Money Market Funds
Operations and Technology
Industry Leaders Address Evolving Industry Challenges and Opportunities
By Miriam Bridges
June 9, 2014
In conversations exploring outcome-oriented investing, the globalization of the fund industry, and the next generation of retirement plans, industry leaders offered their perspectives on serving investors in an evolving world during several insightful sessions at ICI’s annual General Membership Meeting, held in Washington May 20–22.
Outcomes for Investors
“We need to stop and think about what outcomes clients are really seeking to achieve,” said Andrew Sieg, managing director and head of global wealth and retirement solutions for Bank of America Merrill Lynch, in a panel discussion on investor advice. “Years ago, creating wealth ranked higher than peace of mind. Now clients are looking for peace of mind.” Bob Vorlop, head of products and advice for Wells Fargo Advisors, echoed this call on the industry to think more broadly about client goals. “It’s not about beating a benchmark, not about having the best idea—it’s about the organization of the client’s strategy of financial success.”
Panel moderator Robert M. Keith, executive managing director and head of the Global Client Group at AllianceBernstein, noted that the audience seemed skeptical that investors want more than high returns. Though panelists agreed that performance is extremely important to investors, they insisted that their clients are thinking about “more profound” questions and want to have dialogue about outcomes. Bernard J. Clark, executive vice president of advisor services at Charles Schwab Investment Management Inc., confirmed this view of client concerns: “The next generation is worried, and peace of mind is critically important,” he said.
A Focus on Core Principles
“How Is Investment Management Changing to Meet Shareholder Preferences?”—moderated by John F. Casey, chairman of Casey, Quirk & Associates—also addressed investor needs and outcomes, notably the importance of focusing on clients’ objectives instead of on specific products.
Colin Moore, global chief investment officer of Columbia Management Investment Advisers, explained why one product or strategy doesn’t fit all, especially in terms of generating client-specific outcomes. “If you have a standardized way of producing a product, that’s not an outcome,” he said. An outcome involves customizing products and strategies for client needs and objectives, he stressed.
Tim Buckley, chief investment officer of Vanguard, responded to a question about how product development is evolving, saying that a focus on core principles is best when thinking about products. “We look for something that is enduring, that isn’t a fad. We look for something that belongs in a long-term portfolio. We look for things that are well-diversified.”
A concern about product proliferation was shared by everyone. “Sometimes we [can] have too many strategies, which have to be pared back,” stated William Yun, executive vice president of alternative strategies at Franklin Templeton Investments. “It’s getting harder and harder for investors to understand the plethora of options available to them. I think the industry needs to narrow it down and have it make more sense to investors, and help them understand.”
A key component to consider when thinking of a new product is not only how it applies to the distribution system in the United States, said Moore, but also in Asia and Europe: “Can you use the same product in each area? Because the needs may be different.”
In a discussion about international operations, Yun described how his firm serves clients in a local framework with global infrastructure around it. “Think global, act local,” he explained. “We want clients in each city, region, town, to think of us as a local asset manager, not a global one. We want to bring in local teams to compete with other local fund managers.”
Buckley reminded the audience that “it’s important to make sure that you have a global team and consistency across that team. Don’t assume that what works in the U.S. will work globally. I try to take a global viewpoint as to what should work or not work, instead of a U.S. one.”
The challenges of operating on an international scale was a theme that ran throughout GMM, particularly in the panel, “The World View: What It Takes to Lead a Global Investment Manager,” moderated by George Gatch, CEO of global funds management at JP Morgan Asset Management. Leaders of international fund firms agreed that though the industry is benefiting from globalization, regional differences can present challenges.
Gregory E. Johnson, president and CEO of Franklin Resources Inc., described how tough it can be working within “home country” investment bias. “If you really want to be a local player, it’s a lot more than coming in with whatever specialty funds you have” and trying to capture investors in the market that are going outside of the home country, he said. “You really have to [put] boots on the ground.”
Another challenge for global fund managers involves the significant implications of aging populations worldwide. People around the globe are living longer, which is spurring countries to reexamine and reform their pension systems to meet long-term retirement savings challenges.
Johnson said that global asset managers have a unique opportunity as they shape the next generation of retirement plans. Martin Gilbert, CEO of Aberdeen Asset Management PLC, agreed. “We’re in a very unique position, being able to look at various systems around the world.” Johnson noted that this opportunity comes with a need for flexibility and sensitivity to local needs. Managers “can’t come in and say it all has to be active management,” he explained. “We are in a position to be advocates of change.”
Peng Wah Choy, CEO of Harvest Global Investments Limited, said that savings and retirement needs are not fully being satisfied in the Asian region. “We as an industry can create products to deliver investment outcomes, to help [investors] not leave so much money under the mattress,” he said. Fund managers can “give them comfort” that their money is “well managed and give them the outcomes they’re looking for.”
