Deutsche adds fuel to transparency debate
The internal debate around transparency in the funds management industry has been very damaging, and it is now at risk of further regulation of the value chain, according to Deutsche Asset Management chief executive Shaun Mays.
“There is a lack of transparency and this issue is damaging the reputation and encouraging politicians and regulators to life the bar in terms of compliance,” Mays said.
Speaking at the Investment and Financial Services Association conference yesterday, Mays said that the industry’s reputation, demographic shifts and transparency are the big trends that will drive funds management over the next 10 years.
Its poor reputation with the community at large is a result of the funds management industry becoming confusing and losing its way, Mays said.
“We’ve got a bit lost — I think its why our reputations are lacking value because we’re focused on the minutiae rather than the big picture,” Mays said.
“We ourselves have become confused about what risk is. We’ve become obsessed with risk measurement. Risk measurement is not the same as managing risk.”
Mays believes there is a mismatch between what fund managers believe they do and the value add inherent in that, and what they are perceived to provide.
“The industry is very complicated. We need to take every step to explain ourselves in a different way.”
Mays also sees a disconnect between funds management and advice which has developed over the last 10 years, and says while the big changes in advice will be tax, estate planning and the framing of mandates, investment management has “done a disservice” by not delivering a product that is linked to the advice.
Discussing demographic trends, Mays said that catering to the needs of the baby boomer generation will be an important point for the industry, and that accordingly the market focus will shift from “growth with a bit of yield to yield with a growth kicker”.
Mays also predicts that franking credits, for their after tax advantages, will become more valuable.
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