Improving market effectiveness and competition could net investors an extra £37.5bn in returns over 30 years according to Financial Conduct Authority (FCA) interim chief executive Tracey McDermott.
Speaking at the Pensions and Lifetime Savings Association Investment Conference, McDermott quoted the statistic as a warning against complacency.
"The asset management sector is clearly a success with some £6.7trn of assets under management," she said.
"We have around 1900 firms operating so it is clearly a vibrant sector and some have questioned whether we need to look more closely at competition at all. However, [the Investment Association] has estimated that every basis point improvement in the efficiency of the market can translate into £264m in client returns every year. Compounded up this equates to some £37.5bn over thirty years so there is clearly no room for complacency."
Blackrock managing director Andrew Stephens said it was hard to argue against more competition as it would spur innovation but said it had to be effective.
"Additional players should be disruptive forces to spur innovation but added complexity can make it difficult for schemes to work out whether they are getting value for money or not," he said.
Willis Towers Watson global investment committee chairman Robert Brown agreed saying that "innovation combined with complexity is food for sellers, not necessarily buyers."
He continued: "Over the years we have had competition but we have also had increased complexity so there is a greater need for resource," he said. "Many investors have raised their game and employed internal teams and have been able to take costs out of the structure."
RPMI chief executive Chris Hitchen highlighted the Railway Pension Scheme's own work in simplifying its external management arrangements and said significant cost savings had been found.
"We looked forensically at costs and when we really drilled down into our pooled vehicles for instance we found we were paying around four times more than we thought."
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