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News Analysis: Greater transparency needed
Readers of these pages will be familiar with two often-stated views about the asset management industry. One is that it is the only area of financial services set for strong long-term growth in the developed world, not just in emerging markets. The other is that the industry is in a tight spot, and faces the widest range of threats in its recent history.
From the asset managers’ standpoint, there is growing reluctance to invest heavily in retail branding and direct marketing because of the greater influence of the IFA channel and the cost of selling and servicing the direct market. This reflects pressure on budgets, the anticipated impact of the Retail Distribution Review (RDR) and the growing importance of large advisory groups.
While both of these perspectives are understandable, the distance between the industry and its retail customers needs to be narrowed. So how can this divide be bridged? The answer must have many elements, but I would highlight two as being of particular importance: one is the need for better public awareness of the need for long-term saving, and for better financial education in general; and the other is the need for greater transparency on the part of asset managers.
If the industry is straightforward and clearer about the promises it makes and its ability to deliver, along with more transparency around the way it is remunerated, surely this will lead to a better chance of helping retail investors meet their long-term investment needs.
Roy Stockell is investment management leader at Ernst & Young EMEIA
