Posts Tagged “Fund Forum International”

Mum’s the word for simple information for distributors

June 28, 2020

Richard Romer-Lee, Research Director, OBSR speaking at FundForum International 2010

Adrian M Weiss, Citi Global Consumer Group EMEA speaking at FundForum International 2010

An expert panel comprising representatives of four different strands of the distributor base discussed the different needs and demands for open and guided architecture in the distributor manufacturer relationship during the afternoon sessions of the Fund Forum 2010 Distribution Summit. Moderated by Richard Romer-Lee, research director with OBSR, the private bank sector was covered by Philippe Baumann, deputy head of open architecture at Lombard Odier Darier Hentsch & Cie; the consumer bank was represented by Adrian M Weiss, head of investment products and advice at Citi Global Consumer Group Emea; also speaking from the point of view of the private banker was Jean Francois Hautemulle, head of fund selection at Unicredit Private Banking and while the retail sector was represented by Richard Vincent, head of Open Architecture Funds at Skandia Investment Group.

Romer-Lee opened with the view that historically, distribution systems have not served the end investors well, asking the panel how they organised governance. The results varied from Baumann’s reliance on the client relationship and providing the right fund, while Vincent said that he liked to manage expectations, employing a robust process that allowed them to deliver on the promise. Vincent had experienced frustration interacting with fund management firms particularly in instances where they were trying to take a more global view of the world. Generally, only the larger asset managers took a global view. Weiss reported that they preferred the strategic partnership route and felt that some firms did a better job than others in this department. There was a concern that reviewing and updating retail distribution might increase the cost for the investor, which was a concern.

Richard Vincent, Skandia Investment Group speaking at FundForum International 2010

Jean Francois Hautemulle, Unicredit Private Bank, speaking at FundForum 2010

On the issue of customer segmentation, Baumann reported that they had a relatively homogenous client base which was segmented by value with the product selection the same across assets. Weiss found that their products differed depending on risk parameters and Vincent reported that they took an attitudinal view of how sophisticated clients could be. Hautemulle said that they were trying to get clients to be more diversified and Vincent said that products that did well were ones that investors felt that they had an emotional bond with them. Hautemulle said: “A key thing for us is transparency and information from managers. Vincent agreed, posing the ‘mum test’ as in ‘can my mum understand this?’ as a basic level of whether information from fund managers was simple enough.

Post Under: Product Development

Consumer Education: Whose job is it and how to do it?

June 23, 2020

An Article by Todd Ruppert, T. Rowe Price.

Todd Ruppert will be speaking at Fund Forum International 2010, 29 June - 1st July in Monaco

Studies across Europe and globally confirm that financial literacy is a growing priority. Yet surveys and academic research show that while the need for financial education has never been greater, there is much work to be done.

In addition to consumers, the investment industry also stands to benefit from a more financially savvy public – and should embrace financial literacy now more than ever.  Clients with greater financial knowledge will be better equipped to make investment decisions appropriate for their goals and circumstances. As a result, they are more likely to be satisfied, leading to stronger, long-term relationships.

Of course, we cannot expect to educate everyone to be their own Chief Investment Officer. Many investors simply do not have the time, interest or wherewithal to make complex financial decision or keep up with managing their investments.

Innovative solutions such as target date funds can, in part, address this piece of the puzzle.  So, too, can services which automatically enroll defined contribution plan participants and increase their savings rates over time, and which are growing in popularity in the US.  These approaches remove some of the complexity from a client’s decision making and – using findings from behavioral finance research – put investor inertia to use for their own benefit.

Offering new products and services in a vacuum, however, is not sufficient, as investors still need to have a basic level of understanding of those products.  Combining automation with investor education will be more effective, although even that has its limitations.  To provide a foundation, we first need to educate the broader consumer market about basic financial planning.

Although financial education can be introduced at many ages, educators, researchers, and parents increasingly advocate starting financial education as early as age eight.  The need is clearly there. In a Junior Achievement-Young Enterprise Europe survey this past March of more than 1,200 Europeans across 19 countries, 78% said that young peoples’ knowledge of their own personal finances is ‘little’ at best.

Similarly, a recent T. Rowe Price Parents, Kids & Money Survey revealed that while 80 percent of parents says they are having conversations with their children about money at least once every few weeks, fewer than half of their children use the lessons on a regular basis, and nearly 60 percent quickly forget the lessons or need periodic reminding. The survey also showed that on average, parents grade themselves a “B-” when it comes to their own overall understanding of basic saving and investing principles.

Facilitating family financial education is one reason T. Rowe Price collaborated with Walt Disney Parks & Resorts Online and Walt Disney Imagineering and to create The Great Piggy Bank AdventureSM, an online game and theme park experience which offers lessons on goal-setting, saving vs. spending, inflation, and diversification.

In Europe, EFAMA recently released a report regarding the long-term savings challenge.  Their call to action for the asset management industry included promoting financial literacy and competence of individual investors.  To ensure the future and strength of our industry, we must embrace this effort.  It’s no longer a question of ‘Should we do financial education?’ but rather, ‘How do we do it?’

About Todd Ruppert, T. Rowe Price Global Investment Services

T. Rowe Price Global Investment Services Limited, is responsible for T. Rowe Price’s business outside of the United States, ex-Japan, and T. Rowe Price Global Asset Management Ltd, which is responsible for the firm’s business in Japan .  Mr Ruppert cam to T. Rowe Price 18 years ago having previously worked for Citicorp and an engineering firm that designed physiological dynamic motion simulator for pilot training.  Upon coming to T. Rowe Price in 1985, he focused solely on business within the US.  He was first responsible for developing T. Rowe Price’s business of managing investments for banks, insurance companies and other third party distributors.

This document has been issued by T. Rowe Price Global investment Services Limited, 60 Queen Victoria Street, London EC4N 4TZ, which is regulated by the UK FSA.  This material is not intended for use by Retail Clients, as defined by the UK FSA.

T. Rowe Price, Invest With Confidence and the Bighorn Sheep logo are trademarks and/or registered trademarks of T. Rowe Price Group, Inc. in the United States, European Union, Australia, Canada, Japan, and other countries. This material was produced in the United Kingdom.

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