Real opportunity for asset management sector to redefine its role

The funds and asset management industry plays an essential role in enabling individuals meet their long-term financial goals, he said. Right now, the sector has a real opportunity to redefine its role and purpose in Ireland.

While it must take steps that protect customers, meet broader responsibilities and remain compliant with regulation, it must also recognise that it has the power to drive meaningful change that can make a difference. By modernising operations, fostering closer digitally-enabled customer relationships and developing purpose-driven strategies with the power to drive real change.

Lardner said that at the same time, the aggregated capital which it puts to work on behalf of its clients is making a fundamental difference in economies, industries and communities all around the world.

“In more recent times asset managers have also been turned to as a partner with governments, policy makers and regulators to effect broader societal change, especially around issues like climate change. Finally, over 17,000 people all over the Ireland are directly employed by the industry, contributing over €900m annually directly to the Exchequer.”

The industry in Ireland brings together investing expertise which resides in over 1,000 asset managers around the globe and applies it to the needs of millions of investors (from individuals to pension funds, insurance companies and even governments), said Lardner.

“All this sits within a highly regulated environment locally, based on EU law and enabled by our membership of the single market which has made our Ireland’s industry one of the most successful world-wide.

“Our vision, that Ireland will be the premier location to enable and support global investing through its reputation for trust, capability and innovation, is one we pursue with the same vigour and sense of purpose as we did when the industry started here almost 40 years ago,” he said.

The collective power of well managed investments is making a real difference as people age. It also assists governments who are actively seeking to mobilise and harness the power of private savings to support their longer-term objectives and provide much needed funding.

In a complex and constantly changing world, our industry is embracing innovation, new technologies and ways of delivering investment solutions for the current and future generations, said Lardner.

“With increasing longevity and the changing nature of the social contract individuals will have even greater need of the services and solutions provided by asset managers.”

Irish Funds, the representative body for and voice of the funds and asset management industry in Ireland. Lardner said that as a highly successful element of Ireland’s portfolio of knowledge-based services we look forward to increasing and broadening our economic contribution.

“We also need to ensure, along with our stakeholders, that what has been built here, which is the envy of many other countries, is preserved, evolves and grows. We will need twenty first century capabilities to meet the opportunities and challenges we collectively face.

“Our work is only starting,” he said.

Current areas of focus include volatility in the markets due to the war in Ukraine; the impact of increasing interest rates and inflation; an increasingly complex regulatory environment rising costs with consequent pressure on fees and, continued focus on funds activities by macroprudential authorities such as the Financial Stability Board, said director of funds, IOB, Martina Kelly.

“A constant theme in the industry is also keeping pace with the ongoing changes from technological innovation and changing investor preferences around alternative investment funds and sustainable finance. Taken together they have a significant impact on the delivery of products and services to investors.

“At IOB, our role is to support the industry as it navigates these trends with relevant and targeted education and learning spanning many delivery options, educate, enable and empower a community of financial services professionals.”

Kelly said that regulatory requirements in particular, all asset managers must have a strong focus on sustainable finance, both in managing sustainability related risks and in developing products to meet investor preferences.

“This starts with the need for a far greater understanding of sustainability and sustainable finance before moving on to the technical underpinning of the regulatory agenda. Moving through this also requires addressing the well-known challenges in relation to data availability and data quality.”

Asset managers are closely following developments in the digital assets sector, including crypto assets/currencies but for now digital asset strategies are not mainstream. Kelly said that increased regulation of the digital assets sector including regulation of trading and the development of sound safe-keeping practices for digital assets will help this sector to develop over time.

“Asset managers and fund service providers are however very focused on digitalisation and all the opportunities that this provides to them and to their clients. In the case of asset managers advances in data analytics and the rise in ESG related reporting is enabling them offer investors more meaningful insights on their investments.”

For asset managers, continuous professional development is vital to stay ahead of changes in regulation and client expectations, from technology advancements and in industry best practices, said Kelly.

“As the sector’s education partner, we have adapted and evolved to support the education and professional development needs of a changing sector. This year we are celebrating the 125th anniversary of IOB. In the first 50 years of the organisation, IOB introduced two education programmes.”

“This contrasts with the last five years, when we have introduced over 25 new education programmes and short courses. This indicates the pace of change in the industry.”

At IOB, most education programmes are delivered online. Kelly said that one of the great benefits of online learning is that it makes our programmes accessible to those living across Ireland and overseas.

“This is especially important when it comes to our programmes for funds professionals, with the continued regionalisation and growth of the sector across the country and servicing of Irish funds in overseas locations,” she said.