This year is a golden opportunity for asset managers to address the issues that affect their underlying clients. That means bolder communications. Here’s what we’re likely to see.
A stance on big issues. Climate change, political instability and social and economic inequality have a significant impact on the lives of clients and their dependents. They also affect the fortunes of the companies those clients are exposed to.
Companies willing to take a bold stance on the great issues of our time – and able to demonstrate commitment to addressing them – will prevail commercially.
Authenticity. Commercial advantages also accrue from greater clarity of purpose. Organisations with a clear statement of why they exist tend to perform better than those without.
Fund management companies have traditionally shied away from this, filing it in the ‘too difficult’ tray. But some are now embracing purpose, linking it to brand, corporate social responsibility and operational functions.
We should expect to see more businesses taking their first steps towards purpose and, as they do so, helping to better differentiate themselves along the way.
Transparency in private assets. Once niche, private assets now make up a fifth of global pension portfolios*. Private and wholesale investors can already gain access through investment trusts and it would be reasonable to expect other routes to open up – as private assets continue to outperform anaemic public markets.
But private assets can be opaque, with comparatively poor governance and high fees.
A more diverse investor base will change this – leading to more transparency and fee compression, as we head towards a more level playing field with public assets.
The year ahead holds huge opportunity for action on all of the above.
When do you want to start talking?
* Towers Watson Global Pension Assets Study 2018