The whole funds industry constantly speaks of providing a better level of service than its competitor...
What I want to say here is not new. However, short cuts can appear in anyone's business - sometimes under the guise of economy of either cost or effort - often leading to a sub-standard or poor service which will eventually impact upon the future growth and prosperity of that company.
We all like to think we are already giving of our best but an honest appraisal of our services can help reveal opportunities to improve.
There are three different types of clients; the direct investor who often falls into the category of 'high net-worth' investor, the intermediary acting on behalf of many different styles and categories of investors, and the institutional investor.
While these represent three separate distribution channels, they all have to make the decision to become a client. I cannot speak for all channels but I certainly can talk with some confidence for the intermediary.
Becoming a client means having certain expectations and I would like to spell out, from my point of view, what I would hope to receive in service terms from the institution and the fund manager entrusted with mine - or my client's - money.
What is the process by which someone becomes a client in the first place? In my business of specialising in personal financial planning I get to meet and to deal with, at first hand, a variety of people from all backgrounds and of differing wealth and aspirations.
However, the most important fact that I must be aware of is that I am speaking to the person who owns the money or has responsibility for it.
This may be an obvious point, but it is the client's wealth we are talking about and rule number one should be: "Remember whose money it is". This is a principle that is all too easily set on one side. It is the client's money that drives the industry forward and without it none of us would be in business.
Recently, browsing the book-shelf at the airport between flights, I happened to glance at a book that declared that the customer is no longer 'king' - instead, the author suggested that the customer is now, in fact, God.
Whichever category of client you may be dealing with, there will of course be areas of commonality amongst all of them. However, the most important fact is that it is their money.
Everyone has individual expectations in terms of performance, service and com-munication, and while areas of commonality may exist, the assumption that there can be a common solution encompassing all clients is a trap to be avoided at all costs.
Each client has to believe that they are being treated as an individual according to their specific circumstances.
Of course, we all want the big clients, but it does not matter whether clients are potentially large or small - if we do not know and understand fully what our clients require and what their feelings are about risk, when they want to encash their investment, and what purpose the money will be used for at the end of the day - we are failing. So, principle number two has to be: "Truly understand your client."
It really cannot be emphasised enough exactly how important the client is.
If this is the case, how do clients decide to become clients, how do they begin to differentiate between the different investment houses and which funds should advisors be recommending to their clients?
I am sure you scan the newspapers, particularly at weekends, and alight on the pages where experts are asked to advise a person on where they should place their money and who with. It often seems strange that, however many experts there are on the panel, rarely do two people recommend the same course of action or the same funds.
People become clients because certain factors are in place. They might want a better return on their capital or they might have an excess of income over expenditure that they want to do something sensible with, such as provide for a future financial event. They then have to find a vehicle to use - a pooled investment, perhaps.
When it comes to choice, the institution's or fund's performance must lend credibility to their claims and their asset allocation has to fit in with the client's view of world events.
Poor competitive fund performance means no sale, but performance alone does not make the sale. The client must be aware of the costs. It is also important for them to know the fund's objectives and what the risk factors are.
Other questions for consideration will be, what does the fund invest in, does the fund match the client's personal profile and how does this impact upon their financial objectives?
From an intermediary's point of view I would also ask myself, who do I know in the institution being considered? Who can I speak to if I need to? These points would influence my decision. I have to feel comfortable and confident about my recommendations and normally only recommend products or funds that I know about. It is often important to have met a reliable person from within the relevant organisation itself.
Choices, therefore, are usually based upon knowledge of the institution, fund performance and the style of communication.
When considering how the fund institution communicates with its clients, it is relevant to consider whether relationships take place in a rarefied atmosphere or are practical and up-to-date. The question to ask is, are we dealing with people who care, who recognise exactly who the owner of the investment is and understand what their real objectives are?
The differences, therefore, that exist between the 'panel of experts' in the weekend press, is
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