'[Asset management] is about looking after people's futures'

Industry leaders are marking the 60th anniversary of trade body CFA UK with a critical examination of the asset management industry.

Lack of transparency, diminishing diversity and the threat of technological change are among the challenges laid out by senior figures including Andrew Formica, chief executive of Henderson Global Investors, Anne Richards, chief investment officer of Aberdeen Asset Management and Peter Harrison, head of investment at Schroders.

The Q&A was seen by FTfm ahead of publication in the journal of the CFA Society of the UK this week.

Mr Formica and Helena Morrissey, chief executive of Newton Investment Management, cited the need to build a more diverse industry.

"We struggle slightly to attract a diverse range of the best and brightest," says Ms Morrissey, who founded the 30% Club, which campaigns for 30 per cent of company directors to be women. "We need people who can think, challenge, as well as those who are numerate."

Although some progress has been made, Mr Formica says it is not secure. "If I had any concern, it would be that some of that diversity is ebbing. I think we need to actively encourage more diversity now, bringing younger people into the industry from a range of backgrounds."

"Technological changes will also challenge the industry," he says. "In the future, you could see Google or Alibaba acting as distributors."

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Ms Richards says: "Fund management services will need to adapt to a very different landscape. The ones that survive will be the lowest-cost producers on the existing framework or the ones who are able to grasp this technology before Amazon or eBay or some other disrupter comes into financial services."

At the same time the industry needs to focus on simplifying itself, she says. "The investment industry has become so complex that it is less transparent, even though, individually, a lot of these initiatives [regulatory and structural changes such as the increased use of consultants] were designed to improve transparency and governance."

Increasing availability of data is supposed to make markets more efficient, and Ms Morrissey says the greater transparency of market data has been a leveller between the buyside (asset managers) and the sellside (investment banks). "Now we all have the same information, and that is a powerful tool."

<>Over-reliance on data carries its own pitfalls, however, warns Schroders' Mr Harrison. "Without even trying to look forward, there have been obvious mistakes that have come from reliance on data. Holding periods today are tiny compared with what they were 60 years ago. People have become obsessed with the short term and we miss the bigger issues."

He warns that the industry needs "to focus on delivering solutions for a client's needs", although this may be "a major departure for many managers".

Several of the senior industry figures interviewed called for a longer-term approach to investment, as well as a renewed focus on clients' needs. "I was absolutely taught that you were looking after other people's futures, and you had a duty to society as a whole and the people whose futures were in your hands," says Ms Richards. "I think some in the industry forgot this."

If she is right about the biggest external challenge for the industry - global population growth reaching a peak, which could mean "growth might be zero" - this would be more important than ever. "This is not a game about trying to beat the market as a sporting activity. It is not mental athletics. It is about looking after people's futures and getting that right."

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