Lower fees on investment products will emerge as a key trend following the market crisis as financial firms seek to adapt in a new environment, according to ING Investment Management Asia Pacific chief executive Alan Harden.
"Not one financial services firm will go into this crisis and come out of it the same. They will all change at one point," Harden told the Australian Superannuation Funds Association lunch in Sydney yesterday.
As part of these changes, Harden said products will become simple and less risky.
"Investment products will have to have higher transparency and this will mean lower fees," he said.
Lower product fees will also have implications for the way products are distributed, according to Harden.
"Lower fees on products will lead to interesting issues for distribution and the role of disintermediation will need to be debated. Regulation will most likely focus on this issue too," he said.
The way investment returns are calculated will also change, according to Harden.
"An interesting outcome from the crisis will be a focus on risk-reward returns and not just reward," he said.
He said investment performance will be measured on the basis of risk rather than just market return.
"Managers have traditionally chased performance in order to get up the league tables and attract more money. Peer reviews will need to be done on a risk-adjusted basis," he said.
