Interview: Why this $US1.2 trillion asset manager is doubling down on Australia

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Jennifer Duke: Welcome to the Fear and Greed Business Interview. I’m Jennifer Duke.

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Jennifer Duke: One of the largest asset managers in the world is

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Jennifer Duke: expanding its presence in Australia. Natixis Investment Managers has more

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Jennifer Duke: than US$1.2 trillion dollars in assets under management globally. And while

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Jennifer Duke: it’s been operating in Australia for the last 25 years,

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Jennifer Duke: its license is now expanding to promote directly to retail

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Jennifer Duke: clients and to provide more investment options for financial planners.

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Jennifer Duke: I wanted to find out more about how that works

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Jennifer Duke: and the opportunities that a global asset manager like Natixis

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Jennifer Duke: can provide for Australian investors. Remember, this is general information only.

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Jennifer Duke: You should definitely seek professional advice specific to your circumstances

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Jennifer Duke: before making investment decisions. Louise Watson is the Managing Director

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Jennifer Duke: and Country Head for Australia and New Zealand at Natixis

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Jennifer Duke: Investment Managers, a supporter of this podcast. Louise, welcome to

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Jennifer Duke: Fear and Greed.

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Louise Watson: Thank you so much, Jen. It’s such a pleasure to

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Louise Watson: be here with you.

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Jennifer Duke: I’m really excited for you to take me through this

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Jennifer Duke: announcement. So Natixis Investment Managers is expanding its license. How

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Jennifer Duke: does that change how you operate here?

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Louise Watson: Yeah. We’re really excited about this announcement because it changes

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Louise Watson: our focus really from being one that was very much

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Louise Watson: driven to serve institutional clients to now being able to

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Louise Watson: cover the whole market and the whole range of investors

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Louise Watson: that are in Australia. So now we can not only

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Louise Watson: offer our strategies to institutional investors, but also to wholesale

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Louise Watson: and retail investors, and we think that’s a really exciting prospect.

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Jennifer Duke: That’s a massive market expansion for you, isn’t it?

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Louise Watson: It is. It’s huge. But pleasingly, it was driven by

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Louise Watson: our clients. We were seeing demand or experiencing demand from

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Louise Watson: wholesale and retail investors asking us for access to some

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Louise Watson: of these more niche and diverse active strategies that we

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Louise Watson: have within our expert collective.
And we refer to it

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Louise Watson: as an expert collective because we have more than 15

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Louise Watson: affiliates within that stable and over 200 strategies. So we

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Louise Watson: can really draw from all those experts that sit inside

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Louise Watson: that stable of affiliates. And I think that’s what investors

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Louise Watson: are really wanting access to.

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Jennifer Duke: I think you’re right. And we talk an awful lot

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Jennifer Duke: on Fear and Greed about the need for expert quality,

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Jennifer Duke: professional financial advice, particularly when it comes to the investment

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Jennifer Duke: opportunities that people are considering. How do you think that Natixis can

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Jennifer Duke: help broaden the advice that’s available?

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Louise Watson: Enormously. We’ve seen a lot of the same names in

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Louise Watson: the asset management universe being offered to Australian investors, and

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Louise Watson: by offering some more diversity to that offering and niche

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Louise Watson: strategies, really adding to the toolkit of advisors, it helps

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Louise Watson: advisors to educate their investors and also provide them access

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Louise Watson: to these strategies that are going to help bolster their

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Louise Watson: savings in retirement.

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Jennifer Duke: So I’m quite eager to dig into a little little bit

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Jennifer Duke: more about that relationship between Natixis and financial advisors in Australia.

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Jennifer Duke: Can you talk a bit about the network that you

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Jennifer Duke: have at the moment and how that’s broadening?

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Louise Watson: Absolutely. We’re heavily engaged with a number of the major

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Louise Watson: advice firms as well as the consultants that take care

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Louise Watson: of those businesses. And we see that as a huge

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Louise Watson: growth area for us. We are really pleased with the

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Louise Watson: relationships that are in place now and we look forward to

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Louise Watson: growing those, but really it’s being driven by their desire

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Louise Watson: to access these different strategies that exist within our global

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Louise Watson: network of asset managers.

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Jennifer Duke: And I’ll get to those strategies in just a minute,

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Jennifer Duke: but there was a statistic that came up in the

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Jennifer Duke: Natixis Individual Investor Survey this year, which I was quite

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Jennifer Duke: interested in. It showed that 64% of Australian investors don’t

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Jennifer Duke: know what happens to bonds when interest rates rise. Do

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Jennifer Duke: you think there’s a lack of detailed investing knowledge in

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Jennifer Duke: Australia at the moment?

