Asset managers voice concerns about the future of the UK as a focus for future expansion, survey shows

News - Banking

Written by Ray Clancy

Tuesday, 27 July 2010 10:03

There is growing concern about the UK as a place to do business as asset managers representing over £2 trillion of investment raise serious questions about the country as a focus for future expansion, a new survey shows.

The eighth annual IMA Asset Management Survey also highlights the need for a more stable operating environment in the UK and asset managers are calling for regulators to respond to the financial crisis in a proportionate and co-ordinated way.

The survey, which includes a series of in-depth interviews with 24 CEOs, CIOs and Chairmen from a cross section of firms, indicates that there is a resilient sector assuming a growing role in achieving long term financial goals

But it also shows that a lack of certainty around taxation and immigration policy could force some firms to relocate existing facilities to rival international financial centres and focus future expansion plans outside the UK.

However, all asset managers interviewed saw the potential for the new Coalition Government to allay current concerns and create certainty about the future of the UK, to ensure its competitiveness as a place to do business.

Despite these concerns, respondents to the IMA’s survey also identified a number of attractions for the UK as a business location, ranging from natural advantages of time zone and language to its proven ability to attract talent internationally and the current relatively benign regulatory regime. The importance of being part of a wider financial cluster, especially the proximity to the sell-side, was also viewed as an important factor for many firms.

In the longer term, there are significant opportunities for the industry, both domestically and internationally, including asset management led solutions for retirement provision. At a time of substantial economic and demographic change, the UK has the potential to remain a world-leading asset management centre, it concludes.

‘Asset managers still rate the UK’s investment infrastructure and reputation as a premier league financial services centre. They are not about to up sticks, but there is certainly more restiveness about the UK this year than last, with particular unease around the impact of tax and immigration policy. In our view, this presents the Coalition Government with a strong opportunity to provide certainty to an industry managing assets equivalent to 240% of UK GDP,’ said Richard Saunders, chief executive of the IMA.

But there are also concerns about the shape of future regulation. Asset managers acknowledge there are lessons to be learnt from the financial crisis, both for firms within the industry and for the wider financial services sector. They are keen to see a regulatory response that is proportionate, focused and co-ordinated internationally.

‘The asset management industry is clear there should be no return to the status quo as it existed before the crisis, but equally clear that regulation must target the root causes of the crisis and not demonise the financial services sector as a whole,’ explained Saunders.

The research also found that an increasing number of investment managers are independent agency businesses with a global client base. For the first time, it found that less than 50% of assets under management in the UK are managed by firms owned by investment banks, retail banks or insurance companies.

‘Our survey paints a picture of an assertive, innovative and independent industry, now overtly global in its outlook and ambitions. Its distinctive business model, with its clear agency relationship with clients, has stood it in good stead during the crisis. And the future, whilst not without its challenges, looks positive as the industry’s role and reputation continues to grow,’ concluded Saunders.