The funds management industry has come under further attack with more leading industry commentators slamming fund products they claim are being designed for a small profitable high-end market, leaving the majority of Australians without simple products and adequate financial advice.
Resnik Consulting managing director Paul Resnik, speaking at a Sydney conference, says managers have “deserted middle Australia” by targeting only high-net-worth and pre and post-retiree markets.
Resnik says fund managers are manufacturing too much product for this small distribution channel, leaving 80 to 90 per cent of the population without specific products and 90 per cent of products unprofitable.
“Manufacturers have the industrial strength but are struggling to get through a finite distribution channel that is made up by a small portion of the population,” he says.
“Pushing products through a keyhole to a small number of people exposes most to the ravages of pure Darwinism – succeed or die,” he says.
Resnik says that most products fail as they are not designed to meet the needs of the end client, but instead are created because “a few financial planners say they will sell it”.
Credit Suisse Asset ManagementAsia ex-Japan distribution head Clayton Coplestone agrees managers have lost touch with consumers, building products without “stopping to ask mum and dad if they really care.”
He says it is important for fund managers to understand clients and what they want rather than building products they are told to build.
Resnik says the only way for planners to depart from this product model is to work on a fee-for-service basis rather than commission, giving power back to the client rather than the fund manager.
Products also need to be more simple and explicable, according to Resnik, ensuring that clients are able to give properly informed consent to investing and that they are able to make proper financial decisions.
The comments were made at today’s Resnik Product Innovation and Design Conference in Sydney, and follow yesterday’s attack against a lack of fund manager product innovation by Credit Suisse Asset Management managing director Brian Thomas and industry consultant Tom Collins.
