But after a recent meeting with a couple of suits from a Big Four, I reckon its myth put about by the profession to stop you finding out what they’re really thinking.
On Brexit, for example, they revealed that behind the brave façade being put up by financial services firms, three fund houses in a week asked them if they should put ‘boots on the ground’ in the US to counter the pulling up of the UK drawbridge.
Managers starting to think about growth outside the UK could see Britain left as a chilly outpost rather than a vital financial hub.
The regulator also came up in conversation (all of which was off the record, hence no naming of names).
They see the Financial Conduct Authority on alert for anything mimicking the old Swiss banking model, “portfolios stuffed with expensive stuff”.
So, vertically integrated firms with more than 50 per cent of clients’ portfolios in in-house funds may want to watch out.
Otherwise they face defending themselves against claims of a “structural risk of bias”, I was told.
It’ll drive a coach and four horses through the sweet spot everyone’s fighting for, those with at least £200,000 of wealth to invest.Robo-advice, now as ubiquitous as Starbucks, raised its head.
For the two from the Big Four, the way robo-advice works out positively for the industry is if it is offered direct-to-consumer for clients with less than £50,000, because most advisers are not all that keen to service this ‘low value’ group.
But they see the problem coming where wealthy people say ‘I want to use that too’.
If they start going direct it will drive a coach and four horses through the sweet spot everyone’s fighting for, those with at least £200,000 of wealth to invest.
On the flipside, robo-advisers have a problem, as the accountants see it, in that there is no trust in new names coming to the market.
They told me: “People want their trust and stability in purchasing brands online. They want solidity. You need a great product, a unique user experience but lastly, brand.”
Big names’ issue is that they have the brand and they have the solidity but can they be innovative?
The answer, the accountancy reps believe, is that big brands will leverage their name and simply buy up the innovative start-ups.
“Asset management has been late, the most senior manager teams are now aware and are thinking about that,” they said.
Asset managers are also thinking about costs, after several months of record outflows, the first time in over 30 years the industry has suffered two consecutive quarters of net redemptions.
Cost pressures are also coming from an environment where decent income is so difficult to find.
As the accountants from the Big Four pointed out, this sees assets under management at low cost passive leaders like Legal & General Investment Management and Vanguard shoot up.
“This wasn’t so much of an issue when you had 10 years of active assets going up,” they said, “but now?”
“Very few managers are both active and passive houses.”
Looking forward, they expected fund houses’ focus to shift to decumulation products, about which there has been a lot of talk but few launches.
The expectation is that will start to change in the next 18 to 24 months, with a proclivity to target date funds.
Accountants may have a reputation for being far from interesting, but they also have a keen eye.
If these are all the things the guys at the Big Four are concerned about, maybe you should be too.
