After the dotcom bust, it became fashionable to talk about being a “fast follower.”

Let someone else take the arrows of trying to establish a product in the marketplace, then rush in with your own, hopefully better, product once it was clear that there was demand.

No longer the case.

"The fast follower business is kind of lost now,’’ said Joseph A. Carrier, chief risk officer at Legg Mason, yesterday morning at the opening session of this conference. “You can't really be a fast follower.”

The primary reason: You have to look not just at where a new fund is going to be in its first year out of the box, but where it likely will need to be two or three years down the road. How it will change, even before you’ve got it in the market.

"If you're not planning your product line and where it's going to be, you're going to have to exit it,’’ Carrier said.

Take the exchange-traded fund business, now approaching a $1.3 trillion business domestically and $2 trillion worldwide. If you’re not a big player now, you won’t be.

“It's hard to jump in. You're not going to find flows,’’ said Carrier.

But there are other factors that make it difficult to be a fast follower, today. Systems, in particular, says Amy D. Duling, 
senior vice president and chief compliance officer at Dundee Wealth U.S.

Systems not just for oversight, to make sure you are in compliance with increasing fund regulations, but systems for selling funds, which are getting more and more sophisticated, and systems for managing funds, once they’re operational. Not something you draw up overnight, any more.

All of which consumes time – and means you can’t quickly roll out a competitive product. "The lead time for product development is certainly growing,’’ she said.

Plus margins are being compressed. R&D budgets are down. And how many hands are there in the pie now?

Distributor, asset manager, advice giver and custodian, for starters, notes Michael Perry
, managing director of wealth management
 at UBS.

Now, innovation is an imperative. You have to get ahead of the field, to get ahead at all.

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