Seven of the UK's largest asset managers are teaming up to gather information on end investors' needs in a move which could trigger changes to their fund ranges.
It could also help satisfy a regulator which is understood to be placing the design of retail products under increasing scrutiny.
Investment Week can reveal the groups – Aberdeen, Henderson, Investec, J. P. Morgan Asset Management, Old Mutual Global Investors, Schroders and Threadneedle – are pooling resources to better discover consumers’ understanding of the asset management industry, its products, and its terminology.
The research involves surveying would-be investors, on subjects ranging from understanding of common industry terms to product expectations.
“We have formed a syndicate of seven asset management firms with the aim of gaining a better understanding of the end customer’s motivations when purchasing investment products, through an in-depth research project,” said Nick Ring, head of distribution at Threadneedle. “We will also explore areas such as their investment knowledge and attitude to risk.”
The collaboration comes at a time when the Financial Conduct Authority (FCA) is understood to have told the industry it is increasing its scrutiny of the product development process as part of its focus on suitability.
“We expect firms to consider the needs of investors when developing and marketing products and take steps to check products meet the needs of target markets,” said William Amos, director of wholesale banking and investment management at the FCA, in a statement.
The findings could prompt changes to product development, marketing material and the naming of funds and explanation of investment processes.
“The fact we are working together as an industry on this is a positive. If the research triggers an industry move to use common language, I am all in favour of it,” added David Aird, managing director of the UK client group at Investec AM.
James Bowers, head of product at Henderson, said the fund groups’ study will be a natural aid to product research.
“Having more insight from our customers will help on a number of levels. It will clearly help to anticipate customer needs and outcomes in terms of designing new products, and improving existing products,” he said.
The combined effort is being made on top of the groups’ separate, ongoing efforts to find out more about their own client base.
Although some fund houses, such as Henderson, can do this via their significant direct books of business, others are less able to contact end investors.
“We have always done a lot of engagement with our direct book. But, because that book is small, and fund groups are becoming more disintermediated, we need to explore other routes,” said Aird.
Disintermediation is becoming a growing problem for asset managers, with the rise of fund platforms adding another layer of complexity.
The regulator has said platforms’ growing prominence should not serve as an excuse for asset managers in the industry’s quest to find out more about its end users. However, one senior fund group figure recently told Investment Week the process is “incredibly hard” and “like peeling layers off an onion”.
Platforms themselves are stepping up their ability to provide this data to fund groups: Fidelity FundsNetwork, for example, is to give groups more information about their end users via its new ‘Access’ programme.
“We are going to offer further insights into our customer analytics," said Ed Dymott, head of business development and strategy at Fidelity Worldwide Investment.
“We have very detailed information on how they interact with products. That was partly developed in response to fund managers wanting more information.”
