EXECUTIVE PANEL: Leading the way

Read Nick Fitzpatrick’s overview, then see what our eight distinguished industry leaders have to say about the state of the world…

The financial storm has shaken much debris from the branches of asset management firms and there appears now to be a clearer sense about what chief executives must do to make their businesses survive and thrive.

Partly this is because the crisis has set in concrete some of the main problems investment firms face. And it’s about time too: some of these problems were already well known before August 2007 when sub-prime hit.

Examples range from disappointment with active management, to the difficulty of bringing down fund administration costs.

The financial crisis has crystallised these issues and at least now there should be a new sense of urgency to deal with them. Chief executives have had a long think. Ronald O’Hanley, president and CEO of BNY Mellon Asset Management, said recently: “Let’s face it, we as an industry have let our clients down.”

At the end of 2008 Funds Europe hosted a panel of CEOs from some of the top asset management firms to reflect on the crisis. Six months later they are back to give their views about how the crisis is unfolding and how the industry is adapting.

Two notable points are that executives think that the industry’s reputation should be better than it is, but hasbeen caught in the maelstrom surrounding banks. They are also keen to point out that asset management reward structures have normally reflected long-term results rather than quick gains.

Here we offer a full version of their thoughts. A shortened version can be found in Funds Europe July issue.

Jon Little, vice chairman
BNY Mellon Asset Management
 
Is the crisis unfolding worse or better than expected?
I’m more optimistic than I was in December but I am worried that the market will react too positively, too quickly. Whilst markets always anticipate events rather than lag them, many of the problems in the real economy aren’t…

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Is the crisis unfolding worse or better than expected?
The fund management industry did take a severe hit last year, one only has to look at the jump in cost income ratios to see that. But there have only been a handful of high profile casualties and no real scandals outside of Madoff…

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Is the crisis unfolding worse or better than expected?
The severity of the downturn and scope of the market dislocations certainly has become more transparent over the last months. At Allianz Global Investors we took a defensive approach at an early stage, both with regards to…

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Is the crisis unfolding worse or better than expected?
As far as the markets are concerned, the levels reached in early March are probably the lowest that we will see in the current crisis.  However, the industrial and macro economic consequences of the crisis will probably last…

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Is the crisis unfolding worse or better than expected?
Firstly from an investment perspective, the deep recession we are passing through is not the depression that was feared by many. First signs of bottoming out in the developed economies and encouraging news about…

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Is the crisis unfolding worse or better than expected?
The global economic/financial crisis is still with us, make no mistake about that. And, its various impacts have been and will be both widespread and lasting. The surprisingly positive financial market movements over the past…

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Charlie Porter, CEO
Thames River Capital

Is the crisis unfolding worse or better than expected?
Quantitative easing has been the latest and most effective tool to bring rates down, therefore easing monetary conditions. This feeds through to the economy via lower mortgage rates allowing increased consumption and…

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