Fidelity – a cold fish of an IGC report.


Reading the Fidelity IGC report, I struggled to find the missing ingredient that would make me want to read the next one.  Reading it again, I think it may be “passion”. The report is stunningly correct, Fidelity is the only IGC to have a female chair (Kim Nash) and its sixties style cartoon characters who appear in the margin display all the right characteristics. The report is laid out so every base is covered and it is impeccable in its syntax, tone and construction.

Yet, like Fidelity itself, the report is a little distant. Fidelity is a massive world-wide fund management group that has a UK workplace division almost by accident. It has only ever considered large employers to distribute its services so Fidelity’s involvement in the auto-enrolment project has been limited. The large employers who offer Fidelity pensions to their staff also employ consultants to provide independent governance, so for Fidelity, the need for an independent governance committee may seem limited.

The distance noted above is evident in the banality of the report’s conversation with its audience

“Many policyholders of workplace pension plans are invested in default arrangements”

is offered as a key observation (well it’s in very large font!). You wonder who Fidelity’s IGC thinks its audience is and why they are reading this.

Certainly we see little of the too-ing and fro-ing between provider and IGC that characterises other reports. This may explain why the IGC seems a little distant and passionless. As an example, the report calls for Fidelity to review the letters it sends to its policyholders when calling for action. The IGC’s call for the letters to be “timely and pertinent” – words that subvert the aim of increasing engagement.

I originally wrote “ratiocination” rather than too-ing and fro-ing and changed the words so as not to get in the way of a good idea, “timely and pertinent” is just the kind of phrase the IGCs should be discouraging (for the same reason).

The “Fidelity knows best” tone of the provider is ever present “Fidelity carries out post implementation reviews to ensure policyholders are experiencing the best possible outcomes ” is an example. I am sure that Fidelity do have strong controls in place but administrative controls are primarily a protection against expensive restitution programs impacting the provider and employer. The member outcomes of a Fidelity workplace pension are experienced in later life (not post implementation).

This all may sound picky, but it is hard to get under this report’s skin and find out what is really going on. The respectability of the report makes it part of the corporate façade, almost indistinguishable from the internal governance literature that Fidelity turns out.

Where the report engages.

Unlike Zurich’s IGC report that stopped short of identifying the hidden costs of investment, the Fidelity report has a first stab at transaction costs.

fidelity2It’s not very clear why costs fall away towards the end of a member’s accumulation but at least here is an acknowledgement that these costs can be measured; there is a warning that the costs that come out of the FCA’s final calculation formula may be different and Fidelity’s IGC (wisely) accepts that they cannot give a value for money score until they have the full facts on the money. I thought this part of the report worked  well.

I was less impressed by the massive table that dominates the centre of the report, which simply states the matters reviewed by the IGC over the past twelve months. It would have been good to have some information on the quality of Fidelity’s approach to each of the matters. The table seemed to be more about ensuring that the IGC were seen to have been diligent than helpful to the policyholder.

I have no way of telling whether the Fidelity IGC have been effective or not and can only give a neutral score to commend the comprehensive agenda and the lack of qualitative reporting). As an effective report I give this an amber.

For its tone, I am giving it an amber. Controlled as it is , it is very correct, but I would like to hear the true voice of the IGC – and never do – this is a passionless cold but respectable report and I give it an amber.

As regards value for money, Fidelity’s IGC signed up to the wild-goose chase with NMG and got the predictable response that members wanted good outcomes. Fidelity (knowing best) interprets this as getting members to pay greater contributions; this is a mathematically correct observation and the IGC buys into the new normal that the best thing a provider can do is to make it easy for members to save more.

fidelity 4.PNG

But we are left with a bleak solution


The happy bunch above are much more likely to engage where they can interact rather than be talked at, Fidelity’s controlled messaging seems a million miles from how ordinary people use technology to get up to speed.

So the Fidelity value for money research leads us back to precisely the same solution as Fidelity has been pushing to its members for two decades.fidelity5

There is no mention in the report in getting members interested in the investments within their workplace pension through publication of its Environmental , Social and Governance policy.

In short, the IGC is keen to talk to talk , but does not walk the walk. It really doesn’t show more than a passing interest in improving member’s value for money. While I cannot fault it for its positioning , I can only give the report an amber for its work on VFM.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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