ITAS: power disrupts absolutely 26 February 2015Luxembourg Reporter: Stephanie Palmer
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If fund managers want to hand more power to their clients then they must be prepared to make big changes, according to a speaker at the International Transfer Agency Summit.
The speaker referenced the powers of thermodynamics, suggesting that there is a certain amount of power available, and that if managers wish to give investors more, then they must accept relinquishing some of their own.
He added that, while some fund managers may be promising to hand over his power, they have not unveiled strategies original enough to make the necessary scope of changes.
He said: “We shouldn’t believe that the way things have been has anything to do with an end state. That is brutally hard to do.”
According to the presentation, investors can be particularly frustrated when dealing with individual securities, getting frustrated over the complexities and losing interest in the investment.
“We do make things fundamentally complex. We seem to enjoy it. Clever people make things complicated, very clever people can make things simple.”
The speaker suggested that smaller players trying to enter the investment industry struggle because of additional, largely unnecessary, obstacles between the investor and the trade.
“It is hard to get people interested in the mainstream funds industry when the mainstream funds industry is in the way.”
This is leading to fewer advisors recommending funds, which may be ultimately damaging to the industry. “The industry has outsourced caring about clients to intermediaries for too long,” said the speaker.
He suggested that in order for a fund to win back the trust of its end users, it must establish a communication channel, including offline support and concern for the investors’ interests.
Finally, he encouraged fund managers to ‘hug a client’, interacting with investors directly, even though the clients may be unhappy with the service provided to them so far.
According to the speaker, if managers wish to approach them they must be prepared for anger, and prepared to work at a difficult relationship to restore the trust and power balance missing from their industry.
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