Presumably those of us consumers seeking to find the financial Nessie are like the cranks who sit upon the shoreline scanning the calm waters for the photograph that will make us!
The research comes from Fitz Partners, a firm I haven’t come accross before who seem to make a living from providing fund managers with the numbers they want to see.
FITZ Partners main focus is to support the European funds industry participants in their cost management efforts and fiduciary responsibilities.
I have two issues.
Firstly the publication of fund statistics to the public (what this report does) deserves an independent source. Fitz Partners is not independent of the fund managers, as it’s website proclaims
FITZ Partners aim to assist asset managers with a regular delivery of consistent and detailed fund expense calculations and fee benchmarks, allowing fund operators and their boards to conduct detailed accurate reviews of funds operating costs.
Despite claims to be independent, Fitz Partners business model appears entirely dependent on the fund managers from whom we want proper data.
Secondly, the timing of this report is at the start of the process, the IA are currently embarking on. In it’s press release , the IA states
Our forthcoming Disclosure Code will standardise fee disclosure including implicit cost estimates across all investment products
But the Investment Association are bound to pass this Disclosure Code past its Advisory Board (the one that meets in secret) . This board is supposed to be providing independent insight about the Code. In a volte face , the IA claim that it will publish the terms of reference of the Advisory Board but they haven’t yet got that far.
So before we have even got to setting up the TOR for the Advisory Board to provide oversite on the Disclosure Code, the IA have decided that these hidden charges are as mythical as the Loch Ness Monster. They have done so using a fund researcher whose revenues are sourced from the managers being researched and the Code will hear evidence about hidden charges – in secret.
The timing of this press release suggests a “fait accompli”. The Disclosure Code will also demonstrate that there are no hidden charges. No doubt the Advisory Board will meet in secret and validate this.
A legend on their own website
I admire the IA for its sense of humour. It just loves to take the piss out of the general public. Its offices in 23 Camomile Street must echo to the rafters with the laughter of merry fund managers pulling wool over the eyes of all and sundry!
“If you look at the actual performance delivered to fund investors, this is the proof point and we do not see evidence of high transaction costs, either explicit or implicit.” -Jonathan Lipkin (IA)
Well I’ve been working with funds for 32 years and I see no evidence whatsoever that consumer outcomes that investors get anything like Value For Money. I cite research from Thomas Phillipon, Norma Cohen, Novarca, Ros Altmann, David Pitt-Watson and Alan and Gina Miller which empirically demonstrates that what the punter gets is not what the punter was promised.
There is a serious point to their work, they are explaining to the people who save (forget the term investors) where their money goes. They are not in the pay of the Fund Managers or the Investment Association and publish in the public good.
This morning I will be having a pleasant cup of coffee with the man who dared to call time on all this backslapping nonsense. He now works for the FCA and is due to publish a properly independent report on the fund management industry and the various intermediaries that prop it up.
I suspect that having been sacked as CEP of the IA for suggesting they might be wrong about charges, he may look for a higher level of proof than is available from Fitz Partner’s research.
The Investment Association’s credibility outside its own offices and website is rather lower than this arrogant , bumptious press release suggests.
Fortunately, there are still papers who provide balanced journalism rather than printing the press release as the story. Well done the Daily Mail for cobbling this together.
Well done George Kirrin for reminding me of this Adam Smith observation (see comment below).
“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”