There is an old joke about a tourist who, in asking for directions from a local person in the rural countryside, gets the response: “Well, if I was trying to get there I wouldn’t start from here.” In its own peculiar way, it sums up where we find ourselves at this particular moment in time.
The list of impending new beginnings (including but not confined to Brexit) as well as the changes later this year in the EU Commission and Parliament represent a “cumulative complexity” facing us which will likely require all industry stakeholders to approach things a little differently. Keeping things simple from here will be difficult but important.
All industry stakeholders (not just providers) have played a part in enabling us to get here. By “here”, I mean a place where investment fund ownership in Europe grew by 150% from 2008-17 and became an essential component of the financial portfolios of households, insurers and pension funds.
Along the way, many positive outcomes have been delivered to investors: investment into economies has stimulated growth and innovation and significant regulatory change has been implemented. All the while, a range of firms have run businesses with greater commercial challenge and high levels of competition. To say it has been easy would be wrong and there are many topics (covered monthly in this column and elsewhere) that challenge and excite in equal measure.
In the coming year, we all have to decide how we face this range of significant complexities and changes. A concept of cumulative complexity exists in the medical profession – care situations involve much complexity and variable conditions – and there are direct impacts on health outcomes where imbalances exist between the ‘workload’ (all the tasks and responsibilities) on the patient and their ‘capacity’ (abilities, resources, readiness, etc). In personal wellbeing (as in financial wellbeing), ‘outcomes’ are often not final endpoints but an ongoing journey and there are important feedback loops which exist along the way to be learned from.
Applying this to our industry suggests that each stage of the investment journey (from policy formulation, through legislation, into commercial practices and finally as used by investors) need to better calibrate what is being done (or is seeking to be done) with the capacity for it to be absorbed.
A competitive, commercially attractive and better understood industry will continue to deliver the financial outcomes desired by investors once providers and investors have the capacity to absorb and work with the policy and regulatory requirements which are laid out. Keeping things simple from here will be difficult but important.
The industry in Ireland, like our counterparts across Europe, continues to evolve and adapt by providing solutions that are needed – we will continue to do this with professionalism, enthusiasm and a smile!
A parting thought - in this environment, attitudes and perspectives are changing rapidly, creating inevitable dissonance. In these circumstances, the value of dialogue and collaboration increases significantly, especially when our shared objective of helping people secure their financial futures remains no less important. The next leg of the journey starts now.
Pat Lardner is chief executive of Irish Funds and Efama board member
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