Making investment better

6 October 2015

When Andrew Haldane of the Bank of England gave a speech last year entitled “The age of asset management?”, it reflected an important reality both for the UK and many countries around the world. Investment managers are on the political and regulatory radar as never before.

Key drivers are greater longevity, increasing wealth globally and a shift in emphasis towards individuals being given responsibility for pension provision. With the continuation of auto-enrolment and the recent liberalisation of retirement income rules in the UK, the challenge of ensuring lifelong financial well-being is increasingly falling to the investment industry.

However, asset managers face in two directions: towards their clients and towards the wider markets in which they invest. In a world where banks are constrained in their ability to lend, and the UK government is committed to reduce spending, public and private ventures are increasingly looking to market-based sources of funding. This focus on market-based finance in turn raises broader questions about the role of investment managers in the wider economy.

The investment industry recognises the level of responsibility that comes with its increasingly central role in society. Our core aim as the trade association for the UK industry is to make investment better. Better for clients, so they achieve their financial goals. Better for companies, so they get the capital they need to grow. And better for the economy, so that everyone prospers.

But we recognise that the industry will ultimately be judged by its actions, not its words. In that regard, there are a number of different examples of our commitment to work for positive change.

Most recently, The Investment Association has committed to develop an Action Plan to support long-term investment for improved competitiveness and productivity growth, to help the government deliver on its Productivity Plan. This Action Plan will cover a number of areas, including the functioning of equity and debt markets and the interaction of investors with investee companies.

On stewardship specifically, The Investment Association has been a driving force behind the creation of the Investor Forum, a new organisation that helps to facilitate dialogue between domestic and overseas investors and the companies in which they invest to further enhance dialogue on long-term strategic issues.

Last year, we also worked closely with the Government on changes to the withholding tax regime that will facilitate direct investment into the economy via private placements. This is particularly relevant for mid-sized companies and infrastructure projects, and links to the need to ensure that capital markets can operate more effectively for both issuers and investors.

Sitting behind all of this is a broader opportunity that brings the debate straight back to savers. For many individual savers, investing is an abstract, often unsettling world of risk. The debates about investing in the ‘real economy’ can help to make it much more tangible. In the new age of asset management, there is a chance to build towards a long-term investment culture in every respect.

Jonathan Lipkin, Director of Public Policy, The Investment Association

This article was written for the Reform Annual Journal to accompany the Conservative Party Conference event “A high return on investment: ensuring the financial markets work in the long-term interests of UK economy and society”.



No comments yet.