When something goes wrong with an investment what would you rather do: have a trawl through the prod...
When something goes wrong with an investment what would you rather do: have a trawl through the product provider's website; get stuck in a call centre system; or talk to a human being who knows you, appreciates your concern is not a standard query and can get you the answer you need?
It is not difficult to guess the answer but as fund groups look for more and more ways to cut costs and broaden distribution, intermediaries may find the third option is not freely available.
Groups are increasingly turning to third-party distribution of their product, via life offices and fund supermarkets such as Cofunds and Fidelity FundsNetwork. The most important new hire on the sales team at fund groups is now 'head of third party'. One person, one salary and distribution is outsourced to an entirely different sales organisation.
There is just one problem with this for those who buy the end product: it is much harder to get any decent information on the funds. The job of the third-party salesforce is to extol the virtue of the product and the choice it provides, not to discuss the pros and cons of individual funds within it. As a result, the factsheet is becoming the substitute for dialogue between the intermediary and the fund group. Factsheets have their place and can answer some basic questions but they do not provide enough information to make a buy decision and cannot sort out a problem when something goes wrong.
Traditionally, that has been the job of the unit trust salesmen. They know their clients and are able to offer a flavour of the organisation. As everyone in business knows, the real test of a working relationship is not when everything is going well but rather when something goes badly awry and the party responsible has the choice of prevaricating or being up-front and solving the problem.
Financial services is a people industry ' clients like to know their intermediary before they give them money and fund managers like to meet the companies in which they are thinking about investing. The unit trust salesman is the face of many fund management companies. The danger is that intermediaries will be less able to meet the groups with which they are thinking about investing client money.
Product providers are quite rightly looking to run lean and efficient operations. It is what their shareholders and investors demand. But there must be a balance because the death of the unit trust salesman would lead to the demise of a decent unit trust industry.
‘Promising lead’ or ‘Back to the lab’?
Have economic cycles fundamentally changed?
Our weekly heads-up for advisers
Two global vehicles
'Further plug advice gap'