A new
report from Celent, Case Study: Nikko Cordial Securities’ Retail
Strategy, looks at how a major Japanese brokerage is responding to
this challenge through innovative initiatives, including the introduction
of Japan's first separately managed accounts (SMA) service.
Despite robust growth in retail trading over the
past two years, retail securities holdings are still dwarfed by savings
accounts, which constitute over half of all household financial assets in
Japan. Securities firms are trying to capture more of these assets by
introducing a variety of new products and services, including fee-based
wealth management services that have the twin aim of providing customers
with stable, long-term investment options and securing the firm’s own
revenue base.
Nikko Cordial Securities is in some ways the most
dynamic of Japan’s Big Three brokerages. Especially after its wholesale
operations were folded into a merger with Citigroup in 1999, the firm has
pursued an aggressive series of strategies aimed at acquiring and
retaining profitable retail clients across multiple customer segments.
This case study focuses on Nikko Cordial’s initiatives relating to two
new business opportunities in the Japanese retail securities market.
First, new deregulation is allowing corporations, independent financial
advisors and—as of December 1—banks to sell equities and other
investment products as third-party distributors. The firm is actively
developing this new sales channel. In fact, some 90% of the new
distribution licensees (as of end September) are partnering with Nikko
Cordial to offer these products.
Second, wealth management services are coming to the
fore in Japan, with brokerages, banks and insurance companies all
competing to attract retail investment assets and to become the trusted
advisor. A central part of Nikko Cordial’s wealth management strategy is
its SMA service—the first such offering in Japan—launched in April
2004 and rapidly followed by several other firms. Nikko Cordial's SMA
service utilizes advanced portfolio management technology from US vendor
FOLIOfn.
"Nikko Cordial Group's aggressiveness in
restructuring has been matched by its inventiveness in designing new
products and marketing strategies," says
