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Broken Trust in the Asset Management Industry

by Steven

Tyler Mathisen asked the Face the Membership panel at NICSA's Annual conference if the asset management industry has broken the trust of their investors.

The panelists did not feel that their firms had done anything to break investors' trust. For firms that did break investor trust, the panelists felt that they now need to clearly communicate their firm's investment philosophy and process, and focus on what they are good at.

That many firms did not break a trust is technically true. Fund companies always say: "past performance is no indication of future returns." The problem, however, is that investors were not prepared to lose 40% (or more) of their portfolio. Investors feel that an implicit trust was broken. The industry now has to gain back trust if it wants investors to reinvest in their funds.