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Who’d want to be a fund manager?

If your business is asset management, you cannot have failed to see the headlines that point to 10 years plus of poor investment returns or the performance fees debate currently occupying many of the leading columnists’ sections. Then there’s speculation as to the future of the FSA, all of which has led to questions being raised about the role of the asset management industry. In response to these questions, Lansons Communications gathered together a number of senior executives from the asset management industry to debate the future of the industry, and to specifically answer the charge from a well known City journalist, that asset managers are set to suffer for not communicating enough with politicians and public alike. Joining the roundtable debate was the journalist in question, a leading IFA and a Conservative MP. The event was hosted under the Chatham House Rules, therefore we cannot go into too much detail, but below is a flavour of some of the many issues debated over our breakfast. “…the asset management industry is still ‘shockingly misunderstood’.” Opening the debate was the belief from the journalist that the industry lacks a unified, public voice – with fund managers being accused of not voicing their opinions/ concerns enough, and not reassuring or explaining to customers when they were losing their money. A view accepted by many around the table, although they were still surprised to hear that within Westminster, the asset management industry is still ‘shockingly misunderstood’. The debate then moved on to the tricky subject of how the industry should better align its own fees and bonuses to investment performance with many believing rewards for performance should be more aligned with the customer and received over a much longer term to ensure ongoing fund manager commitment. As one attendee around the table pointed out, the industry needs to remember that they ‘are paid by the customer,’ an obvious observation you’d think, but one that probably needs to be said more at the decision making level. It will come as no surprise that the future of the FSA was a hot topic, with many around the table voicing the belief that abolishing the FSA wasn’t the answer. Many believe any change in the structure of the FSA would only further alienate consumers trust. The answer lies instead, in educating those at a policy level to better understand the role of asset managers and the needs of the consumers the industry serves. One of the biggest failings in regulation is the sheer volume of change the system has experienced over the years, and the fact that the tax system hasn’t changed in line with this. As another attendee pointed out, ‘lots of regulatory change doesn’t improve the system it only complicates it.’ This ‘complicating’ of the system and lack of taxation change; he says means that products have had to become more complicated and sophisticated in response to this. Following an hour and a half of discussion which just scratched the surface of the debate, it’s clear that the industry has a lot to say. What’s still not yet clear is whether the industry is prepared to make the investment in the time and effort towards being heard? If they do, there’s a real change that consumers will understand the role of the industry more, be prepared to stick with it in the bad times as well as the good, and with a forthcoming election there’s a real chance for the industry to be heard and to subsequently help shape and inform any change that we may see in regulation. This post also appears in the current Lansons newsletter – http://www.lansons.com/newsletter/dec09/default.htm.  For further information, please contact either Ralph Jackson – ralphj@lansons.com – or the Financial Services practice – fspractice@lansons.com.