Industry still isn’t prepared for the AIFMD despite expected impact on profitability, according to PwC poll
• Only 2% of the asset management industry has a plan in place for responding to the AIFMD
• 41% of the asset management industry think fees will increase and over half expect profitability to reduce
The UK asset management industry needs to considerably ramp up its plans for responding to the Alternative Investment Fund Managers Directive (AIFMD) as only 2% of the industry currently has a plan in place that is being implemented.
According to a recent poll by PwC of 186 senior industry figures from the hedge fund, private equity and real estate sectors, only 16% have set up a dedicated working group to consider the implications and formulate how they should respond.
The poll also revealed that 41% of respondents expect the AIFMD to result in increased management fees and over half of asset managers expect their profitability to be hit by the cost implications of the directive.
James Greig, partner, PwC Legal, said:
“Now that the directive is here, asset managers and service providers are going to have to step up their responses significantly. The transition from education to analysis and adaption can be a long and complicated pathway and firms are leaving themselves an awful lot to address in an even shorter timeframe than expected.
“The lack of concrete plans is even more surprising given the high percentage of managers who think the AIFMD will result in increased management fees and a reduction in their profitability.”
Amanda Rowland, partner, PwC, added:
“The asset management industry is already facing a period of fee pressure against the backdrop of the financial crisis and fund liquidity issues. Firms need to start addressing seriously how their businesses will look post implementation and how much of this additional cost will be passed on to investors.”
The poll also revealed an overall lack of appetite to bring funds onshore, as only 13% of the respondents with offshore funds said they are planning to bring them onshore as a result of the AIFMD. Hedge funds had the most appetite, with a quarter intending to onshore. This is compared with only 6% of the private equity industry and 8% of the real estate industry.
• Only 2% of the asset management industry has a plan in place for responding to the AIFMD
• 41% of the asset management industry think fees will increase and over half expect profitability to reduce
The UK asset management industry needs to considerably ramp up its plans for responding to the Alternative Investment Fund Managers Directive (AIFMD) as only 2% of the industry currently has a plan in place that is being implemented.
According to a recent poll by PwC of 186 senior industry figures from the hedge fund, private equity and real estate sectors, only 16% have set up a dedicated working group to consider the implications and formulate how they should respond.
The poll also revealed that 41% of respondents expect the AIFMD to result in increased management fees and over half of asset managers expect their profitability to be hit by the cost implications of the directive.
James Greig, partner, PwC Legal, said:
“Now that the directive is here, asset managers and service providers are going to have to step up their responses significantly. The transition from education to analysis and adaption can be a long and complicated pathway and firms are leaving themselves an awful lot to address in an even shorter timeframe than expected.
“The lack of concrete plans is even more surprising given the high percentage of managers who think the AIFMD will result in increased management fees and a reduction in their profitability.”
Amanda Rowland, partner, PwC, added:
“The asset management industry is already facing a period of fee pressure against the backdrop of the financial crisis and fund liquidity issues. Firms need to start addressing seriously how their businesses will look post implementation and how much of this additional cost will be passed on to investors.”
The poll also revealed an overall lack of appetite to bring funds onshore, as only 13% of the respondents with offshore funds said they are planning to bring them onshore as a result of the AIFMD. Hedge funds had the most appetite, with a quarter intending to onshore. This is compared with only 6% of the private equity industry and 8% of the real estate industry.
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