UK asset managers have listed numerous concerns surrounding the UK's upcoming split from the European Union including staffing, delegation and passporting issues, as revealed in the Investment Association's first annual Asset Management Survey since the EU referendum in 2016.
In the survey, which collated responses from 74 member firms managing £5.9trn of UK assets, respondents said European staff in the UK asset management industry are concerned about their career prospects over the next two years as Brexit negotiations loom, while asset managers also aired concerns that when recruiting new staff there is potential for Brexit to "reduce the attractiveness of the UK to European nationals".
In addition, some individuals have felt "less welcome in the UK than would have been the case before the vote".
The future of the UK's position as the largest asset management centre in Europe and second globally was also in jeopardy, with the trade body finding some European clients had said they had chose to contract with managers in other jurisdictions rather than face uncertainty surrounding contracting with a UK-based entity.
At the end of 2016, some £900bn of assets were managed on behalf of fund ranges in Dublin and Luxembourg, which delegated their fund management activity to the UK, but the IA has warned "retaining this delegation arrangement will be key to maintaining the UK's position in a post-Brexit world".
It said IA members generally felt in the event that delegation of front line portfolio management should be significantly impacted by future EU regulatory changes, it could "clearly have a major impact on the activity of the asset management industry in the UK".
Some respondents said "a world where we could not delegate asset management activity is deeply worrying" and "safeguarding delegation has to be the government's key priority for the asset management industry during Brexit negotiations".
Meanwhile, a potential challenge remains around UK money in overseas funds. Some £105bn of UK investors' money is at risk should the ability to passport funds be lost as part of Brexit negotiations, according to the IA.
Though this is still a relatively small part of the UK retail market, the trade body said it is "far from insignificant and is currently growing".
Pressure from other forces
In addition to changes to be made in line with Brexit, the industry also faces significant pressure from regulatory change to be imposed by European legislation such as MiFID II and PRIIPS, as well as from UK regulators such as the Financial Conduct Authority (FCA).
An emerging theme the IA found was around the idea of enhanced communication, which has been put under the spotlight following the FCA's Asset Management Market Study released earlier this year.
Transparency and governance are paramount to the body's ‘remedies' for change to the industry, with a key priority being to ensure value is about the service delivered for a given price and not just about the price.
Although the IA the industry is supportive of the overall direction of travel within the Study towards improved transparency there are concerns surrounding communicating the benefits of asset management to the end client: "Investment in asset managers' products and services is of an intangible nature and has uncertain pay-offs, particularly as products are designed to be held for a number of years before the full impact can be seen.
"This has created a considerable hurdle to communicating the benefits of investment to individuals."
Yellen hopes unwinding will be like 'watching paint dry'
Sold property business
New CEO David Barron's first
Promises "proportionality" for firms that have taken "sufficient steps"
The sectors that have weathered the storm over the years