Do boards of directors protect investors?
According to research, a typical board director in the Luxembourgish fund industry is a 53-year-old European man with 22 years of work experience (who probably plays golf). Their role is to ensure investors avoid the rough and get to the green safely.
Failure results in a penalty stroke from the CSSF.
Can Luxembourg avoid fee cuts?
One of my first lessons in finance was that you cannot consistently outperform the market. When it does occur, it is the result of luck rather than skill. You are better off investing in passively managed funds than those actively run by gurus and clairvoyants.
You cannot excel with Excel
The fund industry is a poster child for digital transformation. The industry is characterised by easy-to-follow processes and a high degree of automation. With just a few clicks, investors and auditors can interact with fund managers seamlessly.
Sounds exciting. The reality though is quite different.
Housing: timing and luck
To give me a better life than they had, my parents helped me develop a strong work ethic and invested heavily in my education. Just like them, at the age of 30, I bought a 4-bedroom house suitable for raising a family in. Their investment paid off.
If only this was true.
Education
My parents moved from Ireland to Luxembourg in the 1980s. Even though they did not receive a higher education, they were quickly able to find jobs and subsequently buy a house and raise a family. I wish I could do the same.
Attracting talent is getting harder!
In 1908, there were 16,000 Luxembourgish immigrants living in Chicago. They were extremely poor and needed to emigrate to survive. Today, people emigrate to Luxembourg for different reasons. It’s more about thriving rather than surviving.
Without immigration, there would be no fund industry, there is a constant need to attract talent from abroad. Amazingly, only 20% of the local population works in the private sector. Probably even less in the fund industry.
Costly outsourcing is not the solution
The CSSF has spent the last decade ramping up reporting requirements on fund management companies. In response, the fund industry has invested heavily in automation and now most reports are generated automatically.
If only this was true!