Investment services must change: Financial Simplicity

Financial planners will need to provide clients with more interactive investment services that emphasise experience rather then brands and products if they are to remain competitive, according to the managing director of portfolio technology provider Financial Simplicity, Stuart Holsworth.

Presenting at the SMA08 Separately-Managed Accounts conference in Sydney recently, Holsworth said the increasingly competitive financial services industry, better educated, demanding and sceptical consumers and complex compliance requirements are pressuring the industry to completely re-organise its structure.

In his opinion, the industry needs to separate the consumer experience and process of investment decision-making from investment administration.

He said that the most successful investment services in the future will be experience rather than brand or product focused. This will enable consumers to be more involved in the process, highlight the experience of the financial services professionals involved (by, for example, including approved experience rather than product lists) and make the most of new technologies.

“Licensees and investors select on experience and ease of use, not products and brands,” he said.

“There needs to be a new collaboration between portfolio managers and advisers — in front of the platform, not behind it.”

In Holsworth’s view, individually managed accounts (IMAs) are best suited to the changing investment landscape.

“SMAs [separately managed accounts] are great products, but they are still products and often still trying to fit into the [traditional investment service] supply chain. IMAs provide a new, ‘high-touch’ customer experience and can process large numbers of client portfolios with industrial scale.”