INVESTMENT MANAGERS continue to experience outstanding growth and remain very optimistic for the future, however, a lack of quality people looms as the most pressing threat to future profitability, according to a recent report.
For the first time ever, losing vital personnel has topped a list of threats to profits – ahead of retaining key clients and own fund performance. When it comes to specific challenges facing CEOs, it is a similar story with retaining key people the most important issue, ahead even of increasing revenue.
“The biggest question in many CEOs minds is whether there are enough quality people to support the market’s anticipated growth,” said Peter van Dongen, partner, PricewaterhouseCoopers, which released the report.
It found that there is a looming shortfall of financial planners. More than a third of respondents indicated their intention to grow planner numbers by more than 25 per cent, but only 13 per cent actually expected to attain this level.
“A big part of the Australian industry’s success can be put down to product innovation, but with it comes greater risk. The industry needs to match the resources put into developing products with its efforts to understand and explain the risks to advisors, superannuation trustees and end users,” van Dongen said.
“While a lot of effort is going into that, the key question remains: Who is going to understand and advise on the risks if there are not enough financial planners?”
Unless the emerging talent gap is addressed, he said there must be a serious question as to how the industry’s growth aspirations can be achieved without what may be an unacceptable increase in risk.
Australian fund managers control $1.2 trillion in assets, according to van Dongen, and this very significant market has been built on a series of complex relationships that has served the needs of the investing public, and the investment industry, very well, he said.
“In a mature market like this, it would be naive to ignore the existing industry architecture and try and start with a totally blank sheet of paper. Clearly some conflicts should be avoided, but … many industry relationships can be responsibly managed.”