Brexit will change role of asset managers, says Investment Association

The Investment Association (IA) director of public policy said the investment industry will have to more carefully consider how it works with companies it invests in and the transparency of its dialogue.

Speaking at Uhlenbruch's London Portfolio Intelligence Forum on 9 May, Lipkin said in a low-return environment, pension schemes have changing expectations of their fund managers.

"The debate about the role of asset management is a likely to change in a post-Brexit world, but driven by some of the border factors," he said. "Pension schemes invest in the economy and asset managers, and fundamentally this is about investing in productive growth to deliver long-term returns and ensure savers get the best returns.

"We are seeing a shift in our expectation of how we can be good stewards of capital to ensure that when we invest in companies that the dialogue we have is of a different nature. Looking forward, there is going to be a very different set of relationships between the asset management industry and the UK economy as clients."

The IA has called for FTSE-listed firms to focus on long-term performance and stop reporting quarterly on results. It also said the firms should disclose how they are responding to environmental, social and governance (ESG) issues, as doing so would have a positive effect on long-term delivery for shareholders.

Lipkin's comments also followed a campaign by ShareAction and ClientEarth which called for schemes and providers to vote against executive pay proposals at Shell and BP in a bid to reduce short-termism.

The National Employment Savings Trust (NEST) earlier this year adopted a climate aware fund for its default retirement date funds which attempts to improve dialogue and put pressure on carbon-heavy firms.

Lipkin added the pensions industry was also undergoing significant regulatory change unlike any other period before, and Brexit is likely to deepen this.

"The regulatory environment has profoundly changed since 2008 and there is a degree of scrutiny that most asset managers and banks have not seen in the past," he said. "We are seeing on the one hand extraordinary opportunity to deliver differently and [on the other] regulatory scrutiny that I would expect to continue in forthcoming years.

"Brexit will determine how as a jurisdiction we think about our regulatory architecture."

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• Topics
• Investment
• Jonathan Lipkin
• Uhlenbruch
• The Investment Association
• Brexit