Good article linked below about some of the the many facets of trust and what is changing in the trust equation between both advisers and investors.
Our belief is that the race is now on to defining, developing and implementing new sets of propositions, systems and processes that ultimately become the infrastructure to supporting the new adviser to client engagement model, and that this must be entirely in line with what the new ‘trust’ equation is. Clearly the adviser to client interactions is increasingly more about relationship, and fitting in with client’s ways of doing things, which is bringing out that such interactions are much more about service than products, and whole of experience.
We have seen some great developments by both individual firms and brands over the years that are heading in the right direction. However, many developments are often soon superseded by newer more powerful versions, and often more importantly ‘platformed’ equivalents that provide the same capabilities to not only a single firm but to a whole industry.
Some of the key areas that the industry is developing to help advisers with the new trust equation include:
- Reducing the layers of costs and overheads – many of these layers were put in place in the first place more about supporting product distribution and protecting client monies from absolute loss or fraud. However, in the new adviser to client trust equation, the move is to remove these layers of custody, schemes, administration etc, to reduce cost to clients, and to increase trust through transparency of assets, and also answer critically to make it easier to answer the question ‘so what am I paying for ?’.
- Moving from product centric to client centric investment propositions – not only is this shift an essential relationship and trust enhancer, but also it is shown that making services client centric dramatically increases consumers willingness to pay in a world where commoditized investment propositions are gravitating to being low to zero cost.
- Removing the concept of ‘trusts’ and investment schemes – many investment products of the past took the form of ‘trusts’ that ironically hid a lot of the activity that went on with client funds. These may have been critical to protecting client monies from being lost, but in the new world are ironically creating questions of trust from the clients.
Evidently, with so much in incumbent industry operating infrastructure based on the ‘old world’ of financial products, unit trusts, platforms, etc, whilst there are incremental improvements at each of these levels to gain trust in the new world, we are seeing evidence that to gain real trust in the new world may require quite a fundamental rethink in terms of a complete investments operating model and proposition. I suspect that which firms can get their first will have considerable advantage in attracting and retaining clients, building new brands and better businesses, and ultimately the trust that binds advisers and their clients.
*Referenced Article: http://www.strategyand.pwc.com/perspectives/2016-wealth-management-trends