Fund management companies must pay more attention to the needs of their customers as customer satisfaction levels fall to an all time low, a...

Fund management companies must pay more attention to the needs of their customers as customer satisfaction levels fall to an all time low, according to a major study from McKinsey, a consultancy. The consultancy believes fund managers must learn from private bankers when it comes to placing the customer first. The consultancy firm told a gathering of 150 European asset management and private banking chief executives recently in London that they needed to tackle some deep-seated problems if they are to ensure the long term health of the industry. The fund management industry is witnessing falling net inflows, which is hardly surprising, says McKinsey, given that out performance is promised but often not delivered. Net inflows into investment funds as a share of total European net inflows into financial products fell in both retail and institutional markets from 1998 to 2003. At the same time, fund management costs continue to rise. “Retail customer satisfaction is at an all-time low; many customers feel intimidated or baffled by the technical language of money managers. Most importantly, some feel that money managers are not addressing their needs, choosing to focus relentlessly only on out performance versus the benchmark, while customers in reality expect absolute performance,” said McKinsey. McKinsey believes that the asset management industry should pay more attention to placing the customer at the heart of the business model. “Other industries, including private banking, have made the journey from product-centric to customer centric with some degree of success, so asset managers should be confident that such a move is achievable. It does however require a radical shift in the mindset and organisational structure,” said McKinsey. The consultants advised the fund group chief executives they needed to make radical changes to their 'mindset and organisational structure'. This meant investing in customer service to make sure customer stayed with them, as well as working closely with distribution channels to make sure the sales process really met customers' needs.