IFAs threatened by the disintermediation of fund supermarkets and discount brokers will have to prom...
IFAs threatened by the disintermediation of fund supermarkets and discount brokers will have to promote themselves on the benefits of good quality advice, according to Alan Ainsworth, chairman of Autif.
Ainsworth told delegates at a recent unit trust and Oeic conference, that empowered new investors who can access commoditised information and more advice via the internet are seeking information and price deals. They, therefore, often turn to discount brokers and fund supermarkets when buying their products.
These empowered new investors mean that fund managers will find customer loyalty harder than ever to maintain prompting them to find new ways to add value.
He said: "IFAs will need to fight back. They need their customers to argue persuasively the value of their service. The battle has to be fought around the quality of advice."
Ainsworth said the role of fund management companies, that believe an independent advice sector is vital to maintaining a range of distribution channels, is also to raise the quality of advice.
He added: "This is one of the most important issues now facing our industry. Moreover, we would argue that the quality of continuing advice, as opposed to the product selection process at the front end of the sale, is what counts and what adds value to the client relationship. The regulators simply do not understand this point and IFAs are not getting the message across."
Fund managers also face the challenge of maintaining service levels against a background of rising volumes.
Ainsworth said: "If we cannot raise service standards constantly, today's investors, who demand higher standards, will walk.
"With lower customer loyalty, improving service will no longer be something nice to have. It will become a condition of business."
Cost controls in fund management will become vital to maintaining margins, as the UK investment funds industry moves from low to high volume.
He said: "Forcing down operating costs will become key. This links back to client service, since the most effective ways of bringing down operating costs will be in making the service and administration functions more efficient."
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An added tier of asset management can of course deliver additional benefits for certain investors, writes Graham Bentley - just be sure you can justify it to the regulator and, especially, the client