[At-Risk Public Funds] ③ Three Revival Challenges of Seo Yuseok, Chairman of the Korea Financial Investment Association

Communication with Authorities, Industry Competitiveness, and Investor Education Emphasized
"Asset Allocation Funds Must Be Fostered with Supportive Tax Policies"

[Asia Economy Reporter Park So-yeon] The financial investment industry shares the financial authorities' recognition that the activation of public offering funds, which have advantages such as expert management, diversified investment, and long-term investment, is necessary. Seo Yoo-seok, chairman of the Korea Financial Investment Association, emphasized that in order to maintain market balance by channeling some of the interest focused on direct investment, symbolized by the "Donghak Ants," into indirect investment, especially public offering funds, institutional incentives, reliable returns, and investor education must be implemented simultaneously.

In a recent interview with Asia Economy on the topic of revitalizing public offering funds, Chairman Seo said, "Policy incentives are necessary," adding, "Among them, tax benefits for long-term investment public offering funds are important." This is based on the idea that for the healthy growth of the capital market, it is necessary to shift investors' attention from so-called short-term direct trading to indirect and long-term investment supported by expertise.

Chairman Seo believes that incentives that investors can be interested in are needed to change the habit of direct investment through not only general stock investment but also exchange-traded funds (ETF) and exchange-traded notes (ETN). Although the financial authorities have proposed measures several times in the past, the most effective tax support measures have not been introduced, so the association must take the lead in communicating and persuading the authorities. Seo stated, "'Long-term tax-exempt funds' should be established, and companies and investors who support the capital market from a long-term perspective should emerge." In the short term, he said that tax policies should support this while the industry simultaneously works to foster asset allocation funds.

Chairman Seo Yoo-seok said, "The industry itself must restore investors' trust by fostering asset allocation funds that can generate long-term and stable returns." He added, "The goal should be to consistently achieve excess returns compared to deposits through global asset allocation strategies."

He emphasized that for the retirement pension system to be successfully established in preparation for an aging society, each asset management company must have a solid lineup of reliable public offering fund products in which retirement pensions can be invested. Chairman Seo's theory is that the capital market can grow healthily only when various investment options are guaranteed in the fund market. He explained that from an investment strategy perspective, it is risky to have assets concentrated in one place during a major crisis, which is why public, private, and direct investments must all grow evenly.

Chairman Seo plans to make efforts to improve investment habits and awareness to create a foundation for capital market advancement and healthy capital accumulation. Seo said, "We will expand educational opportunities that can lead investors away from short-term investments that follow trends and toward smart investments that can build portfolios long-term according to their risk tolerance levels." He plans to increase education and investment in personnel for asset management companies and distributors in line with the major demographic changes, enhancing general investors' risk management and understanding of investment products.

In addition, voices have recently emerged in the financial investment industry calling for the easing of public offering fund regulations that do not match investors' tendencies. The MZ generation values convenience and speed as much as returns when investing in products. However, the public offering fund system still remains within the framework of decades-old regulations. With the enforcement of the Financial Consumer Protection Act, the offline sales process and explanation obligations require about one hour of total sales time. This is also why it loses out in sales competition against products like ETFs and ETNs, which can be traded in just one minute. The decline in trust caused by the excessive issuance of policy funds with each regime change is also cited as a problem to be solved.