Asset managers should be realistic about return claims

nest golden egg 410Asset managers should help their defined benefit pension scheme clients by being honest about what returns they can deliver, and helping to manage their clients' expectations.

More than 60% of respondents in a survey commissioned by Principal Global Investors say asset managers should avoid unrealistic claims about returns, while 55% say asset managers should manage pension clients' expectations about what can and cannot be delivered in today's market.

The survey also found that the shift towards defined contribution pensions could result in a change of focus from beating the market to satisfying members' objectives.

“The asset management industry will need to redefine how it works,” says Nick Lyster, chief executive of Principal Global Investors Europe. “New, forward-looking products need to be developed. Innovations will be more solutions-based, with alpha being a question of exceeding clients’ needs rather than the market.”

Respondents say the best thing asset managers can do to help their defined benefit pension clients is to gain a deeper understanding of the risks and opportunities available in the current debt dynamic, as the United States and Europe continue a painful deleveraging process.

The survey polled 700 fund managers, pension plans, consultants, distributors and administrators with combined assets under management of $27.4 trillion (€21 trillion).

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