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Louise Watson: Jen, I was fascinated by this statistic. And initially, I

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Louise Watson: was really surprised because 64% is a high number. But

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Louise Watson: at the end of the day you’re not really going

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Louise Watson: to be sitting around Googling what’s the relationship between interest

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Louise Watson: rates and bond pricing. It’s pretty dry material, but-

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Jennifer Duke: It’s true.

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Louise Watson: … it’s an important one to understand now that equity markets are becoming a

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Louise Watson: little bit more challenging and it’s harder to derive those

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Louise Watson: same investment returns that investors have been able to achieve

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Louise Watson: in the past. And advisors are going to be looking

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Louise Watson: to bond strategies like global bonds or high yielding fixed

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Louise Watson: income strategies to offer to their investors. And it’s really

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Louise Watson: important that investors have some sort of understanding of how

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Louise Watson: those strategies work in order to diversify their investment portfolios.

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Jennifer Duke: Do you think at the moment that Australians are a

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Jennifer Duke: bit limited in the way that they’re investing their money

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Jennifer Duke: because of that lack of understanding?

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Louise Watson: Not really, because I think that that offering is being

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Louise Watson: brought through the advice network in a really effective way.

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Louise Watson: But what I do think is that there is a

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Louise Watson: massive opportunity for advisors, whether they sit within a superannuation

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Louise Watson: fund or whether they sit in an advice business to

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Louise Watson: step into that knowledge gap and provide education to their

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Louise Watson: clients and really help them on that journey.

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Jennifer Duke: Stay with me, Louise. We’ll be back in a minute.

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Jennifer Duke: I’m talking to Louise Watson, the Managing Director and Country

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Jennifer Duke: Head for Australia and New Zealand at Natixis Investment Managers.

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Jennifer Duke: Do you think that that education role is something that

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Jennifer Duke: the financial advice community is aware that they need to

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Jennifer Duke: step into a little bit more? We’ve been through an

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Jennifer Duke: awful lot of, as you would well know, there’s been

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Jennifer Duke: a lot of soul- searching about the role of financial

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Jennifer Duke: planning in Australia and how to grow that. Is that

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Jennifer Duke: where they can lean into it? Is it that education space?

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Louise Watson: Absolutely. And don’t underestimate what your clients actually know. I

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Louise Watson: think in my experience, most people are not forthcoming to

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Louise Watson: say what they don’t understand. And I think inviting that

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Louise Watson: discussion and offering all sorts of investment education, whether it

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Louise Watson: be the very basic fundamental knowledge, things like how do bonds work,

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Louise Watson: what’s the relationship between interest rates and bonds, don’t overestimate

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Louise Watson: what your investors know. And I think there’s a real

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Louise Watson: thirst for knowledge out there, whether it be on the

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Louise Watson: basics or whether it be very technical investment information. And

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Louise Watson: that’s something that we can all lean into and provide

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Louise Watson: to our clients.

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Jennifer Duke: And if we were to sort of zoom out and

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Jennifer Duke: look at this on a global scale, how do Australians

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Jennifer Duke: compare to other markets in terms of their knowledge and

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Jennifer Duke: their willingness to consider sort of alternative investments?

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Louise Watson: Well, I think the other statistic that came through was

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Louise Watson: only 18% of Australian respondents said they had invested in

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Louise Watson: bonds. That compares quite low compared to some of our

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Louise Watson: other global counterparts.

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Jennifer Duke: I think it’s kind of interesting actually, that that proportion

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Jennifer Duke: is so low. Do you think that if we were

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Jennifer Duke: to do this same interview in sort of six months,

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Jennifer Duke: 12 months, that we would start to see that ticking

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Jennifer Duke: up? Is that part of your aim?

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Louise Watson: Definitely. And bond markets, and we’re not just talking about

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Louise Watson: bonds here, but other asset classes outside of equities and

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Louise Watson: real estate have started to gain a lot more traction

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Louise Watson: with investors because markets are becoming more difficult to navigate

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Louise Watson: and we can’t be addicted to those returns that we’ve

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Louise Watson: had in the last 10 to 15 years. We need to start

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Louise Watson: looking outside of equities and the stock market to deliver

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Louise Watson: those returns. So I do expect to see a tick

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Louise Watson: up in some of these other asset classes.

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Jennifer Duke: And what sorts of asset classes do you think are

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Jennifer Duke: going to start taking out those top roles?

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Louise Watson: We’re definitely seeing a lot of attention on alternatives and

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Louise Watson: private assets. Things like private equity, whether it’s listed or

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Louise Watson: unlisted real estate, venture capital, and even sustainable investing through private assets.

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Louise Watson: So private equity in the ESG space, all of those

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Louise Watson: asset classes are starting to be profiled more heavily by

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Louise Watson: advisors in order to offer that differentiated product and service

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Louise Watson: and access to investment returns.

