Product pushing managers to be bypassed by consumers
Investment managers relying on performance and pushing products to market will be by-passed by consumers seeking bespoke products that match their needs throughout their lifetime according to a report by KPMG International.
KPMG Australia partner Jacinta Munro said investment managers have traditionally interacted with consumers by promoting a product to consumers that they have created but this would be rejected by consumers who were seeking more flexibility.
Munro said that as population demographics shift to include five generations of workers the social values of investors will reject that model and would seek tailored solutions from investment managers and financial intermediaries.
The report, which was co-authored by Munro, stated that investment managers recognised the risks of relying on performance to attract new inflows, particularly in markets where ongoing outperformance was difficult to sustain.
"They [investment managers]also recognize that for many investors of today - and more importantly those of the future - outcomes, solutions, information, education and greater visibility and transparency will be as, if not more, important than performance," the report stated.
The report also said investment managers were already equipped with inherent capabilities in their research and asset allocation work that could assist financial intermediaries better understand consumer needs and educate them were applicable. However those who were unwilling to make these shifts faced "the prospect of remaining simply a manufacturer of components for others to combine into value-add client solutions".
Munro said the shift in consumer appetites and attitudes was not often understood by senior executives within wealth management firms who did not see value in the same way as their customers, many who were younger and were already engaging in critical product reviews with peers online.
AUTHOR
Jason Spits
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