Starting a new job is always a stressful time but when you are the new chief executive of the Investment Management Association during a period of unprecedented change and regulatory upheaval, your initial few months are going to come under particular scrutiny. Daniel Godfrey took over as head of the trade body for investment managers in October 2012 and has had a few pressing issues to deal with since then.
“It’s been like drinking from a firehose,” explains Godfrey. “There is so much stuff coming at you there’s only so much you can absorb. But overall it’s been hugely enjoyable.”
The issue of fund charges has not been far from the news agenda this year while regulatory changes such as the financial transaction tax, Fatca legislation from the US and reform of funding of the Financial Services Compensation Scheme have also demanded attention.
Near the top of the IMA’s priorities is the issue of fund charges and Godfrey is trying to be proactive on this issue.
In early April, Godfrey outlined plans for a new system for highlighting costs and performance of investment funds.
By using the total costs an investment fund incurs over a year and the average number of units in an investment fund, Godfrey says it is reasonably straightforward to produce a pound and pence figure for the costs any investor incurs over a calendar year.
He is urging the industry to adopt this method of displaying costs and says it is important for the industry that is does so before it has further regulation forced on it.
“If something is going to benefit consumers and show that we mean what we say, why would we wait?” asks Godfrey. “However, I don’t think we should rush this and potentially screw it up.
“For example, if we were to wait for this to become a compulsory practice we would probably be waiting until 2016. If we all agree on the methodology by the end of 2013, then why not just get it done in 2014?”
Godfrey says implementing a system like this before it becomes legally will help to repair the industry’s reputation. “Philosophically speaking, I don’t want the industry to need to be regulated,” says Godfrey. “I want it to be doing the right thing because its the right thing to do and not because anyone is forcing us to. In terms of how we determine how we run our businesses, I think we should be making these decisions ourselves based on what is right for our clients.”
This initiative cuts to the heart of Godfrey’s overall aim to repair the industry’s tarnished reputation but he is aware that this rhetoric will only go so far and actions always speak louder than words.
“I think you repair reputation by being seen to do the right things, not by words,” says Godfrey. “Clearly there’s a lot of negative perception, with people suspecting there are hidden costs and that managers are lying.
“The financial services industry is under a lot of pressure and there’s a lot of mistrust. I think there’s a lack of understanding of what asset management is, not only in the general population but also in the political parties as well.”
The asset management industry is seeing an ever increasing regulatory burden and Godfrey says more is being introduced as regulators adopt an increasingly safety-first approach. He says he is optimistic about the current situation in the UK but that European legislation does not always understand the industry.
Godfrey says: “I think in the UK there’s a pretty good understanding between the regulator and governments but I feel this is less so in European parliaments. The industry wants regulation but I think we can move the dial considerably towards cost-effectiveness and simplicity.”
Seven months in to the new job and Godfrey’s to-do list is not getting any shorter. European legislation is still looming and changes in the platform market are likely to see fund management charges come under even greater scrutiny from advisers and investors.
The FCA is also promising a thematic review of product design and charging. However, Godfrey explains he relishes the challenges presented by his role: “I always prefer to take on a challenge, I’m not particularly someone who wants to just put up the sails and catch the wind.”
He is unfazed by the long road ahead of him and instead is confident from support and positive responses he has already received.
“The response I’ve had has been overwhelmingly positive. I’ve found in the past if people don’t like things they’ll be pretty quick to tell you. So the responses I’ve had would indicate a pretty broad level of support,” concludes Godfrey.
“I think if we are moving this in the right direction, I feel the industry as a whole will get there. What I’m determined to do, is that what we can control we can continue to do so by doing the
Born: London, 1961
Education: Westminster School, University of Manchester
Career: 2012-present: chief executive, Investment Management Association; 2009-2012: communications director, The Pheonix Group; 1998-2009: director general, Association of Investment Companies; 1994-1998: marketing director for investment trusts and communications director for unit trusts, Fleming Investment Management; 1991-1994: self employed; 1989-1991: head of sales and marketing, Laurentian Unit Trust Management; 1988-1989: product development manager, Mercury Asset Management; 1985-1988: marketing manager, Schroders; 1982-1985; life inspector, UK Provident
Favourite book: I Know Why The Caged Bird Sings by Maya Angelou or May Contain Nuts by John O’Farrell
Favourite film: Pulp Fiction
Favourite music: Sign o’ the times by Prince
Career ambition: Turn up every day, do my best, see what happens next
Life ambition: For my children to be happy
If I wasn’t doing this I would be…a barista.