Traditional investment and pensions models are under threat as a result of the recent financial crisis, says Penrose Financial.

In a survey run by the PR consultancy firm, The Future of the Investment Industry, a third of 150 senior industry figures believe that the days of traditional investment consultants are numbered, with almost 60 per cent agreeing that fiduciary management will be a huge threat.

Multi-strategy investment managers, who offer both alternative and traditional investments, will prove the most successful business model over time, and only one in eight respondents believe traditional long only managers will have as promising a future.

Seventy-four per cent expect to see pension funds increasing their exposure to hedge funds and/or other asset classes, and one in eight said emerging market equities will be one of the best asset classes to invest in over the next three years.

Over 90 per cent of respondents expect defined benefit (DB) schemes to continue to close to existing members due to cost pressures, and more than eight in ten said they see the Personal Accounts system as likely to fail in providing adequate incomes for retirement, as employers will choose to level down their existing pension provision to the statutory minimum.

More broadly, 41 per cent of respondents said they believe UCITS IV legislation will take more than two years to come into practice, and will have less of an impact than UCITS III. Exchange traded funds (ETFs) are expected by 45 per cent to rival mainstream funds in the near future, and 68 per cent see the era of the 'star fund manager' surviving.

"This survey paints a picture of an industry in flux, with traditional models under increasing pressure from market upheaval, regulatory change and innovative new approaches," commented Sally Todd, managing partner of Penrose Financial.

She added that although fiduciary management looks like it will succeed in the UJK, practitioners in this space will still have to prove their worth.

"At a time of increasing consolidation, some investment managers face a tough fight for survival, with multi-strategy firms most likely to succeed. The diversified portfolio mix will remain popular, with global and emerging market equities, investment grade bonds and hedge funds expected to be attractive investments over the next three years. In such a climate of rapid change, innovation and flexibility will be required of all market participants, form pension fund trustees to consultants to investment managers."

The survey is available here.

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