11 May 2018
The financial regulator is getting increasingly uppity with fund managers and investment providers on the issue of cost and transparency. Do people actually know what investment providers charge? And does it represent fair value? How can you tell if you’re paying a ‘normal fee’ or being rinsed?
Value is a blisteringly hard concept to put a single metric on. I have only ever bought one handbag worth more than £200 - I bought a Mulberry beauty at Heathrow’s Terminal 5 at 6.30am to cheer me up before a head-banging advisory day with the world’s slowest financial services firm. I have used it so much I can just about justify the valuedespite the shocking price tag. But I’m far too mean to fork out for Manolo Blahniks. I have my own value thing going on!
The regulator has given fund managers 18 months to work out how to evidence and demonstrate that they are offering value for money. Price and performance are factors but so are service, communications and more. It’s not just who has gone up the most – it’s whether they doing what they said they would? And did they tell you in clear English what they would do and how much they would charge?
Over the last two weeks I have listened to actuaries, fund managers, the large accountancy firms and consultants talk about how they plan to measure value. And some of it sounds self-serving. “Well done us. We think we’re a 10.” Compared to who? 10 out of what! On what criteria?
The missing link is always talking to the actual customer. Perhaps that’s very old-fashioned or dim, but I don’t actually see how anyone other than the person who pays the fee can determine whether it is good value or not. One man’s trash is another man’s treasure and all that. Sure the propeller-heads can calculate relative cost and performance. But value is more complex than that and once again the industry is rushing to solutions which don’t involve their customers.
So my starting point on this value conundrum is to ask you guys. If any of you have funds, and you are happy to be my very first ‘guinea pigs’, would you be happy to talk to me about this on the phone for 15 minutes next week? We'll pay for your time. Or email me your views?
More generally, we’re looking to get a better feel on what you guys, the investors who fork out for this, think about the investment providers. If you’d be happy to help us out with occasional online surveys, phone interviews or even face to face focus groups, please fill out this one minute survey and become a member of our Boring Money Research Army! Again, we’ll pay you for your time and insights. Unless you’re my dad in which case family rates apply ;0)
Thanks all. Heading into a sunny weekend in May. I have a sneaky bottle of half-price champagne in the fridge for later. Yay. £16 from Sainsburys. Now that is value for money!