In a report from KPMG, communication between investment managers and clients has reached a nadir in dialogue, with trust being a key issue.
According to a survey of investment and wealth managers by KPMG, entitled Renewing the promise: Time to mend relationships in investment management, investment managers should work to rebuild trust with investors through a back-to-basics client relationship approach. This would involve buzz words such as risk management and transparency, but most importantly improving education and communication.
Investors must also go on more product and strategy training, and encourage managers to follow best practice.
Rather confusingly, the survey also discovered that despite face-to-face time with clients being a priority, client-facing advisors are perceived as untrustworthy and lacking knowledge. Perhaps the most revealing statistic shows that 77% of investors felt that intermediaries are less trustworthy than politicians.
The breakdown in communication extends within investment houses. The research highlighted that managers do not have faith in their own senior-level management being able to drive this necessary change. Nearly two-thirds of investment managers globally blamed the top brass as the major obstacle for change. The desire for regicide leapt to 90% of managers questioned in the US.
There were also obvious findings, such as managers fearing new regulation will stifle innovation and increase cost. Yet where regulation will fall remained uncertain, with half of the institutional investors surveyed believing that risk management and internal controls will be more strictly regulated, while 77% of investment managers feel the focus will be on leverage limitations.