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Jennifer Duke: So Louise, how do you see the balance between active

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Jennifer Duke: and passive investing at the moment?

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Louise Watson: Yeah. I think it’s a really interesting dynamic between active and

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Louise Watson: passive. And when we talk about passive, Jen, we’re talking

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Louise Watson: about things that include passive ETFs. They’re very accessible, they

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Louise Watson: tend to be cheaper and they’ve grown rapidly in recent

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Louise Watson: years. And when we think about active management, you’re talking

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Louise Watson: about asset management strategies like an Australian equity fund that’s

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Louise Watson: managed by a group of portfolio managers.
And I think now that markets

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Louise Watson: are becoming challenging, you need to be able to rely

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Louise Watson: on that team of portfolio managers to actively manage the

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Louise Watson: portfolio to avoid certain stocks or avoid those pitfalls and

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Louise Watson: move away from the benchmark rather than being in a

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Louise Watson: passive ETF that is tracking the benchmark. So I think

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Louise Watson: what we’re expecting is active management to pick up, again,

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Louise Watson: as investors look to have more control over their investments.

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Jennifer Duke: And I’m curious around whether or not you have any

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Jennifer Duke: thoughts on the international sustainability standards that are coming out.

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Jennifer Duke: I believe they’re coming out here relatively soon. Is that

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Jennifer Duke: going to make it easier for Australian investors to compare,

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Jennifer Duke: I guess, the sustainability profile of different businesses and different

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Jennifer Duke: opportunities on a global basis?

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Louise Watson: We hope that that is the case. This is definitely

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Louise Watson: a landscape that is evolving and changing rapidly. But what

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Louise Watson: we have seen at the institutional level is net- zero

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Louise Watson: investing and net- zero targets being put in place across

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Louise Watson: whole of portfolios. And it’s going to take a lot

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Louise Watson: of work to reach those net- zero targets. And institutional

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Louise Watson: investors are putting those steps in place in order to

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Louise Watson: reach those goals.
And asset managers such as Natixis, play

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Louise Watson: an important role in offering strategies to help them meet

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Louise Watson: those targets. So when we think about the advice network and how

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Louise Watson: that filters down to individual investors, individual investors are certainly

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Louise Watson: giving a lot more thought about how they can achieve

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Louise Watson: that in their own portfolios. So again, that’s another education

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Louise Watson: piece that we’re seeing advice businesses step into in order

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Louise Watson: to help advisors and their clients understand those trends.

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Jennifer Duke: And one of the issues we’re obviously facing is that

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Jennifer Duke: there just aren’t enough advisors in Australia at the moment.

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Jennifer Duke: We need some more. We need more options for advice

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Jennifer Duke: for people. Do you have any thoughts about the ways

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Jennifer Duke: that we can encourage more financial advisors into the market

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Jennifer Duke: and ways that we can help revitalize that industry?

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Louise Watson: Well, I would start with encouraging more female graduates to

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Louise Watson: enter that landscape.

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Jennifer Duke: Definitely.

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Louise Watson: We are trying to do whatever we can in order

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Louise Watson: to increase diversity and encourage women into finance. So that’s

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Louise Watson: certainly one way that we can do that. But it

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Louise Watson: is a really rewarding career path to be able to

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Louise Watson: help individual investors achieve their goals, not only their short-

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Louise Watson: term goals, while they’re still accumulating savings, but also as

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Louise Watson: they move into retirement. Especially for women, knowledge is power.
And women retire

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Louise Watson: with 24% less than men, and we expect that gap

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Louise Watson: to widen over time. So there’s a huge role for

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Louise Watson: advisors to play in order to help people achieve those

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Louise Watson: goals. And I think that’s a really rewarding prospect and

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Louise Watson: if we can encourage more people to take that path

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Louise Watson: and take up the challenge of being an investment advisor,

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Louise Watson: because we will need more going forward given the demographics

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Louise Watson: in Australia.

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Jennifer Duke: Definitely. Louise, thank you so much for talking to Fear

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Jennifer Duke: and Greed.

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Louise Watson: It’s been an absolute pleasure, Jen. Thank you for having me.

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Jennifer Duke: And that was Louise Watson, Managing Director and Country Head

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Jennifer Duke: for Australia and New Zealand and Natixis Investment Managers, a supporter

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Jennifer Duke: of this podcast. This is the Fear and Greed daily

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Jennifer Duke: interview. Remember, this is general information only and you should get

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Jennifer Duke: professional advice before making investment decisions. Join us every morning

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Jennifer Duke: for the full episode of Fear and Greed, Australia’s best

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Jennifer Duke: business podcast. I’m Jennifer Duke, economics correspondent for Capital Brief

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Jennifer Duke: and filling in for Sean Elmer. Have a great day.