After Mr Godfrey’s appointment comes into effect on 1 December, Mr Saunders will remain with the IMA in an advisory capacity until the end of 2012 to help smooth the transition.
As well as serving as director general of the AIC, Mr Godfrey was previously chairman of the Personal Finance Education Group from 1999 to 2003 and a member of HM Treasury’s Financial Services Forum from 2006 to 2010.
He most recently spent two years at the Phoenix Group.
Mr Godfrey said: “Long-term investment is vital for consumers, for companies and for the economy, so the breakdown of trust between society and financial services could not be more damaging.
“The challenge is broad and complex, but the agenda is simple. The IMA and the industry must identify and do whatever is necessary to earn trust by demonstrating the fundamental qualities of transparency and customer focus on which investment management is based.
“Secondly, we need to steer a path through the regulatory agenda so that consumers are properly protected without unnecessary costs or distractions that can only cause detriment by damaging long-term returns.”