Newspaper article The Evening Standard (London, England)

Things to Come Could Change City; CITY COMMENT

Newspaper article The Evening Standard (London, England)

Things to Come Could Change City; CITY COMMENT

Article excerpt

Byline: Anthony Hilton

GIVEN that the City lives by its ability to innovate, it is astonishing how we are all prisoners of conventional wisdom and lazily assume that the business models of today will be the business models of the future.

Penny Shepherd, chief executive of the UK Sustainable Investment and Finance Association, gives a timely reminder when looking at the structures of the investment management industry in an article published this week that this ain't necessarily so.

It would be a historical error to assume that the practices of tomorrow would be much like those of today, she writes, the more so as today's investment management world is generally failing to meet clients' needs in terms of costs and volatility, even before we get to the vexed issue of returns.

She is obviously looking to a world where investors opt wherever possible for sustainable solutions, even if short term these don't always look to be the most profitable.

Currently, investment professionals won't make that choice, but individuals might with their own money. So the game may be changed, she suggests, because conventional, long-only institutional investors are shedding equity holdings and could be replaced in time by individuals making their own personal retirement provision. This might allow more varied investor voices to be heard and different interests, desires and needs voiced. Potentially it opens the door to new approaches to investment management.

A further thought is to use the internet to harness the wisdom of crowds -- like the ask the audience option on Who Wants To Be A Millionaire -- and use its ideas rather than those of paid, professional investment managers to run pooled funds.

It is counter intuitive, however, in that the whole point of the stock market is that it already embodies the wisdom of the crowd, but the point presumably is this internet crowd knows about opportunities which never get near the stock market and the conventionally structured world of investment analysis. …

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