There are €4 trillion of household assets in Europe that asset managers are failing to capture because they target only the wealthiest 10% of people, a report finds."
The Association of the Luxembourg Fund Industry (Alfi) says investors outside of the 10% are a missed opportunity for asset managers and that the investors themselves have missed opportunities to grow their capital.
European cash makes up 42% of household wealth in Europe in contrast to the US where the figure is 18%, the report – entitled Beyond 10%: the case for enlarging the pool of retail investors in Europe’s investment funds – finds.
However, Alfi’s report comes as financial advisers, a key link between households and investment funds, are being inadvertently pushed by regulation to target wealthier people to maintain profit margins.
The Retail Distribution Review, a set of regulations in force in the UK since December 2012 and designed to make advice costs more transparent, is expected to lead to five million disenfranchised customers who will either cease using an independent or bank adviser, or lack access to them, according to accountants Deloitte.
In Europe, the Markets in Financial Instruments Directive II is expected to have a similar impact.
The ALFI report, carried out by Mackay Williams, acknowledges this trend and proposes an action agenda, including building brand awareness, clearer communications, and encouraging more regular saving in investment funds.
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