Earlier this autumn, the Financial Services User Group (FSUG), of which Guillaume Prache is the Vice-Chairman, has issued a position paper on asset management in the European Union.
The position paper summarizes the outcomes of a study on investment fund performance and lists the characteristics of a successful, effective market (accessibility, safety, efficiency etc.). Against this background of an “ideal” market, the gloomy everyday reality experienced by the consumers is even more striking: on the EU Consumer Scorecard, the market for investment products scored lowest of all markets for goods and services in the EU in 2011, 2012 and 2013.
Why?
Suboptimal information disclosure including information asymmetries, blatant conflicts of interests, disappointing underperformance – you choose. In short, asset management has been delivering bad value for money over the long term. And this is hardly the way to win consumer trust.
Perhaps the most puzzling is the fact that people who opt for their assets to be managed actively – i.e. investment experts decide when and where to allocate them – and who pay for this service, do not reap more than those who let their assets be managed passively (i.e. following an index): in 10 years (2003-2012) there was not a single asset class where active managers outperformed the index.
“It is illogical and dangerous to continue to expect financial users to make increased use of this industry to save for the future and for retirement without first improving the efficiency of the industry and consumer confidence and trust,” concludes the FSUG report.