FRANCE - Ratings agency Fitch has today warned French asset managers they are out of touch and need to regain investors' confidence by offering products which match their needs.
The rating agencies claimed money managers should grow its asset base in future through a better alignment of investment products and services with investors' needs, namely in the areas of cash management, absolute return and long-term saving investments solutions.
In an overview of the French asset management industry, entitled French Asset Management Industry - Dynamics and Challenges, the agency reported in the absence of a market standard, these investment products are being challenged and should be "significantly reviewed".
"The current environment is also placing significant pressure on independent asset managers, a large number of the domestic investment firms, who are having to prove their financial resilience while maintaining the quality of investment resources and processes without the backing of a larger institution," commented Fitch.
The firm suggested French asset managers need to introduce fiscal inducement measures, while simultaneously supporting the development of long-term orientated investments.
Charlotte Quiniou, director in Fritch's und and asset manager rating group in Paris, told IPE the French industry needs more inducement to encourage retirement savings: "More will be needed for long-term saving products to really grow and be a success in the French market."
The incentive to join a private complementary pension scheme is currently low because it is limited to annuity payments, while there is also no obligation to join a corporate pension scheme, said Quiniou.
Moreover, the regulation applied to pension funds and onther institutional investors still tends to be less advanced than what is authorised on the product side, the firm claimed.
"The challenge is to direct savings towards investment solutions that better match investors' long-term needs, such as lifecycle and lifestyle products, which offer a systematic adjustment of asset allocation, or risk-constrained multi-asset products, as opposed to products referenced to particular market indices", commented Nicolas Beneton, analyst in the Paris group.
The French asset management industry had total assets of around €2.5trn at the beginning of this year, but has so far left little room for non-domestic asset managers.
Most of these assets are concentrated under the management of banks and insurance companies' affiliates which benefit from their parent's captive distribution networks.
Innovative independent asset management firms have also developed since the 1990s and are starting to expand internationally, but remain relatively small in terms of AUM compared to the larger players, explained the report.
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