The reason for this, he says, is that in the aftermath of the global financial crisis, there was a dearth of that kind of trust and a need for those in financial services to show, through their actions, that they behave in the right way.
More to play for
For investment management, the stakes are higher than in the past because the number and breadth of channels to market is only going to grow, according to Godfrey.
“Historically, the route to market for the sector’s core competence, choosing what to buy, was really dominated by investment managers building components and other people downstream assembling those components into portfolios in one form or another.”
Now, however, he adds: “Regulation has caused many of those downstream advisers to say, ‘Actually, assembling the components is not where we want to be. We will advise the clients, make recommendations to them and service them but we are now more interested in the multi-asset funds, where the investment management firm is making the asset allocation calls’.”
On top of that, there are also millions of new people likely to come directly into the investment management sector through pensions liberalisation and auto-enrolment, which will grow the market even wider.
Simplicity itself
Godfrey recognises that many in the mass market will not be able to afford bespoke, independent financial advice.
However, he believes that the level of advice many of these people actually need is uncomplicated enough that the sector will, over time, be able to deliver it at an affordable cost.
“If you are part of the mass market with a saving horizon of 30 or 40 years, there are probably not that many flavours that make sense, broadly speaking. Knowing that you have to save, broadly how much you have to save and what kinds of vehicles are available that have a good chance getting the job done is probably the extent of the advice you need.”
It is not, however, just the sector that is changing.
The Investment Association itself has had a rather busy time of things since Godfrey took over as CEO in October 2012.
Not only has it undergone a significant rebrand, changing its name from the Investment Management Association, it is also digesting a merger between it and the Investment Affairs team of the Association of British Insurers.
“We now cover quite a broad spectrum across everything of importance to investors. Whether it is product regulation and governance, communication or transparency, or around engagement, remuneration, environmental sustainability and how the financial markets extract costs, we now look at it all.”
Given its significantly broader mandate and its new, simply expressed goal to “make investment better”, Godfrey does not expect its role to change much from here.
“We gave a lot of thought to how we articulate our mission and core objectives, and you expect those to stay stable for a period of time. If they are ambitious enough, they take a long time to achieve and, if they are the right ones, they should not change.”
Words into action
But, as Godfrey admits, saying things is one thing but doing them is another.
For the Investment Association, what its new goals mean in practice is an ongoing process of self-examination to see how it – and the sector – can continue to improve itself.
