Britain’s trade body for investment management is set to merge with the investment arm of the insurance industry association.The hope is that this will allow them to more effectively lobby on the issues that affect asset managers. The investment industry hopes that they will be given a stronger voice due to this tie-in. They also hope for help to deal with regulators and politicians who have been exerting pressure over fees and performance, along with the company boards.
The merger will take place between the Investment Management Association (IMA) and the Association of British Insurers (ABI) investment affairs division. It will provide advice on how to exercise votes at company meetings to fund managers. These two bodies represent funds controlling billions of pounds of assets. They hold a large proportion of shares in Britain’s FTSE 100 index. That being said, as representatives of British investors, their influence has begun to fall in recent years. The shareholder base of UK companies has become much more internationally diverse recently.
At the moment, there is a problem with the current mechanism for collective engagement and conventional engagement made by individual investors. It has not been able to have the desired effect, the system falling flat for the individual. This is particularly true of very large companies who have an incredibly diversified shareholder base. This new merged organisation will be able to offer better and deeper assistance to asset managers.
It will also compliment the work done by the Investor Forum, which helps represent the voice of the incredibly diverse amount of overseas investors. They will be working with companies in the hope of fostering a culture of longer-term strategic thinking. This is in line with a report recently released, that criticised the short-term standard expectation within the financial markets.
Investors hope that by engaging collectively with company boards, rather than individually, they will be able to deliver long-term benefits. They hope that this will be the first step towards the industry answering more to the shareholders, while also encouraging them to take a longer-term view around planning and pay in the market.
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