For Immediate Release: Thursday 25 May 2000

KEY ISSUES FOR THE UK INVESTMENT FUNDS INDUSTRY

Speaking at the Annual Unit Trust and OEIC Conference today, Alan Ainsworth, Chairman of the Association of Unit Trusts and Investment Funds (AUTIF), drew the following conclusions from the issues he had identified for the industry;

• that in future, the industry will be divided between two kinds of brands: well-known retail brands dominating low cost mass markets; and specialist brands, with a significant share of the investment market.
• that customer loyalty will be harder than ever to maintain. Managers will be driven to an ever-increasing search for ways in which to add value to customer relationships and that the quality of these relationships is likely to fall.
• that one of the biggest challenges for those who believe that an independent advice sector is vital to maintaining a range of distribution channels, is in establishing and raising the quality of advice. It is the ‘quality’ of continuing advice, as opposed to the ‘product selection process’ at the front-end of the sale, that counts and adds value to the client relationship.
• that the industry needs to increase, not just maintain, service levels. If management companies cannot raise service standards constantly, today’s investors who demand higher standards will walk. Improved service will become a condition of business.
• that forcing down operating costs will become key. The most effective ways to bring down operating cost will be in making the service and administration functions more efficient.

He concluded by saying:

"In an age when large financial institutions are rapidly losing the trust of their customers – the banks and life sector are obvious examples – the effective regulation and strong reputation of the investment funds industry has put us in an enviable position. The biggest danger we face in responding to change, which we all do with relish, is maintaining this trust. I suggest this should be the overriding objective for every investment manager in today’s rapidly changing world."

A copy of the full speech is attached.

For further information please contact:

Alan Ainsworth, Chairman, AUTIF - +44 (0)20 7464 5739
Anne McMeehan, Director of Communications, AUTIF - +44 (0)20 7831 0898
Clare Arber, PR Manager, AUTIF - +44 (0)20 7831 0898