Association column: Financing the real economy

Europe’s asset management sector is central to its economic life and fundamental to maintaining its strength and competitiveness. With a supportive environment, it can only grow in the financial and social contribution that it makes.

With governments alone no longer able to guarantee their citizens’ financial security in retirement, asset managers offer ways in which people can make their own provision.

As growing businesses and major infrastructure projects such as highways, hospitals and schools seek the funds they need, asset managers have stepped into the gap created as banks re-trenched after the financial crisis.

By funding these growth businesses and public projects, asset managers help tomorrow’s companies expand, creating jobs for European employees and taking better care of their customers.

The returns on these investments give savers and pensioners the freedom to provide for their current and future needs.

A sophisticated European asset management sector gives citizens access to investment opportunities both at home and globally, while simultaneously making possible inward investment in European assets from elsewhere in the world.

Finally, asset managers are increasingly investing clients’ funds with a keen sense of the goals and preferences of those clients, with particular regard to the social and environmental impact of the uses to which their funds are being put.

These six key aspects of modern European asset management can come together to create a virtuous circle of security, employment, growth, opportunity and sustainable, socially aware investing. But for such a circle to operate at its full potential, two concerns should be addressed: the need for citizens to be able to make informed choices, and the requirement that financial regulation be proportionate and supportive.

It is important to appreciate that each of our six aspects of asset management is connected. Only by investing in growing businesses and major projects can the sector pay the returns on which investors rely, helping to offer citizens financial security. This in turn allows asset managers to attract funds from around the world and provide access to global investment opportunities.

Only by addressing growing investor concerns about the environmental and social impact of investments, while acting as shareholders to hold companies to account, will asset managers enjoy the trust without which the industry will struggle to attract funds on the scale needed if it is to fulfil its potential.

The power of active engagement to promote environmental, social and governance issues is increasingly recognised. The decisions savers make can send a strong message to companies about how they should behave. We believe the ultimate goal should be making responsible investment mainstream. This is not a simple thing to implement and will need careful consideration of how the different pieces fit together.

Clearer and more accessible financial advice is essential if investors are to reap all the benefits of asset management. Citizens need impartial guidance at a price they can afford and delivered in a manner convenient to them. This, and the benefits offered by asset managers, can be realised only within a framework of meaningful, consistent policies and regulation that protects the end-customer while providing space for innovation. Such a regime needs to work with the grain of the market and be informed by continuing dialogue with the industry.

By Tanguy Van de Werve, director general of Efama

©2019 funds europe

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