High levels of profitability, rising markets that boost growth, and the prospect of increased demand as governments push individuals to take greater responsibility for their retirement savings, all point to the attractiveness of running an asset management business. And each of these is accentuated by the recurring revenues that mutual funds provide. So despite fund holding periods averaging just over three years, which might seem relatively short compared to changing home every 14 years, or changing car every 8 years, revenues are generated on fund assets every single day (IA 2021; Gibson 2021; SMMT 2021; Gillies 2017). And this holding period does not reflect that aggregate net inflows to mutual funds typically rise year-on-year, and certainly do so over any given three-year period. No wonder Bernie Cornfeld proclaimed, “If you want to make money, don't horse around with steel or light globes. Work directly with money.”

But the management of other people's money brings with it potential conflicts of interest that need to be managed when growing a business while staying aligned to the purpose of fund management. The main purpose of fund management is to grow clients’ wealth over the long term by prudently investing in companies and other assets. The main vehicle for doing this is the mutual fund, where clients’ assets are shared and the manager is obliged to act in their best interests. Inherent in this is a fiduciary duty that goes beyond managing the fund in the way set down in legal documents. While the exact nature of this duty remains contested in Europe, pressure is increasing from regulators for firms to justify their charges and demonstrate that consumers’ interests are at the centre of their businesses. Firms have so far largely resisted this pressure as it has the potential to threaten their profitability.

The shock of some in the funds industry to regulators’ efforts both to make firms put client interests first, and to define how far-reaching these interests might be, suggests that many asset managers struggle with groupthink in some areas of their business. In other words, they struggle to think beyond what is accepted industry practice (asking one of the highly paid mega consultancies to repackage existing thinking about how to succeed does not really count). Groupthink can even become a subconscious part of a company’s culture – “this is the way we do things”.