Onozuka: What’s the current situation concerning the investment value chain and what challenges need to be addressed?

Tahara: Ensuring that the investment value chain works properly and realizing the formation of assets for the people to revitalize the Japanese economy is a key financial policy goal. To upgrade the nation’s asset management industry to higher levels of sophistication, we need to attract more talent from abroad. From this point of view, the Tokyo Metropolitan Government’s “Global Financial City: Tokyo” initiative has huge implications for the future of the industry in Japan.

Matsumoto: It is vital to get more individual investors, who are key components of the investment chain, involved in this process. Japanese individual investors have a massive amount of assets and could have a high level of financial literacy. It is quite important to encourage individual investors to hold stocks over the long term by getting them to be interested not only in stock prices but also in the management of companies they have or may have stakes in.

Toda: Sustainability and investment returns can be compatible over the medium- and long-term. Life insurance companies have a strong affinity for ESG (environmental, social and governance) investing because they basically focus on long-term investment. We not only own Japanese stocks but also place much importance on engagement with companies we invest in to help them tackle their management problems.

From left: Onozuka (moderator), Tahara, Toda, Matsumoto

Onozuka: What are your thoughts about the innovations in asset management that are required to make Tokyo a global financial center?

Toda: It is crucial to make strategic use of cutting-edge technologies like artificial intelligence and Big Data to realize more sophisticated asset management. New technologies are vital not just for management and analysis but also for sales, distribution and risk management.

Matsumoto: Human intelligence, which can gain insight into various phenomena that have yet to be translated into a set of data, is more important for engagement and shareholder activism. I myself have established an asset management company that collects money from individual investors for open-end investment trust funds for engagement with the firms they have invested in. We hope to make innovations in a broader sense in the Japanese capital market.

Tahara: Investment performance cannot be improved without innovation. I want to see Japanese financial institutions make more active and effective use of state-of-the-art technology. The Financial Services Agency intends also to provide policy support to efforts in the field of fintech.

Onozuka: What are your views about diversity in human resources in the industry?

Toda: Asset management companies have a wide range of operations, including explaining investment products to customers and risk management. That means they need to make good use of technology and ensure diversity in human resources and work styles. We have a growing number of cases in which fund managers have risen to senior executive positions while being involved in managing specific asset classes for years. We intend to accelerate this trend further.

Matsumoto: The biggest issue concerning diversity is not nationality or gender but age. The asset management industry needs to do better in capitalizing on qualified people irrespective of their ages.

Tahara: Asset management companies are grappling with some sticky challenges in their efforts to develop and tap human resources, such as the difficulty of reforming their compensation schemes, which are inevitably influenced by those of their parent companies. I’m keen to see them craft better personal management systems to develop a diverse workforce of qualified specialists.

From left: Oguri(moderator), Kiguchi, Shibusawa, Sato

In Panel Discussion 2, Oguri, the moderator, asked the panelists how it is possible to revitalize local economies through financial services and investments. Sato referred to “All-Japan Kanko Rikkoku Fund,” a fund to invest in projects to boost local tourist industries, and argued that financial institutions should play active roles in promoting communications between different regions in order to make more effective use of tourist resources in local areas. Kiguchi pointed out that managing local corporate pension funds requires developing investment strategies by obtaining the latest information about the world from asset management companies in Tokyo. He stressed the importance of Tokyo’s status as a major international city that attracts information from all over the world. Shibusawa said the world is on the cusp of a new era of impact investments, designed to help solve social problems while seeking economic returns. He argued that Tokyo should serve as the core of the ecosystem for the new era, emphasizing the importance of the capital’s intermediary functions of connecting regions to regions and regions to the world.

From left: Aritomo (moderator), Biedermann, Vaeth, Stanton

Panel Discussion 3 featured thee overseas experts as the panelists. Biedermann explained that Tokyo and 15 other international financial centers that are competing with each other have formed a partnership called the World Alliance of International Financial Centers to work together to promote investments and savings while supporting sustainable economic growth. Aritomo, the moderator, said enhancing asset management capabilities is urgently needed in Japan to make the most of the $18 trillion worth of household assets in this nation. Asserting that it is vital for Japan to attract outstanding foreign talent in this field, Vaeth stressed the importance for financial centers to learn from each other. Stanton described Japan as a market with high levels of liquidity and well-developed infrastructure for financial services and investment. He also said FinCity.Tokyo’s principal mission should be to provide information about Japan’s advantages as a financial hub to the overseas audience so that people in the rest of the world can understand them accurately.