IMA: Fund managers need better client communications


A couple of months ago, I was discussing the importance of improved communication for clients and questioning what it means in practice.

Findings from the IMA’s 11th annual asset management survey show that fund management firms fully recognise that better communication is needed to maintain and improve trust among the industry’s retail client base.

The survey also emphasises the challenges they face in that process.

While asset managers work closely with advisers and other intermediaries, with special roadshows, seminars, videos and other CPD initiatives, they are aware that post- RDR their materials are likely to be read by more unadvised consumers. Not all their customers will have the benefit of professional advice.

At the same time, there is a growing demand for absolute return and risk targeted funds, which are inherently more complex and harder to explain without losing clients’ attention.

The survey highlights a range of steps that fund managers are taking to communicate more clearly – and directly – with their retail clients:

Improving the quality of information

Checking for plain English and appropriateness for audiences at different levels of financial literacy, as well as monitoring the client experience during the marketing and sales process.

Focusing on better information on fund costs and charges

There is currently a public consultation on proposals for fund managers to disclose historic performance, charges and costs all together in simple pound and pence figures. This will cover the investment side of things and as advisers and distributors also make their charges clear, investors will be able to understand the total cost of ownership.

Using innovative communication channels

YouTube, Twitter or mobile phone applications can be used to get messages across to clients in an engaging and interactive manner.

Extending client communication

Fund management firms could extend client communications from product information to educational material on personal investing, market behaviour and related areas of investor interest. Financial education is fundamental to enable retail investors – whether advised or unadvised – to make an informed choice. The issue is how much will those investors understand; how much detail will they digest to make their decisions?

Some would argue that products need to be kept simple to make it easier for investors to understand them. Others, however, argue that the need for a simple outcome should not be equated with the need for simplicity in product design, which by itself risks inhibiting the industry’s ability to help clients meet their expectations. Instead, the emphasis needs to be on being transparent and clear with customers.

There is no easy solution. In any case, client communications need to happen in partnership with advisers and other intermediaries who, for many retail clients, are best versed to explain products in an understandable and accessible way. If customers choose to bypass professional advice, then they should be able to access layers of information to drill down to find out more about various funds and how they are managed. Even if in practice few are that engaged, the information must be there.

As one manager in the survey said, “Our whole emphasis is on partnership and how to be more engaging and transparent”.

Victoria Nye is director of training and education at the Investment Management Association