UK IMA outgoing boss reviews 11 years in asset management industry
Richard Saunders, the outgoing chief executive of the Investment Management Association, the trade body for the UK’s £4.2trn retail and institutional fund industry, has reviewed his time in a blog.
Saunders (pictured) will be succeeded on 1 December by Daniel Godfrey, but will remain with the IMA in an advisory capacity until the end of 2012 to assist with an orderly transition.
Here, in his last blog, Saunders reviews 11 years at the head of the industry:
So what changes have I seen in 11 years at IMA? What do they imply for where the investment management industry is going today?
The last decade has been a turbulent period for investors, with the dotcom crash, 9/11, the credit crisis and the eurozone crisis. As I write this the FTSE 100 index is still about 2% lower than on my first day in the job. That has inevitably had a profound impact on the savings industry.
Major casualties have been products which were perceived as promising investors what they would get at the end of the day. By this I mean defined benefit pension schemes (in the private sector at least) and traditional with-profits products. While they could work well when markets were rising, many proved unsustainable in the tougher conditions of the early twenty-first century.
The investment manager was inside those traditional products, though not always visible. But with the products which have replaced them – defined contribution pensions, ISAs – the manager moves front and centre stage.
At one level, this is good news for the funds industry, which already holds more than twice the volume of investors’ savings it did 10 years ago. It is fast approaching 10% of shares in UK companies and sometime in the next few years is likely to overtake pension funds and life companies as the biggest investor in UK plc.
But this greater visibility and volume will inevitably change the outside world’s perception of it. Instead of being a perhaps slightly obscure sector of the financial services industry, its importance to people’s everyday lives will become more apparent. Retirement saving is set to become a major issue in the coming decades and investment management will be at its heart.
And that is going to put the industry under much greater scrutiny than before.
Costs and charges have been the subject of much comment during 2012, some ill-considered, some not. The [UK] Financial services Authority has also thrown a spotlight on some issues and have made it clear that this scrutiny will continue under the new [UK] Financial Conduct Authority.
This is not something for the industry to shy away from. What marks out investment management in financial services is its transparency. It should welcome and embrace scrutiny – improved transparency has never been bad for this industry. Certainly IMA will continue to promote good practice.
The other consequence of greater prominence will be that people will want to know the industry’s views. As former IMA chairman Bob Jenkins has said on many occasions, it has a real stake in financial stability because few things are more important to its clients’ interests. Bob has urged the industry to speak out more about banking reform and the lessons of the credit crisis. He will not be alone.
I doubt that the next few years will be any less turbulent than the last.
Nevertheless this is an industry facing great opportunities, if also some challenges. I wish it the best of fortune.