Another great piece from the State Street Center for Applied Research, notable both for the depth of primary data, and the willingness to break convention in suggesting complex and long-term possible solutions. Congratulations to Mirtha Kastrapeli, Marie Chandoha, and all those that worked on this great industry overview. Their call to action is more complex because of the “soft” nature of the issues and the “human-centric” quality of the proposed solutions to challenges that are normally relegated to externalities in routine financial analysis.
“Only 25% of the investment professionals who noted lack of trust among clients as a challenge believe the industry is working to regain trust… [Only] 31% of investment professionals concerned with value delivered versus fees paid believe the industry is working to address this issue — even though market forces are already tackling this problem.
As one CIO noted, “The easier things are to do — the lower hanging the fruit — the more likely it is that we’ve done them, which gives us a false sense of accomplishment. More structural change is not happening.”
“There is consensus about the industry’s biggest challenges, yet concerned investment professionals agree that the industry is not actively addressing them. Industry insiders and outsiders alike appear to be growing increasingly frustrated because they believe current efforts to solve some of the investment industry’s most persistent problems are simply not enough.”
“Being a fiduciary is centered on putting your clients’ and beneficiaries’ interests
first. Embracing transformation toward a human-centric purpose will take letting go
of incentive structures that focus on specific performance metrics over narrow time frames, in favor of a more long-term vision for your organization and its role in society. Committing to the unified stated purpose of the financial system — to support economic prosperity by the efficient allocation of capital and to help clients achieve their financial objectives — will strengthen a financial institution and allow it to focus on higher aims.”