It's that time of year known as Sommerloch (summer hole) in German and the silly season in English, when everyone is away, the newspapers are full of nonsense and lots of research is released into the stratosphere.
The fund management industry is a vigorous generator of research about itself, with internal offerings readily bolstered by output from consultants. Many and long are the “state of the asset management industry” reports that flood into one’s inbox of a balmy summer evening. It’s interesting to consider how much of this research is useful.
Useful, I concede, is a hard term to define. The dictionary definition is: of use, serviceable, producing or able to produce good results. But, while it’s easy to decide if a kitchen implement or car part is of use or not, it’s much trickier with research – especially into something as nebulous as the state of the asset management industry.
However, there is one fairly reliable measure. It is the law of the nonsensical reverse, defined by Simon Hoggart, a journalist at the Guardian newspaper. According to the law of the nonsensical reverse, a statement need not (and probably should not) be made if it’s reverse would be nonsense. Thus there is no point in politicians issuing pronouncements of the “This party supports hard-working families” variety, as no politician would say: “This party wants to screw hard-working families” or “This party is for feckless bachelors”.
Similarly, according to the law of the nonsensical reverse, there is no point in businesses writing: “We are a cutting-edge, client-focused organisation run by committed, highly skilled individuals.” (We are a self-centred organisation that doesn’t give a stuff about its clients and is run by numpties who’d rather be down the boozer.)
I have applied the law of the nonsensical reverse to this year’s summer splurge of asset management research. It produces some breathtaking examples of the mechanism in action. “The predominant industry theme remains one of seeking better to serve specific client objectives,” states the 11th annual asset management survey from the UK’s Investment Management Association (IMA). (The predominant industry theme remains one of seeking to undermine clients and stymie their objectives.)
Or consider this from a McKinsey & Co 2013 global asset management survey taster: “Institutional clients are becoming far more sophisticated and demanding across a growing set of key needs, including risk management, cost effectiveness and outcome orientation (for example, absolute return, volatility reduction, income). Firms capable of meeting these complex needs are gaining ground at the expense of those who are failing to do so.”
(Institutional clients are becoming less able to understand complex issues and less demanding across a diminishing list of minor needs. Firms that fail to meet institutional clients’ needs are doing better than those that waste time trying to work out what these tedious suckers want.)
But my favourite research extract of the summer comes from the Association of Professional Financial Advisers (APFA) in the UK and is not so much a nonsensical reverse as just nonsense. “The APFA has conducted research into the impact of Scottish independence on financial advisers’ business. This new research reveals that almost three in four financial advisers have not yet considered how their business would be affected if Scotland became independent, but those that have considered it are awfully worried about it.”
Why are they worried? “The main concern surrounding Scottish independence is that of providers potentially being re-classified as ‘overseas’ and therefore not being used.”
This is indeed most concerning. I can only assume the APFA has privileged intelligence about secret plans to dig a sea channel between the Solway Firth and the Tweed estuary should independence come to pass.
Perhaps it’s one of those infrastructure projects in which, according to the IMA survey, fund managers increasingly want to invest – a rare and welcome insight of genuine import in a summer sea of forward-facing, trust-building gobbledygook.
Fiona Rintoul is an editorial director at Funds Europe magazine
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