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Asset managers ‘must improve’ communication
16 May 2014
Industry faces years of intense pressure, according to the IMA’s CEO speaking at the Alfi conference. Hannah Smithies reports
The asset management industry must improve how it
communicates with consumers and policy makers as it faces
increasing scrutiny from regulators in Brussels and around the
world, according to the CEO of Investment Management
Association (IMA), Daniel Godfrey, speaking at the
Association of the Luxembourg Fund Industry's London conference
on May 14.
He pointed out that managers face another three to five years
of "very intense" pressure and work after the implementation of
the Alternative Investment Fund Managers (AIFM)
"I think it’s vital for the industry that we work
together to consistently improve the way we’re
able to communicate and to explain to consumers about what we
Costs, in particular, should be explained more clearly, said
Pointing to a Financial Conduct Authority report released on
May 13 that found examples of UK funds having failed to explain
costs clearly, he argued that lack of transparency was an issue
not only in the UK but across Europe and globally.
"We are a very fortunate and privileged industry, we enjoy very
good rewards for being in the industry and until we can
articulate what we do, why we do it and what the costs are,
we’re going to find ourselves under the continuous
pressure from politicians and policy makers that makes it
difficult for us to get on with doing that very important
Godfrey mentioned that the IMA had received ratification for a
new accounting standard that would give a comprehensive measure
of costs an investor incurred.
He urged asset managers to quote an ongoing charges figure
rather than an annual management charges figure, saying the
latter was misleading.
"There is no need any more to talk about annual management
charges and leaving people see a number that may be
considerably lower than the actual ongoing charges that they
The IMA’s new accounting standard will require
funds to produce a total cost figure in pounds and pence per
unit which will include operational charges and transaction
costs. This will likely be required for all UK funds from the
end of the year.
Godfrey concluded by saying that the asset management industry
was increasingly important to the UK, Luxembourg and the rest
of the world because of the continuous increases in
"People need to provide for their future and the only way they
are going to be able to secure confidence around their
standards of living as they get older is by investing in asset
management and, particularly, investing in funds."