How best to communicate to institutional investors - UK

British institutional investors are demanding less jargon and less sales. They prefer knowledge sharing and education

Institutional investors across Europe would like asset managers' communications to be clearer and more transparent, but British institutions in particular prefer less jargon and a bigger focus on education, a survey by Fundamental Research found.

European institutions are in agreement that asset managers should be transparent and clear in their communication and provide information that is targeted, relevant and concise. However, British respondents in particular bemoaned the use of too much jargon and communications that are too sales-focused rather than educational. It is therefore perhaps unsurprising that being knowledgeable is the attribute that is most strongly associated with asset managers who are considered to have standout communication.

In line with their European counterparts, British institutional investors would like to receive more information on investment trends and strategies (62%), market and economic updates (33%), different asset classes (33%) and ESG (33%).

Meeting liabilities a key concern

Between September 2019 and March 2020, Fundamental Research questioned institutional investors in the Netherlands, the UK, Switzerland, the US, Germany and France about their views on global trends, asset manager communication, manager selection, their media consumption habits, and their top asset manager brands.As a result of the increasing life expectancy coupled with an ongoing low interest rate environment, longevity is by far the most important trend for UK institutional investors. The low interest rates are seen as a massive challenge for the UK pension industry in particular and the outlook of most respondents is rather negative. Pension funds are therefore seeking investment returns that match their liability profile, with more than half of respondents planning an increase in liability driven investments.

Investment consultants have a strong position in the UK, with 90% of respondents using one, particularly in the pensions industry. Consultants are considered the most reliable information source in the UK, so influencing consultants and getting consultant ratings is essential for managers wanting to reach this audience. Indeed, more than half of respondents said they have a (very) high reliance on consultant ratings, the highest percentage across all markets surveyed. On the other hand, the use of fund ratings is very low compared to the other countries and to British discretionary portfolio managers/fund selectors, as more than half of British institutional investors do not use them.

Other findings of our UK Institutional Investor Research include:

• In line with the other countries surveyed, British institutions are planning a massive increase in sustainable investing.
• When it comes to asset manager selection, respondents seem to focus on quantitative factors (i.e. performance/track record and fees) when discarding unsuitable managers from the long list, while qualitative criteria (i.e. investment team and strategy/investment process) are more important when selecting the winning manager from the short list.
• LinkedIn is by far the most widely used social media platform by UK institutional investors, who tend to access social media less often on mobile than discretionary portfolio managers/fund selectors.