from the 1987 sharemarket crash and there wasn't much action.

Nine years later. The economy is technically in recession, growth is nearly non-existent, business confidence is low and funds flow is negative.

The timing of his new appointment is a plus, Baron-Hay says. BT is positioning itself for the better times ahead.

"While it's tough it's also an opportunity to gap the competition. Now's a good time to get ahead, he says.

In six years at AJ the company went from being a small player with about $115 million under management to one of the biggest, managing a total of $1.1 billion under the AJ, SIL and MFL banners.

Only time will tell what Baron-Hay can do with BT.

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