Johnson wrapped up the panel by stressing the value added by fund managers. It’s important to focus on fund cost, he explained, but said that should “be balanced with the advice component that is so very important for the success of retirement plans.”
Find more meeting highlights at the GMM website.
Miriam Bridges is editorial director at ICI.
Adapting to the Rapidly Evolving Cybersecurity Environment
By Todd Bernhardt
June 6, 2014
Because external hackers typically try to “look like an insider” when attempting to penetrate IT systems, “every cyberattack is likely an ‘internal’ attack,” according to Mark Clancy, managing director of technology risk management at the Depository Trust & Clearing Corporation (DTCC).
Now Off the Hill, Senator Snowe Still Brimming with Ideas, Advice
By Rob Elson
June 5, 2014
U.S. policy is ripe for reform in a number of key areas, but changes to ease the polarized political environment must come first, former U.S. senator Olympia Snowe (R-ME) told the crowd during the final session of ICI’s 56th annual General Membership Meeting (GMM), held May 20–22 in Washington, DC.
Industry Leaders Reflect on Serving Investors in an Evolving World
By Tina Kilroy
June 4, 2014
Speaking on the Leadership Panel held Wednesday, May 21, at ICI’s General Membership Meeting (GMM), fund industry leaders agreed that challenges as well as opportunities abound for their businesses in today’s complex world.
SEC Chair White Stresses Need for FSOC to Consult Sources for Necessary Expertise
By Rachel McTague
May 22, 2014
Securities and Exchange Commission (SEC) Chair Mary Jo White today called for the U.S. Financial Stability Oversight Council (FSOC) to use outside expertise to the degree necessary in its process of designating systemically important financial institutions (SIFIs). She asserted that it is “enormously important for FSOC, before it makes any decision of any kind, to make sure it has the necessary expertise on any of those issues.”
Headlining ICI’s GMM, Blair Talks of Tough Challenges, Vast Opportunities
By Rob Elson
May 21, 2014
Challenges abound in our increasingly global world, said Tony Blair, former prime minister of the United Kingdom. Yet our future could be brighter than ever, he insisted.
Blair’s stirring words came during a keynote speech at ICI’s 56th General Membership Meeting (GMM). After his opening remarks, Blair sat down with ICI Chairman Bill McNabb, Chairman and CEO of The Vanguard Group, to discuss a range of issues. The session headlined the three-day meeting, which began yesterday in Washington, DC.
GMM Policy Forum: BlackRock’s Larry Fink Speaks with ICI’s Paul Stevens
By Todd Bernhardt
May 21, 2014
The fund industry needs to stop focusing on the moment and start focusing on outcomes when advising investors on their resources, said Laurence D. Fink, chairman and CEO of BlackRock, at ICI’s Annual Policy Forum, part of the Institute’s 56th General Membership Meeting (GMM).
Navigating a Changed—and Global—Industry
By Jeanne C. Arnold
May 23, 2013
Navigating the ever-changing landscape and increasingly global nature of the fund industry took center stage during several panels at ICI’s 55th General Member Meeting (GMM).
U.S. Could Quickly Solve Its Budgetary Problems, Say Former Senators
By Todd Bernhardt
May 20, 2013
The United States is tantalizingly close to solving its budgetary problems, according to former U.S. senators Kent Conrad (D-ND) and Judd Gregg (R-NH).
GMM Panelists Discuss Retirement Savings and Financial Education
By Miriam Bridges
May 17, 2013
Americans need greater access to savings vehicles and better financial education to help ensure that they use them effectively, fund industry experts told attendees at the 55th Annual General Membership Meeting.
GMM Panelists Share Tips on Strengthening Cybersecurity
By Andrew Gillies
May 7, 2013
Cybersecurity gained prominence as a topic of discussion at ICI’s General Membership Meeting (GMM), held last week in Washington, DC. “Hugely important,” said Mary John Miller, the Treasury Department’s under secretary for domestic finance, in her GMM remarks.
SEC Is Integrating Itself into the Global Financial System, Chairman White Tells ICI Conference
By Rachel McTague
May 3, 2013
In a speech at ICI’s General Membership Meeting today, Securities and Exchange Commission (SEC) Chairman Mary Jo White highlighted the myriad ways that the SEC, in light of an increasingly global regulatory environment, pursues its mission to protect U.S. investors and markets and to promote capital formation.
Luncheon with Keynote Speaker: Lloyd C. Blankfein in Conversation with Paul Schott Stevens
By Andrew T. Gillies
May 2, 2013
If Lloyd Blankfein were in charge of the U.S. economy, what would he be most afraid of?
GMM Policy Forum
By Andrew T. Gillies
May 1, 2013
Addressing America’s fiscal challenges will require both raising revenue and cutting government spending, said Mary John Miller, the U.S. Treasury Department’s Under Secretary for Domestic Finance, at the Policy Forum of ICI’s 55th annual General Membership Meeting (GMM).