Luxembourg Roundtable: Left Behind On The Journey Of Life

Fund managers are trying to move closer to their end investors but, after years of disintermediation, have little customer data and face immense disruption. Our Luxembourg panel discusses tech and the competitive threat.

Steve Bernat (founding partner, ONE group solutions)

Noel Fessey (CEO, European Fund Administration)

Lee Godfrey (managing director, Western Europe, Intertrust Luxembourg)

Rafal Kwasny (VP and conducting officer, international TA EMEA head, Franklin Templeton)

Piotr Laskawiec (Software architect, Metrosoft)

Janusz Lorenc (CEO, Metrosoft)

Funds Europe - How well do asset managers really understand the investor journey? They say that if millennials can't do something in two minutes on their mobile phone, they won't do it ever. Does this also apply to the older generation?

Noel Fessey, EFA - Asset managers generally do understand this, especially if we're talking about tier-one asset managers. They employ bright people who think not only about the financial markets but also about the distribution market they're addressing. But they don't necessarily show very well that they do understand the customer journey, and they don't necessarily engage with their customers in a way which facilitates the customer to understand and make that journey.

Look at tier-one asset managers' websites to see how they engage their customers. The better managers engage their customers in a dialogue. They encourage them to understand their life goals and how to achieve them. Some managers also use behavioural finance to help individual investors understand how and why they think about investing. They also educate their clients on the investment process. In other words, good managers do more than promote their funds. But it is true that some managers are more transactional, promotional, and show less interest in - or understanding of - the investor journey.

When we come to talking about how asset managers engage their customers through digital media in direct-to-consumer mode, asset managers generally do it poorly, even if they have retail arms. They tend to be better at selling into intermediary markets and selling to other professionals.

Rafal Kwasny, Franklin Templeton - Most of the knowledge is on the distributors' side because they deal directly with the customer. Some players like Franklin Templeton, in addition to intermediated distribution channels, also have quite a significant retail base in some markets.

I would agree that asset manager knowledge regarding customer behaviour is pretty decent, in particular for those markets where, apart from intermediated distribution, they deal with retail customers. In some markets, asset managers may also be playing the role of wealth manager and that requires in-depth knowledge if they want to be successful. Asset servicers have less of that knowledge: their core business is obviously to service asset managers and only secondary purpose is servicing clients of their clients - i.e. investors and distributors.

Steve Bernat, ONE group - In an environment of shrinking margins, we've had no choice but to move towards understanding what investors really want. Many, many years ago, people would buy whatever you sold. Over the last few years, whether we've been asset managers or asset servicers, we've all been challenging ourselves to make sure that we add value to our clients' business and that we build products with this added value in them.

Fessey - I think we can agree that it's one thing for an asset manager to understand possible investor journeys and quite another thing to engage investors in a way that helps them to make the journey. The challenges, be they technological or about proper conduct of business, are evident to us as industry insiders and - speaking personally - it's something I can also see as a consumer. It's difficult to design a digital experience that helpfully and legitimately enables an investor to choose the right path. It's much easier to deliver something transactional and, quite frankly, clunky.

Piotr Laskawiec, Metrosoft - First of all, I'm probably the only one representing millennials here. Secondly, I would like to start from the view of the software provider, because we often have limited access to end investors. Of course, we can follow our common sense, knowledge, experience, etc. But without access to the investors themselves, we are unable to provide cutting-edge solutions. So, we need to talk with parties like asset managers who really understand the needs of their clients.

Sometimes people involved in creating digital solutions for investors directly are not investors themselves, so they are living in a bubble.

Digitisation for me is extremely important. I was ready to change my bank if they wouldn't introduce Apple Pay fast enough.

Kwasny - Do you do everything online, or do you still need an adviser when you make investments?

Laskawiec - To be honest, the vast majority of actions I do online without consulting third parties.

Janusz Lorenc, Metrosoft - The investor journey is everything. It's the seven days from when you want to open an account but cannot log on yet; it's from the moment when your account is blocked and you have no idea why, and you cannot unblock it. This all adds up.

Lee Godfrey, Intertrust - I'm not a millennial. My wife is, however. If she had access to an online tool where she could engage directly with an investment adviser and have all the information to hand, she would much prefer to do it herself.

I ran a couple of sessions in my previous job with millennials and I asked the question, "If you go and see a doctor, how many of you already pre-diagnosed yourself before you get there?" Almost every hand went up. I then said, "OK, once you've sat there and listened to what the doctor has to say, how often do you agree or disagree or discuss what you've just found online?" Almost everyone's hands go down.

"And which do you believe? Do you believe the guy that's...