Funds Congress Highlights

Government growth policies: With the UK investment management industry managing approximately £10 trillion in assets, maintaining its competitiveness is vital for the country’s future. At a societal level, however, the UK remains over-saved but under-invested, with excessive cash savings outweighing broader investment. The government has taken some steps towards addressing this challenge with its Edinburgh reforms and support for the Mansion House proposals.  Additionally, the reforms signify a governmental endorsement and recognition of investment management as one of the UK’s high-growth industries. Nevertheless, cultivating a thriving investment culture will require opening the investment landscape wider than just public markets, the democratisation of private markets is crucial too. This approach could help bridge the gap between saving and investing, fostering healthier financial habits among the population.

The role of financial education: Although initiatives like Auto Enrolment have brought millions of people into private pension schemes, contribution levels remain inadequate, with a wide discrepancy continuing to exist between what people think they will receive annually from their pension and the actual value of their pension pots. Unhelpfully, the Retail Distribution Review compounded the issue by reducing the accessibility of financial advice. Addressing profound misconceptions will undoubtedly require the reinvigoration of financial education, ideally commencing at school age, to help the public understand the significance of investments for long-term financial security and ensure that individuals are better prepared for retirement.

Addressing regulatory overload: A regulatory “reset” is needed to balance consumer protection with market dynamism, thereby encouraging increased investment activity. Extensive costs arising through new regulations have weighed down the UK’s investment management industry; a strategic review of these initiatives would help ensure that regulations are achieving their intended outcomes without stifling market dynamism. Moreover, a rethink that aligned regulatory measures with the goal of encouraging more people to invest would not only foster innovation and market dynamism but would also make the UK a more attractive destination for domestic and international investors.

Fostering global competitiveness: A dual focus on innovation and competitiveness will be required for the UK to maintain its position as the leading international investment management market. Collaborative efforts between government, regulators and the industry—as evidenced by the rapid development of a blueprint for tokenization—demonstrate how the UK can remain agile and competitive. The industry must work with government to adopt a more proactive approach that convinces the public of the benefits of active participation in capital markets. Ultimately, encouraging investment goes beyond boosting personal wealth: it ensures a stable standard of living in retirement, making it a societal necessity.