The present
Which brings us to the second point, the increasing focus on the part of advisers on quality of service when selecting a discretionary manager.
The Investec survey released yesterday provides insight into some of the pressure on discretionary managers to ensure they not only provide high quality service, but also can demonstrate its repeatability. A situation that is likely to see the continued rise in the trend toward the increased adoption of institutional fund buying practices. And, also, further concentration in terms of who actually makes fund buying decisions.
These points were identified by Hillenbrand, who said: “As a manufacturer, you need to ensure that everything you do is to the best of your ability. Whether it be the continuing rise of passives, how portfolios are constructed, the rise of the gatekeepers, the increasing institutionalisation of the fund buying in the UK, you really have to be clear on what you represent, what you stand for and, most of all, what you are offering.”
And, he added, this is likely to continue as many advisers, in light of the increased regulation, have taken the decision to focus on the advice parts of their business.
“We knew life was going to get more difficult post RDR, it is not about having hundreds of funds, some of which don’t perform very well, some that don’t have shape or scale, it is about making sure you are very focused on what you are doing,” he said.
One could argue that the lessons of these particular ghosts have already been learned. That asset managers already recognise a present wherein the UK retail market is increasingly employing institutional-type fund screening and selection tools and a future wherein, large institutions are no longer tolerant of high costs or underperformance.
Indeed, fund ranges are smaller in most cases and much of the talk in the industry in recent months has been focused on specific outcomes for clients rather than performance against benchmarks. But, I would argue, staying focused can be tough, and yesterday’s news, like the ghosts in Dickens’ story may well have provided a useful reminder of exactly why it is so important to do so.
