Dissatisfaction of the Unit Trust Industry, are you aware?

In this survey conducted by FIMM in 2019, clearly there were key dissatisfactions that require key changes to the industry. I recall writing my views both on this blog and on IME Facebook circa 2012-2016, expressing similar concerns as well as sharing my opinion that the future of unit trust will be via digital platforms and investors are given freedom to self service when investing.

 

Looking back, the industry prior to covid-19, was very much consultant dependent. There were thousands of licensed unit trust consultant working for various fund houses, yet many investors were unhappy with the high sales charge coupled with poor/almost absent advisory services from these consultant (as reaffirmed by the 2019 survey)

In fact relationship between investor and consultant back then were more transactional, involving filling up forms for cash investment/withdrawal, taking thumb prints and signatures for epf withdrawals, etc. The issue was systemic (in my opinion), but not much could be done as the livelihood of many in the industry were dependent on such commissions. The dependency on commission was clearly highlighted by this post from The Malaysian Reserve in 2019, where the introduction of EPF's i-Invest platform raised alarming concerns on how it could impact the income of consultants.

Then the Covid-19 pandemic (2020-2021) hit! The resulting lockdowns during the pandemic phase of Covid-19 practically disrupted the traditional "transactional and manual" way of work of unit trust consultants. 

As a matter of fact, Covid-19 was the tipping point for the industry to embrace digital. Investors begin to learn how to self service by embracing digital platforms such as eUnittrust  to transact funds, have access to wider choices of funds from these platforms as well as enjoy massive reduction in sales charges for cash investment via these platforms. EPF's introduction of i-Invest with zero sales charge to invest into epf approved unit trust funds was another significant moment for this industry. 

Personally, I see these changes over the past 2-3 years (which was accelerated by Covid-19) as a welcomed one. We now witness the democratization of the unit trust industry as well as empowerment of investors to make their own investment choices. Which is rightly so if you think about it! Unit trust has been touted as an option for many to invest passively for their retirement, yet how many of us are actually aware of where their money invested in or how the investment is doing? 

Food for thought indeed...if you are planning for the future.

Cheers and Happy Investing!