Products weakened by poor consultation
Fund managers are failing to adequately con sult researchers and financial planners at the product development stage, leaving many exist ing products weaker as a result, according to Zenith head of research David Wright.
He described the level of consultation as “all the more surprising in the exceptionally com petitive funds management market in Australia, which has the most products per head of any country”.
“You would think managers would be out to cover off everything in the product devel opment phase, especially in the current market, [where] flows are more difficult to attract, but this is not the case.”
Wright said he was “aware some fund man agers are actually quite good on consulting, whereas others don’t engage in the feedback and buy in”.
“You look at some new products for the first time and realise that it could have been a much stronger offering with just a few subtle tweaks here and there.
“You tell yourself that if the fund manager had only done the focus groups with financial planners or its research input properly, those things would have been covered,” he said.
Wright was reluctant to estimate if many products are flawed for a lack of consultation on the basis that many of the possible changes “tend to be subtle in nature”.
“However, it can be the subtle nuances that can be the difference between a product being highly successful [or] just another ‘me- too’ product in a high ly competitive market.”
Aegis head of sales and relationship man agement Craig Northey said often the level of consultation would “depend on whether your perceived worth to a product provider is worth while”.
However, in general, it would be “rare for the big end of town, say a JP Morgan or an ABN AMRO, to just build a [Product Dis closure Statement] and say here it is”.
“This may not be the case with some of the smaller players in the market and some of the clean skins we will probably see come into the market over the next year,” he said.
AMP Financial Plan ning managing director Michael Guggenheimer said there “is a case to make sure you get all the stakeholders involved in product development in an appropriate way”.
He said it was the job of the research house to bring those people together in a way which makes it easier for planners to access the information and make the appropri ate recommendations.
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