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SEC to focus on asset management competition

Dalia Blass

The Securities and Exchange Commission will begin investigating whether consolidation and other asset management industry trends pose a threat to investors by crowding out competition, said Dalia Blass, director of the investment management division.

"I am concerned about what it will mean for investors — particularly Main Street investors — if the variety and choice offered by small and midsized asset managers becomes lost in a wave of consolidation and fee compression," Ms. Blass said Monday at an Investment Company Institute conference in San Diego. She stressed that the first step before considering policy changes is to "have a clear understanding of costs and benefits and pay careful attention to unintended consequences."

To that end, the division is planning a new outreach initiative to learn more about regulatory barriers facing small and midsized fund sponsors, and might form an asset management advisory committee.

While investors might be benefiting from more competition and lower fees, "the same trend may mean that investors end up with less access to small and midsize advisers, who do not have the scale of large advisers," Ms. Blass said, "while reliance on service providers may reduce the diversity of perspectives in the market and create shared vulnerabilities."

The investment management division also plans to issue this year recommended changes to marketing and solicitation rules for investment advisers and to engage with international organizations that focus on asset management policy.

Another priority will be exploring ways to update current guidance on proxy advisers to clarify how investment advisers should fulfill their fiduciary duties. "I anticipate developments on this project around the end of proxy season this year," Ms. Blass said.