UK – The head of the UK's Investment Management Association (IMA) has insisted that the industry must have "excellent" fiduciary standards to guarantee its services are perfectly aligned with client needs.

In a seeming endorsement of the Kay Review's findings, which called for a greater emphasis on the fiduciary duty of all members involved in an investment chain, IMA chief executive Daniel Godfrey argued that a focus on fiduciary responsibility would undoubtedly lead to lower asset management fees in the long run.

Speaking at a conference organised by the University of Warwick and Financial Services Knowledge Transfer Network, Godfrey accepted that many in the industry failed to acknowledge that an individual was at the end of the services it provided to pension funds, insurance companies and other institutional clients.

"What we have to do as asset managers, and a responsibility we have, is to look through that transmission chain and say, yes, our client may be a pension fund, our client may be a life company, but at the end of that chain is a real person that is relying on us to do something that is very, very important to them," he said.

Godfrey, who has been the IMA's head since the end of 2012, was speaking after fellow panellist David Norman of TCF Investment alleged that the asset management industry was "negligent, incompetent and systematically corrupt" and outlined a number of examples where he believed fees had not been disclosed fairly – to the detriment of retail investors.

However, Godfrey said that if the industry recognised its importance to "real people", this could be used as a starting point to address a number of concerns.

"The first one – and they are sequenced to a certain extent – is to say that if we are going to fulfil this purpose for real people, whether they are direct customers or at the end of some transmission chain, is to have excellent fiduciary standards and operating practice," he said.

"I don't mean fiduciary standards in some legal sense. I'm thinking about fiduciary standards more as a moral code, a way of behaving, a form of conduct – so that you understand what you are supposed to do in any given circumstance, by being aligned to an understanding of what your purpose is."

He said with such an approach came a recognition that improvement was always possible, as changes were needed to stay ahead of rivals.

"If you base your conduct around trying to always improve your standards of fiduciary excellence, you will look for ways in which you can bear down on costs for your clients – that you can bring costs down, and have a very big impact on long-term outcomes," he said.

Godfrey argued that, as costs were addressed and made clear and transparent, it would allow his industry to enter a "trusted partnership" with financial regulators, politicians and consumer groups.  

This would create an optimal environment for the industry, "a regulatory and tax regime that helps asset managers do a great job for their customers".

He said costs could be expressed both in sterling and percentages, noting that one potential approach would be to disclose by how much an investor's unit has appreciated in value, measured in pounds, and then publish the fee cost that went towards bringing about this increase.

"That's something we want to look at going forward," he said, "to see if there is a way through this quagmire of suspicion and smoke to try to get something that helps people understand what's happened in their fund and what the costs have been."

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