Hot on the heels of Daniel Godfrey’s departure from the Investment Association, the FT’ Claer Barrett has published a great piece on what appears to be another own goal- that only 25 out of some 200 members could find it within themselves to sign up to these principles.
1 – Always put their clients’ interests first and ahead of their own
2 – Take care of clients’ money as diligently as they would their own
3 – Only develop, offer and maintain funds and services designed to add value for clients and help them achieve their financial goals
4 – Maintain and apply the investment and operational expertise needed to meet the objectives agreed with clients
5 – Make all costs and charges transparent and understandable
6 – Disclose to investors the source and value of any other material benefit they receive as a consequence of their role as investment manager
7 – Ensure regular, timely and clear lines of communication with clients
8 – Set out clearly their approach to the stewardship of client assets and interests
9 – Maintain a corporate culture that sustains these principles
10 – Work with industry colleagues and stakeholders to develop and maintain guidance on industry best practice
The only duty for the 25 who signed was to publish a statement by the end of the year on how they intended to show they were complying.
I completely failed to pick up on the press release from the IA – in August and- had this row not blown up, I suspect that the principles would have consigned to another drawer in the governance cabinet.
But now it’s all red hot news. The question that I would be asking any fund manager not on the list would be which of them they objected to?
The Trustees of an occupational pension scheme would surely expect a fund manager to subscribe to all ten, so would any individual , who understand the fiduciary nature of fund management.
And this is exactly what trustees and private investors should do.
There are some very embarrassing conversations to be had with household names such as Black Rock and Aberdeen Asset Management and I don’t think that arguments about the internal politics within the IA wash.
Had this press release not gone out- fully 9 weeks ago – the 175 or so non-signatories would never have had a question to answer. In retrospect, the publication of the document, in the IA’s name and with such a small sub-set of signatories will bring the very issues that have been suppressed to a head.
We are reminded that it has been six months since the FCA’s call for evidence on “value for money” .
We are reminded of the scandals surrounding the likes of State Street caught with fingers in the till.
And we are reminded that the consultancies and IFAs that act as gate keepers to the asset managers focusses on precisely the issues that these principals deal with.
On the face of it, the panels of the IFAs and the preferred provider lists of the consultancies should reflect the willingness of the asset managers to embrace these principles.
I would be tempted to create a shortlist myself based purely on the funds of the 25 managers who have signed up and excluding the rest.
Indeed, we could go so far as to only include those providers on the Pension PlayPen whose investment defaults are managed by “signatories”.
This is probably taking things too far. But for the refuseniks, the ball is in their court. Just as the signatories have signed up to telling us how they will live the principles, so those who aren’t signing , should tell us why.
The only alternative would be for an asset manager to absent itself from the debate and resign from the IA. This may be why M&G and Schroders are not making positive noises about changing their intention to leave the IA (even though Daniel Godfrey has left).
Good will come out of this I am sure.
Not only are we back discussing the important governance questions but we are doing so with some commercial venom.
One thing is for sure, this story has a long way to run and the longer it runs, the better the consumer’s hopes of getting something good out of all this!