Andy Brown of Prudential PMG tells us what is good and what is bad about the service he gets from fund providers.
Q: A lot of asset managers believe that service is going to be a real battleground as they look for areas where they can find a competitive edge. Do you think this is true?
A: Service has always been important but I do think that, as we move into a world where investors demand better defined outcomes - more so than just being able to beat an index or benchmark and, therefore, removing the league table approach of fund selection - how a manager manages the relationship between them and their investor will be more and more important.
That service relationship may make a big difference between two managers who both meet the outcome desired.
Q: How does service contribute to your overall scoring for an asset manager?
A: We use a weighted mechanism so depending on what range we are looking at then the service score will be greater or smaller. For example, service is a larger score in our LDI funds than in our NURS range.
The NURS range objectives are mainly about performance, so that takes the largest weight but the LDI funds are about the delivery of the exact outcome, there are fewer tail events so delivery of asset/report/material/information is of more importance
Q: Is there a particular element of service, an approach or a characteristic, that you always like to see from the asset management groups you work with?
A: That’s hard to answer because of the range of different client portfolios we run. If I were to say that regular investment and operational meetings, regular reports, regular contact with the areas we engage with - dealing, research, operations, registration) are the most common items across all portfolios, would that help?
Q: And the other side of the coin: is there anything the provider groups do that you really don’t like?
A: They change the relationship manager when there is no “new” business. They tend to ignore that keeping business with the manager can be equally important. Many managers forget the business had to be won in the first place…
Q: Are there any specific examples of great service that stick in your mind?
A: When we were selling out of a fund and the manager losing the business ensured that they stuck to the plan to sell over a few dealing days. This helped us buy into the new fund without incurring too many additional costs. We were left with a very high opinion of the management group who lost the assets.
Q: Do you have any service horror stories you can share?
A: Yes, mainly involving the legal departments of management groups not really understanding what they were supposed to do, how that supported the actual business of their employer and resulting in customer detriment to our investors - which we paid up for.
Q: What’s the one thing you’d most like to see change in terms of the service & support that product providers give to professional investors?
A: Defining what service they will provide in the unit purchase agreements entered into. Sometimes even the base details, such as who should receive financial or operational information, are just ignored. So many corporate actions are missed across the industry because few actually update their contact lists.
Q: Are there any major challenges on the horizon in terms of service - for either the product providers or the professional buyers they serve?
A: With the adoption of outsourced risk management systems, such as Aladdin from BRS, a lot of investment information could be delivered by an app. Less aware management might think of that as an opportunity to remove the people from the customer interface. That would be a mistake.