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What Is “THE Key” to Asset Management Success?

Posted by Larry Doyle on March 11, 2013 8:44 AM |

There are many factors that go into developing and maintaining a successful business enterprise. If you were asked, though, what is the single greatest key to business success, what would you say?

Gven that this blog is all about helping people navigate the economic landscape, let’s delve into what asset management firms believe is the key to their success. It should come as no surprise. The FT highlights this key point this morning in writing:

It is often said that trust is the hardest thing to gain, but the easiest to lose. The experiences of many fund management companies over the past few years are testament to that.

The unexpected fund blow-ups, malpractice and lack of transparency exposed since the 2007-08 financial crisis have left some big industry players wondering how they can regain the high standing they once had among investors and advisers, which they had taken years to build up.

For the past four years, the Financial Times has conducted research into the image of US fund managers among financial advisers, seeking to find out what the most important attributes are for a strong reputation, and how to achieve them.

The latest survey – conducted last September – sought the opinions of 397 US financial advisers, the majority of whom are subscribers to Ignites.

The results are conclusive: the key to a strong reputation among intermediaries is trustworthiness.

No surprise there. This simple virtue of trust is priceless. Recall that a few weeks back I highlighted the anemic levels of trust that most Americans hold in our banks, our television media, and our politicians. Trust is not some base commodity that one can purchase in an open market. Trust takes years to develop and can be lost in a heartbeat. What are the top five actions investors would like to see asset management firms undertake to build and maintain trust?

1. Clear and consistent investment process

2. Consistent returns

3. Increased transparency

4. Reasonable fees

5. Solid customer service track record

The FT research shows that while advisers view performance as a key measure of reputation, they will forgive under performance if it is not unexpected and the asset manager has been open and transparent.

“Advisers told us they do not want to be surprised by asset managers and they want clear and frequent communications,” says Mr Rothman. “They want communication during good periods and especially if there are issues that have come up.”

How much trust do you have in your financial advisors?

How much do you trust our major banks, media, and politicians?

Once, twice, thrice times burned, four, five, six times shy, no?

Navigate accordingly.

Larry Doyle

Isn’t  it time or overtime to subscribe to all my work via e-mail, an RSS feed, on Twitter or Facebook.

I have no business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

  • LD

    The Pew Research Center in Washington, D.C. has found that fewer Americans than ever trust the decisions made by the government.

    Data collected from a survey taken in January of this year indicates that all demographics and partisan groups experienced an increasing lack of faith in government leadership, according to a release posted on the Pew Research website late last week.

    For Every 10 Americans, Only 3 Trust The Government

  • Andrew

    Our paper currency says “In God We Trust” on it. Perhaps it is time to change to “In Bernanke We Trust”?

  • Peter Scannell
  • AndyLynn

    we’re in a .GOV and .COM landscape *filled* with
    FID’s – Functionally Immoral Degenerates. the question
    isn’t “when can we trust again?”, the question is
    “where can we move to where the corruption isn’t so rampant?”

    i doubt our current situation can be recovered within 2gen.

  • Rick

    don’t know if I agree….many folks go along with the crowd…madoff exemplifies that, but many fund managers are known to their more sophisticated clients as rougues and that knowledge is ignored as they stay along for the ride which might be pretty profitable for a whle

  • Jay

    The next downturn will cull the herd

  • Christine

    Larry:

    In answer to your questions:

    How much trust do you have in your financial advisors?

    How much do you trust our major banks, media, and politicians?

    None and None!






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