The UK’s financial services sector must be “reinforced and reinvented” as the country nears its departure from the European Union, according to the Investment Association’s (IA) chief executive Chris Cummings.
Cummings called on both fintech and investment management firms to collaborate to bring “a new energy and impetus to our financial services expertise” in the IA’s latest Investment Management Survey.
The industry body said the sector’s international competitiveness was one of four key themes identified by the survey, as it highlighted the importance of UK firms to global investors.
The IA said UK investment managers looked after £7.7trn in assets under management (AUM) in 2018 – flat on the total AUM in 2017, but more than the next three largest European centres of France, Germany and Switzerland.
Within that number, it said almost half, or £3.1trn, was managed on behalf of overseas clients. Almost 60%, or £1.8trn, of that figure came from savers in Europe, and £565bn from clients in North America, a number that was up 11% on 2017.
The survey found growth in the appetite for UK-based fund managers to invest clients’ cash on a global basis, particularly in fixed income. The amount of overseas allocation in the UK-managed bond funds increased by 30% to £1.3trn in 2018, from £1trn in 2017.
Cummings also said the sector’s future success depended on “the UK’s attractiveness to international talent, but also its ability to nurture and develop domestic talent”.
“We are going through one of the most significant periods of change in how we deliver better for our customers, with an unprecedented focus on competitiveness, transparency of products and services, and stronger internal governance.”
The survey noted the industry is “making a significant contribution to UK employment figures”. The industry currently supports 115,000 jobs, with 39,500 people having directly been employed within investment management firms in 2018, up 4% on 2017.
Changing face of the investment industry
A second theme highlighted by the survey was the growing emphasis on responsible and sustainable investment, alongside expanding the industry’s activity beyond public markets and supporting wider sources of company and infrastructure funding.
“Getting these areas right will help ensure better outcomes for UK customers and the domestic economy,” said Cummings. It will also “bolster our position to compete globally, particularly as sustainability becomes an ever more urgent theme for policymakers, regulators and all stakeholders”.
The survey also accepted that investment returns will be “ever more scrutinised, and understandably so” as investment risk through both people’s working lives and retirement will increasingly be borne by savers.
Cummings said: “Our members are working closely with pension schemes and others in the delivery chain to ensure the ‘investment engine’ delivers successfully.”
He added: “We are going through one of the most significant periods of change in how we deliver better for our customers, with an unprecedented focus on competitiveness, transparency of products and services, and stronger internal governance.
“This, in turn, links to the wider question of culture and ensuring that the industry mindset evolves in line with its growing responsibilities and public scrutiny. It also includes the critical area of ensuring greater diversity and inclusion.”
This article was originally published on Professional Adviser on the 21th September 2019