GLOBAL – Investment managers say consultants have hindered their relationships with institutional clients, according to a new survey by PricewaterhouseCoopers.
“Many providers feel that traditional employee benefit/investment consultants, in insisting on being the conduit to the client, have hindered investment managers in serving and understanding institutional clients,” PWC said.
“On the institutional side there are very heated views about the role of employee benefit consultants, with many feeling that such middlemen actually hindered developing better client relationships,” the report added.
It said that ‘manufacturers’ feel let down by the distributor/middlemen to the ultimate client.
PWC said that there was much discussion in the UK of what role, if any, that consultants would play in constructing the platforms through which defined contribution funds are sold.
The firm asked: “How do investment managers keep in touch with client needs as they become ever more distanced from the end user? And, are the consultants and distributors taking the responsibility for understanding client needs and communicating that to product manufacturers?”
“In an increasingly complex environment communication across the layers becomes more important but also more of a challenge.”
PWC also said that managers expect “a wave of consolidation across funds, service providers and manufacturers”.
“More than half of survey respondents expected up to a 30% reduction in both funds and manufacturers in Europe,” PWC said in a statement. “However, for many, consolidation is hampered significantly by regulatory and tax barriers and the cost of consolidation.”
“Regulatory and compliance issues, particularly regulatory barriers to cross-border distribution, are a major burden globally,” said Simon Jeffreys, global investment management leader, at PWC.
“The investment management industry needs a stronger and unified voice to lobby governments and regulators in the dismantling of tax and regulatory barriers which are guarded by national interests.”
Jeffreys added that the structure of the industry is changing. “With investment managers picking their areas of focus, the industry will become like pieces of a jigsaw where organisations work together in co-operation to the point that they have interlocking strategies and operations.
“The leading investment managers will decide where to do business and where not to, based on whether it is profitable or not.”
The comments come in the firm’s global investment management survey for 2003. The survey, conducted from May to September and completed by 71 houses with combined assets of more than 6.6 trillion dollars, is a development of PWC’s annual UK Investment Management Survey.