Binary tendencies
While polarisation in the asset management space is nothing new, be it small versus big, active versus passive or retail versus institutional, the drive towards scale, price-based competitiveness is not surely the only answer and some are concerned about the ever-increasing level of administration – a heavier burden for the smaller, more specialist and, perhaps actively managed groups.
Simon Turner, partner in EY’s wealth and asset management practice, said: “These changes should result in greater competition and increased consumer knowledge. They should also better equip consumers to make more informed investment decisions, and ultimately, better manage their finances. However, firms are already dealing with a growing volume of regulation, and this will add to a long to-do list, making prioritisation key. Particularly now, amid increased market uncertainty, the UK must remain competitive on the global stage.
“Price competition to drive value for money is positive and leading firms within the sector are already on this path, but care must be taken to ensure that it does not end up pushing smaller, boutique firms out of play.
As managing director of a smaller group, Miton’s Gervais Williams believes there will be winners and losers, regardless of AUM.
He said while indexation has been a way of making a “extraordinary” amount of money for quite a long time, he feels the tide is about to turn, casting a shadow of irrelevance over the FCA’s paper.
Williams said: “We are look at a period of change, with political preferences and a change in economic policies and market trends. It has been all about indexation but I think that may be coming to an end and investors need to be attentive to the way they are making money and managing risk.
“I can see that when everyone was making a lot of money perhaps there was less shopping around taking place. But with such ultra-low bond yields the days of such good returns will be coming to an end and it will start to pay to shop around.”
