Point of View – An open letter to fund managers

This is an open letter to all funds managers from a typical adviser who runs a small business. I mean to raise issues that urgently need to be addressed by all sides of our industry.

I have been in the industry for 17 years and have seen myriad changes, but one constant seems to remain. Funds management companies are big businesses populated by large numbers of people climbing the corporate ladder, while most advisers are small businesses populated by a small group who tend to act independently. Even the larger adviser groups tend to be made up of clusters of small businesses, where advisers tend to run their own practises with their own clients.

In my experience, not one fund manager has demonstrated a good understanding of these small business practitioners. It seems that the very nature of the larger corporation is that people are promoted up and out until you are left with a new bunch who don't know what went before and who are often hell-bent on change, possibly to put their own stamp on things.

It is a real pity that many big businesses (and in particular their most so-called "successful" employees) prefer to move on to the next pot of gold rather than finish anything.

A recent episode with a well-known master trust illustrates my point. Until this episode, I had felt comfortable with the master trust based on a relationship with one particular person within the organisation who knew me, understood how I operated and who would always take my call to fix a problem. At times his ability to quickly cut through to the problem and fix it was nothing short of miraculous. In a nutshell, this person took responsibility and he thought and acted like a small business person.

Unfortunately, he looked after the customer so well that he was promoted, moving up and out of client contact. He gets paid more and is probably moving up the corporate ladder to even bigger things.

I don't want to hold him back, but I do want him to continue doing what was so valuable.

If I had my way, he would have been promoted by paying him more and giving him more credit for a job well done. In my view, this guy was the most valuable asset a business could have.

Until recently, this master trust received a strong inflow of money from my clients but this has now become a small net outflow. This is not directly as a result of dissatisfaction, but all other things considered, I now take a more pragmatic view and have less loyalty.

I have seen so many marketing managers, product development gurus and assorted portfolio spruikers that most are now a blur. Few stand out as being people who cared about my business enough to really listen to my point of view and digest it before answering.

In 1994, I told BT's Terry Power that I thought the service advantage that BT deserved and enjoyed in the 80s and early 90s was slipping, and I was about to explain how and why, when he said: "No you're wrong! We have done surveys that tell us we are the best in this area. Our surveys tell us blah, blah, blah…"

It is history now that BT's growth slowed and the likes of First State and Perpetual took up much of the market share that the marketing people at BT probably thought rightfully belonged to them. I still regard BT highly as doers, but they still aren't great listeners.

Another service related issue is the move to replace people with technology. It is getting harder to get through on the telephone to a person who can listen and attend to my needs, thanks to the ubiquitous automated switchboard.

I wonder how much longer fund managers think clients (advisers and their clients) will continue to put up with telephone calls being answered by a series of recorded messages and machines? Have they ever called their own 13 number and waited in the queue, being reassured that "your call is important to us. Please hold on and you will progress your position in the queue…"??

My objective in voicing the above concerns is not to embarrass anyone. It is to change things for the better. I learned a long time ago that our industry does not enjoy a great reputation because people indirectly distrust things they don't understand. It is therefore essential that our industry become more transparent, more understanding andlessefficient andmoreeffective.

It also needs to remember we were given one mouth and two ears for a very good reason!

<I>Philip Carman holds a proper authority with Roxburgh Securities