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Lee Robertson: The value of a customer advocate

Lee Robertson

I have just been reading about the new customer advocate appointed by Prudential to sit on its customer committee. Reporting directly to the chief executive UK and Europe, its aim is to put customers at the heart of decision making within the group. What a great idea from a larger player.

Many of us in the advice community will already have client advisory panels – either formal or informal – helping us refine our service propositions and communication methods.

If, as an industry, we are truly serious about putting clients first, rebuilding trust and engaging with those who need our services, perhaps we should be putting this more to fund groups.

Asset managers are constantly looking to convince us their fund range is worthy of being entered into our due diligence process in the hope of making buy lists.

Quite rightly, due diligence processes have evolved over the years away from being solely focused on performance and fees. Perhaps a new area of consideration should be group’s policies on the treatment of their unit holders?

Investment companies have long had boards of directors charged with ensuring the trust is run in accordance with its mandate, overseeing its investment process and any attaching gearing decisions. Why is there not something similar for open-ended funds?

I readily accept there are mixed views on the effectiveness of some boards and their composition, willingness to bat for the investor against the manager and lengthy tenures of members. But they remain an important check and balance nonetheless.

As we are constantly told, the investing public needs to have confidence in the organisations and funds within which they invest. Are the fees appropriate? Are they closet trackers? Are they doing what they were designed and advertised to? Are the investment mandates being followed? Are the liquidity levels correct?

You get my point. It all boils down to whether the end investors are being appropriately represented and their needs adequately considered.

And before anyone rushes to complain about the potential cost of all this for active managers, I am not suggesting each and every fund needs an investor advocate.

Those groups that have not yet gone down this route could form customer committees made up of senior staff representing fund management, distribution, marketing and relations, and selected investor advocates that understand things from the customer’s point of view.

Valuable insight and trust could be gained on both sides; more than what is gleaned from focus groups and surveys all too often touted as investor insight.

It may be that there are already many more fund groups doing what Prudential is doing. If this is the case, I would love to hear more from them, as a group that puts its investors at the heart of everything it does deserves serious consideration for our clients’ hard won capital.

Lee Robertson is chief executive of Investment Quorum


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