 By Daniel Godfrey, Chief Executive, IMA
Being asked to write a blog in your second week on the job isn't quite as daunting as being asked to make the after dinner speech to the Annual Scottish Dinner, which was the hospital pass I received last time I joined a trade body, but it comes close...
Before I reflect on the key issues that will define the IMA’s work for years to come, I want to thank Richard Saunders for assembling and leaving behind him such a depth of technical knowledge and experience in the team that I inherit at the IMA. I am also grateful for the open and supportive reaction I've received from everyone in the industry whose insights I have sought to date.
As an industry, investment management supplies a product that people all over the world need and will need increasingly if they are to make adequate provident provision for the future. As well as helping our fellow citizens in the UK to enjoy greater confidence in the future by increasing their resilience to bad luck in their lives and providing a better quality of life as they age, we have an unprecedented opportunity to grow a global export business on the back of rapidly improving incomes in Asia and Latin America with other regions set to follow in due course.
If the UK investment management industry is to succeed in fulfilling this potential, the two key areas of work that the IMA will have at the top of its agenda are the two ‘Rs’ of Reputation and Regulation.
Since the financial crisis began, there has been a profound breakdown of trust between society and financial services, which has dragged in investment management just as it has the banks. There is no point in complaining that it is unfair or that we are not to blame. That won't change a thing.
If we want to gain trust from society, we can only succeed through what we do. And what we do has to be to take positive steps that demonstrate clearly that our driving force is to deliver great results for our clients. If this is the case, then we will have nothing to hide and so complete transparency holds no fears for us.
This doesn't mean pandering to every siren cry that the industry is ripping customers off (it so isn't) and being pushed into developing complex measures and disclosures that would serve to conflate apples with pears and actually mislead clients. Instead it means being willing to look at ourselves objectively, identify any improvement that could be made and then actively taking steps to raise the bar. And exactly the same applies to the way in which we manage conflicts of interest and to the disclosure of our approach.
As investors, we will build trust the more we show that we manage our responsibilities as stewards of our clients' money. This means engaging intelligently with companies whose shares we hold and by being willing to take increasingly dramatic action collectively with other investment managers and shareholders when we have serious concerns and where the company is refusing to engage sensibly with us.
Trust will support our other key challenge, which is to work with regulators and governments around the world to help them build a regulatory framework which provides proper protection to clients with the lowest possible cost and complexity. We need effective regulation, because it gives clients the confidence to trust us with their money. We want the lowest costs that are commensurate with that objective because it leaves more money in the pot for clients. And finally we want simple regulation that minimises distraction so that we can get on with making money for them.
Building trust with society and becoming a trusted partner of regulators and governments will lead to better results for all, but most importantly for the client who will earn better returns in a safer world. And that's a mission that I know we all share.
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