Investment Management Association chairman Douglas Ferrans has called on asset managers to reconnect with clients and demonstrate why the industry deserves their trust.
Speaking at the IMA’s Chairman’s Dinner at Mansion House in London yesterday evening, Ferrans urged: “The asset management industry needs to look past the heavy intermediation of much of its business model and take proactive steps to reconnect with investors and to build reputation and trust.
“The first step is to reconnect with those investors and understand what they need and how best to serve those needs. The second is to demonstrate why we deserve their trust and confidence.”
At the event, Ferrans highlighted the IMA’s campaign of looking to develop a simple pounds-and-pence measure of investment funds’ historic costs alongside actual performance.
Ferrans stressed the need to always keep consumers’ interests front-of-mind. He said: “We need to ensure that when we spend our clients’ money, we do so with real skill and diligence. We must ensure that when we face issues that give rise to potential conflicts of interest, we are able to think independently and put our clients’ interests first.”
Looking at how the industry tackles the challenge of effective engagement with companies in which it invests, Mr Ferrans said: “There is a very mixed approach in this area among investment management firms.
“The challenges in effective engagement are well-known and I have in the past defended the right of our firms and clients to decide how far down this path they individually go. However, as an industry, this is an area that cannot and should not be ignored.”
IMA chief executive Daniel Godfrey has recently bought together the buy-side trade associations to consider options to improve and extend collective engagement – as suggested in the Kay Review – which would allow industry practitioners to collaboratively address issues and support companies in delivering long-term and sustainable returns.
Ferrans emphasised the important role asset managers play in encouraging more consumers to save and invest.
“There is a massive underestimate of the future bill to pay for pensions and long-term care. And unless we all redouble our efforts to facilitate an environment where individuals do not rely on the state in later years, future generations will have a crisis on their hands that will make the recent banking crisis look like a tea party,” he added.