The FCA final report: active managers shouldn’t fear price transparency
Patricia Regnault, Europe head of asset management at Linedata, the leading international software and technology provider, responds to the FCA’s Asset Management Market Study Final Report:
At first glance the requirements for increased transparency on prices look tough for asset managers. But if we take a step back, these proposals should help the buy side industry to remain sustainable and grow stronger.
Why should the active asset managers be afraid to communicate the real price of the services that they deliver? The large majority provide a high level of expertise combined with great professionalism to help investors achieve their goals. Investors accept that they have to pay for specialised, quality investment services. Transparency will benefit all parties and pull the industry toward excellence in service and investment performance.
The report highlights a lack of commitment for asset managers to reduce their overall cost structures. While regulations have not helped to bring the costs down, new technologies and services can now enable the industry to reengineer their business models. Digital technology, machine learning and targeted outsourcing will help the smartest asset managers to reduce their overheads without compromising investor satisfaction. Blockchain is also a longer term source of cost optimisation thanks to a real dematerialisation, estimated to have the potential to reduce some operational costs by as much as 30%*.
The FCA’s report demands a new approach, but if the industry works together we can ensure the bright and successful future that we all want.