Established wealth managers have for too long relied on the apathy, inertia and the hassle of opening or transferring investment accounts to get away with poor service to clients, according to the founder of Vestra Wealth.
Speaking to FTAdviser, senior partner David Scott argued that this had opened up opportunities for more client-focused competitors to steal away disenfranchised long-standing clients or attract new younger clients with higher expectations.
“The growth in online information and advice and hopefully greater ease in transferring accounts, as has happened with bank accounts, will mean that everyone needs to review their service offering to ensure that the service being provided is being offered to the appropriate clients,” he commented.
Jason Hollands, managing director for business development at Tilney Bestinvest, agreed that there is no doubt that asset transfer processes have been clunky and time consuming in the past, though they appear to be improving as more firms adopt electronic systems.
“However, I’m not sure that this in itself is the prime cause of investor inertia. After all, investors only realise what a headache these processes can be when they’ve already hit the accelerator and commenced a move.
“The bigger cause of investor inertia is probably down to the stickiness of long embedded relationships, which in some cases can be multi-generational for long established family wealth, and a lack of transparency in comparing performance and the complexities around different fee structures.”
He added that investors with ‘new’ money are less fussed about the pull factor of traditional names and more inclined to shop around and compare services, performance and fees.
Tony Overy, managing director at Saunderson House, said he was surprised when people say they are satisfied with their advisers, but do not push them for information that would tell them whether or not they are receiving a service that is commensurate with the fees they pay.
“We think clients need to ask the right questions of their advisers - such as what is the total cost of supply and what is the performance of their portfolio versus independent benchmarks - we always show the total cost of supply, so our clients understand what the fund manager, the product provider and we are charging for our advice.”
Danny Cox, Chartered financial planner at Hargreaves Lansdown, commented that what it needed is a transparent and competitive market where informed investors are able to shop around for the solutions and services which suit them best.
“As we have seen from the recent consultation on pension transfers and exit penalties, if firms don’t invest in the technology and processes to make it easier for investors to exercise their choices, they can expect increasing interest from the regulator.”