All levels of Australia's financial services value chain need to work together if they are to regain the trust of clients and ward off looming threats, a number of industry participants have said.
Colonial First State general manager distribution Marianne Perkovic said financial advisers, licensees, fund managers and product manufacturers need to take greater responsibility for their client relationships, particularly in light of competition from direct investing opportunities.
"It's an interesting place. Clients don't trust advisers and they are going direct because they think they can do a better job themselves," Perkovic told delegates at the 10th annual Wraps, Platforms and Masterfunds conference.
"We've got financial planners not trusting licensees and thinking they can do a better job than what a licensee offers, so they are going down a self-licensed path.
"What I am suggesting as a product manufacturer is that we've got to work together across the whole value chain and bring back value across that whole value chain."
Fortnum Financial Advisers executive director Ray Miles said the industry needs to do a better job of regaining client trust.
"We have consumers that don't trust us. We have consumers moving away from using platforms and advisers, doing direct equity, doing direct property," Miles said.
"The press have done a pretty good job in beating this industry up by alluding to clients that platforms are expensive or that advice is expensive and that fund management is expensive ... our issue is how we get that trust back."
FPA deputy chief executive Deen Sanders said the industry needs to address its empty promises with a greater focus on truthful client dialogue.
"We have to be much more truthful with our dialogue with clients - and you are having a dialogue with clients even if you're not in the room and it's in the prospectus," Sanders said.
"That's the dialogue you're having with the client - you're making promises. You're drawing graphs and they all go up ... this is a dialogue and you can't pretend it's not happening."
Tyndall managing director Craig Hobart said the funds management industry needs to be careful the client disconnect that exists between wholesale fund managers and the end customer is not abused.
"I think one of the challenges for us all is that we are the silent party in the room ... they [advisers, licensees, manufacturers] all have relationships at one point or another with the client, and of course the wholesale fund manager gave up that relationship 10 years ago and 80 per cent of flow of clients is going through platforms. So, 80 per cent of clients don't have a relationship with fund managers," Hobart said.
"At the end of the day, a lot of things that are aggravating clients is market return - it's beta, it's not actually what fund managers have done per se.
"And the solution given back to the customer that they should use direct investment or use an ETF [exchange-traded fund] is just a substitute for the same problem."
