Posts Tagged “EFAMA”

EFAMA leads the asset management industry in a call for pan-European long-term savings product in closed door session at FundForum International 2010

July 2, 2020

Jean Baptiste de Franssu, President, EFAMA speaking at FundForum International 2010

Eddy Wymeersch, Chairman, CESR at FundForum International 2010

In an intense and wide ranging meeting which included those representing the regulatory view, the investment industry and investor representatives today, five key issues were debated in the new closed door session at FundForum International 2010.

The panel, moderated by Tom Brown, Partner at KPMG, consisted of Eddy Wymeersch, Chairman of CESR; Jean-Baptiste de Franssu, President of EFAMA; Consumer advocates Mick McAteer and Guillaume Prache; Marc Garvin, Chairman International Business, Treasury and Securities Services of JPMorgan as well as the members of the EFAMA President Advisory Council: Juan Alcaraz, CEO of Allfunds Bank and Santander Asset Management; Dominique Carrel-Billiard, CEO of AXA Investment Managers; Alain Dromer, CEO of Aviva Investors; Roderick Munsters, CEO of ROBECO, Martin Gilbert, CEO of Aberdeen Asset Management; Allan Polack, CEO of Nordea Savings and Asset Management; Peter De Proft, Director General of EFAMA and Claude Kremer, Vice-President of EFAMA.

First up on the agenda was the issue of long term savings and distribution in particular on the back of the report entitled Revisiting the landscape of European long-terms savings published by EFAMA at the beginning of the year.

The attendees were supportive of creating a pan-European long-term savings product which will meet the needs of the ageing population of Europe, one of the greatest challenges facing Europe today. It is the European asset management industry’s aim to provide a solution to this problem. European consumers need a product that is simple, cost effective and transparent to encourage long term savings which the investment management industry can provide. Effective distribution and advice on savings products across Europe are major challenges, from a regulatory, supervisory and commercial standpoint.

The second issue under debate was shareholder engagement, both in terms of activism and stewardship. Asset managers need to go beyond a short termist approach and engage in a long term dialogue with the companies in which they invest. The group acknowledged that it is essential to find the right balance between their fiduciary duties to their investors and their role as investors in a company, and to find proper mechanisms for effective engagement.

The third item on the agenda was the evolving supervisory framework in the EU and how it will impact on the asset management industry. ESMA, one of the three new authorities will be an independent body not comparable to the SEC, operating as a co-ordinating rather than guiding force. The aim is that will ultimately lead to a more harmonised approach in regulation across Europe.

Turning to the issue of new regulation for depositaries, the industry representatives said that the existing global custody model has served the industry and investors well but there is a legitimate argument for strengthening investor protection. The industry representatives on the panel felt that new regulation should not lead to an overhaul of a well established body of practices.

The session concluded with a look at the growing fund group of ETFs. Panellists discussed how the characteristics of these funds have an impact on existing distribution models.

Consumer Education: Whose job is it and how to do it?

June 23, 2020

An Article by Todd Ruppert, T. Rowe Price.

Todd Ruppert will be speaking at Fund Forum International 2010, 29 June - 1st July in Monaco

Studies across Europe and globally confirm that financial literacy is a growing priority. Yet surveys and academic research show that while the need for financial education has never been greater, there is much work to be done.

In addition to consumers, the investment industry also stands to benefit from a more financially savvy public – and should embrace financial literacy now more than ever.  Clients with greater financial knowledge will be better equipped to make investment decisions appropriate for their goals and circumstances. As a result, they are more likely to be satisfied, leading to stronger, long-term relationships.

Of course, we cannot expect to educate everyone to be their own Chief Investment Officer. Many investors simply do not have the time, interest or wherewithal to make complex financial decision or keep up with managing their investments.

Innovative solutions such as target date funds can, in part, address this piece of the puzzle.  So, too, can services which automatically enroll defined contribution plan participants and increase their savings rates over time, and which are growing in popularity in the US.  These approaches remove some of the complexity from a client’s decision making and – using findings from behavioral finance research – put investor inertia to use for their own benefit.

Offering new products and services in a vacuum, however, is not sufficient, as investors still need to have a basic level of understanding of those products.  Combining automation with investor education will be more effective, although even that has its limitations.  To provide a foundation, we first need to educate the broader consumer market about basic financial planning.

Although financial education can be introduced at many ages, educators, researchers, and parents increasingly advocate starting financial education as early as age eight.  The need is clearly there. In a Junior Achievement-Young Enterprise Europe survey this past March of more than 1,200 Europeans across 19 countries, 78% said that young peoples’ knowledge of their own personal finances is ‘little’ at best.

Similarly, a recent T. Rowe Price Parents, Kids & Money Survey revealed that while 80 percent of parents says they are having conversations with their children about money at least once every few weeks, fewer than half of their children use the lessons on a regular basis, and nearly 60 percent quickly forget the lessons or need periodic reminding. The survey also showed that on average, parents grade themselves a “B-” when it comes to their own overall understanding of basic saving and investing principles.

Facilitating family financial education is one reason T. Rowe Price collaborated with Walt Disney Parks & Resorts Online and Walt Disney Imagineering and to create The Great Piggy Bank AdventureSM, an online game and theme park experience which offers lessons on goal-setting, saving vs. spending, inflation, and diversification.

In Europe, EFAMA recently released a report regarding the long-term savings challenge.  Their call to action for the asset management industry included promoting financial literacy and competence of individual investors.  To ensure the future and strength of our industry, we must embrace this effort.  It’s no longer a question of ‘Should we do financial education?’ but rather, ‘How do we do it?’

About Todd Ruppert, T. Rowe Price Global Investment Services

T. Rowe Price Global Investment Services Limited, is responsible for T. Rowe Price’s business outside of the United States, ex-Japan, and T. Rowe Price Global Asset Management Ltd, which is responsible for the firm’s business in Japan .  Mr Ruppert cam to T. Rowe Price 18 years ago having previously worked for Citicorp and an engineering firm that designed physiological dynamic motion simulator for pilot training.  Upon coming to T. Rowe Price in 1985, he focused solely on business within the US.  He was first responsible for developing T. Rowe Price’s business of managing investments for banks, insurance companies and other third party distributors.

This document has been issued by T. Rowe Price Global investment Services Limited, 60 Queen Victoria Street, London EC4N 4TZ, which is regulated by the UK FSA.  This material is not intended for use by Retail Clients, as defined by the UK FSA.

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