2  Personal Financial Assets are defined as financial assets that are held by households, rather than companies or other institutions  3  The growth in AUM may be overstated by increased coverage of the source data over the period. 2  BIS central bankers’ speeches  From an end-investor perspective, both of these trends are understandable. Yet they also potentially carry risk implications, both for end-investors and for the financial system as a whole. For example, the shift towards illiquid assets heightens market risk for investors. And the move into passive and tracking strategies increases the potential for investor herding and correlated market movements (Bolognesi and Zuccher (2008)). Both potentially have implications for financial markets dynamics and systemic risk. Turning to the liabilities side of the balance sheet, here again some important trends are at play. Among the most important is the progressively greater share of investment risk being put back to end-investors, with commensurately less being borne by intermediaries and companies. One clear example is found in the pensions industry, with the structural shift away from Defined Benefit (DB) and towards Defined Contribution (DC) pensions. Here in the UK, the proportion of DB schemes offered to new members has fallen from 31% to 14% since 2008. Contributions to DC funds have been roughly twice as large as those to DB funds since the early part of the century.
Andrew G Haldane: The age of asset management? Speech by Mr Andrew G Haldane, Executive Director, Financial Stability, Bank of England, at the London Business School, London, 4 April 2014. *  *  *  I would like to thank Sarah Breeden, Antonia Brown, Edd Denbee, Ronnie Driver, Ronan Hodge, Tamara Li, Pippa Lowe, Varun Paul, Jonathan Rand, Martin Taylor, Lewis Webber and Jack Worlidge for their help and comments. It is a great pleasure to be speaking at this London Business School conference on asset management. Given the topic and my area of responsibility, I thought I would discuss the links between asset management and financial stability. This issue is not new. But it has become topical recently as the asset management industry has grown and changed shape. Partly in response, regulators globally have begun to explore the risks to the financial system that might be posed by non-banks of various stripes, including asset managers. I want to discuss those risks and their potential policy implications. I want also, however, to discuss some of the opportunities asset management offers. The industry is a key bridge between end-savers and end-borrowers, between the financial and real parts of the economy. As the banking system continues to de-risk, strengthening that bridge could well strengthen both the financial system and wider economy. The evolution in asset management Let me start with some facts on the evolution of the industry. Asset management is, of course, an agency activity.