Expert Decry Absence of Intermediaries Between Retail Investors and Fund Managers

Kayode Tokede

A Financial Expert and Investment Strategist, Mr.  John Oniyilo, has expressed that the absence of a robust layer of fiduciary financial intermediaries between retail investors and fund manufacturers remains a critical structural flaw amid rapid growth in Nigeria’s asset management industry.

The outcome, according to him, is the overconcentration in low-risk instruments, heightened exposure to fraudulent schemes, poor capital allocation, and chronic investor distrust.

He noted that unlike more mature markets like the U.S and South Africa, Nigeria has not institutionalized a framework where independent, fiduciary-aligned advisors connect individual investors to a broad spectrum of investment solutions.

Oniyilo in a report stated the  Nigerian investment market is structurally unbalanced, stressing that retail investors typically interact directly with fund providers, who both manufacture products and serve as the “advisors.”

“This bundling has allowed product sales to flourish, but at the expense of personalized guidance, investor protection, and diversified capital deployment. There is little or no formal guidance that links investors’ needs, goals, or risk tolerances to financial solutions,” he explained.

According to him, the vast majority of Nigerian mutual fund assets are concentrated in money market funds.

“As of late 2023, over 65mper cent of the N5.9 trillion in collective investment schemes were in money markets — a figure that dwarfs equity and balanced fund allocations. This overexposure stems from: Lack of risk profiling and planning, fear driven by past investment losses, fund managers pushing “safe” products for easy traction.

“Without fiduciary advice, investors prioritize capital preservation over long-term wealth creation. The result is an economy awash with short-term capital — while long-duration instruments (infrastructure funds, private equity, even equity mutual funds) remain underfunded,” he said.

He quoted a Securities & Exchange Commission (SEC) report where Nigerians have lost over N300 billion to Ponzi schemes in the last 15 years.