Industry attacked for client neglect

Financial services practitioners are increasingly breaking ranks and criticising their own industry for its lackadaisical attitude when it comes to giving the best deal to consumers. While this critical introspection has definitely not been embraced by huge private banking powerhouses such as Credit Suisse, UBS and Deutsche Bank, it was clearly gaining acceptance among speakers at PWM’s third Open Architecture Forum.

“I don’t feel that we have heard much evidence that fund groups are actually meeting client needs,” said Mike Harding, managing director at consultants Mercer Oliver Wyman and the Forum’s chairman and most critical speaker. “Most of them don’t even meet any clients.”

He singled out the Swiss institutions for particular criticism, drawing attention to the global themes followed by their client advisers. “If you look at Credit Suisse, their exciting ideas are not solutions to anybody’s problems, but just an opportunistic way to sell more products,” said Mr Harding.

While open architecture presentation of much broader ranges of third-party products was a response from suppliers of investment strategies to customer demand, it did not necessarily solve the problems of clients being directed into unsuitable investments. “Whether the changed menu is helping to sort the problem is still under discussion,” said Mr Harding. “But this industry is not making sure people are provided for, it’s about profitability, not social welfare. In fact, it’s worth asking whether any of us are here to meet clients’ needs, or just to make money.”

James Bevan, chief investment officer at UK high street bank Abbey, painted a very uncertain future for distribution of investment products. “Is open architecture good for customers? Not necessarily, as it will require more cost to the customer. It has to be paid for by the customer – will this be to their benefit?”

Harding: new ideas are not solutions