The distribution challenge for fund managers
Fund managers can no longer shy away from the distribution challenge, according to Calastone, and should develop a way to target consumers without the need for an adviser.
Teresa Walker, head of Australia and New Zealand, said the adviser exodus was having a negative effect on fund managers as, unlike other parts of the world, Australians were averse to buying funds directly rather than through an intermediary.
“The Australian market remains traditional in its investment approach in many ways, with individual investors historically focused on direct property and domestic equities, although the former is becoming increasingly unaffordable.
“As a consequence, the direct-to-consumer business has not matured to the extent of many other developed economies- where digital brokerages are widely used- or neighboring Asian markets where mobile consumption of investing is well entrenched.”
However, this would need to change if the adviser marketplace was going to continue to decline, having already fallen below 16,000 and currently sitting at 15,860.
Options for fund and asset management firms to target clients directly could include building a direct relationship with investors, an owned portal, creating listed vehicles and working with brokers or attracting greater institutional investment, Walker suggested.
However, she warned the benefits and opportunities gained from a direct communication with investors also came with high expectations from clients of a seamless experience.
“There is no one right answer, with all distribution route containing trade-offs. A branded portal, for example, gives a fund manager the advantage of owning the customer relationship, but also the cost of having to acquire those customers in the first place and the requirement to provide a high level of service.
“The closer asset managers choose to be to the end user, the more they will need to meet high expectations and deliver an outstanding client experience. Increasingly, that means matching the kind of seamless digital service that people are accustomed to from consumer brands. Customer expectations of a digital experience are high and will not be easily satisfied.”
AUTHOR
Laura Dew
Recommended for you
Evidentia Group has announced the appointment of a chief risk and operating officer, rounding out its executive leadership team after a slew of hires last month.
Family office Lederer Group has progressed its takeover bid for the Elanor Commercial Property Fund, lodging a bidder’s statement with ASIC as it says the fund has been “unable to agree” on negotiation terms.
Magellan Financial Group is keen to enact further strategic expansions with income from strategic partnerships tripling to $31.1 million from the addition of Vinva during FY25.
Outflows have doubled in the property and infrastructure space to $1.3 billion with advisers instead favouring private markets as Morningstar data finds active property funds are struggling to outperform.
