You can find the Fidelity 2018 IGC report here. Don’t try searching for it on any Fidelity website (unless you want to spend 20 minutes like I did this morning). At the end of the report, Kim Nash has a moan at Fidelity for not giving the IGC support – she has every right – they seem to consider the report something to be filed in the least important by-ways of their various UK websites – shame on Fidelity and good on Kim Nash for kicking up a fuss.
FYI Kim, Fidelity now employ Richard Atkins who used to the L&G IGC liaison man (very good). How about recruiting him to the cause?
Value for money
Fidelity workplace pension clients (e.g. the employers ) are a well-heeled bunch. Fidelity won’t look at you if you aren’t going to give them half a million a year. If you are a big enough employer and have a healthy employer contribution, you get a quote from Fidelity. There’s nothing wrong with this as a business strategy, Zurich and Black Rock are much the same.
But it doesn’t mean that Fidelity should be any less rigorous at providing value for money for their clients than those (like NEST) who service the rest of the market.
The Fidelity IGC has always kept a low profile and produced what I call “cold fish reports”. In reality, most Fidelity employers – Unilever for instance – will have their own governance committees and their own DC consultants. The IGC is pretty peripheral – one might have thought.
As I read through the value for money section, I was typically bored, no comparative performance data, no challenge to the Fidelity default investment strategy, cut and paste ESG stuff – yawn yawn yawn, Then this – details of transaction costs within the Fidelity (Future Wise) Default.
Holy cow -that’s a lot of money!!
0.31% pa will be more in hidden charges than in explicit charges for many Fidelity customers. Just what is going on?
I read through the rest of the section but sadly had no explanation. While I am used to seeing transaction costs in the 0.00 to 0.05 range , these charges are more in the Alan/Gina True and Fair league of retail fund charges.
As there is no explanation what value Fidelity investors are getting for all this money, my interest is really aroused.
Come on Fidelity IGC – now is your chance to shine and ask some serious questions. Well done for unearthing the information but poorly done for not following up.
I’m giving Fidelity an amber on value for money – more investigation needed.
Engagement
Fidelity have obviously given its IGC a reasonable budget and some of it has been spent with the Fidelity design team. The report is really slick with lots of stock images that suggest a professionalism of approach that is reflected in the report’s language. It’s coherent and a lot more engaging than the first two reports – there is even a (fairly awful) video.
Like six other “large” providers, Fidelity signed up to the Redington benchmarking project and like all the other providers, they have not published anything of value from the project. I am beginning to wonder whether Redington actually helped the IGCs and members at all or whether the much talked about benchmarking work was no more than some help to the providers on where they stand on Redington’s buy-list.
For effort, I’m giving the Fidelity a green for engagement, though the report is really short on genuinely interesting insights.
Effective?
As I’ve already said, this report is clearly not destined to be read much. Stuffed away at the back of a website with no sign-posting and clearly little support from Fidelity, this is a peripheral document.
IGCs are easy street for committees who are being asked to go through the motions and though Kim Nash and team have tried to inject some interest into this report, they seem to have done very little to ask what is really going on.
The whole section on ESG reads like a Fidelity press release, Here’s an extract.
As an investment provider, Fidelity believes that high standards of corporate responsibility will generally make good business sense and have the potential to protect and enhance investment returns. Their investment process takes ESG issues into account when, in their view, these have a material impact on eitherinvestment risk or return in order to achieve the best possible risk-adjusted returns for investors. Fidelity seeks to gain an understanding of the relevant. ESG issues applicable to investments through their internal research process and to identify these issues before they escalate into events that may potentially threaten the value of investments. Fidelity encourages integration of ESG issues into the investment decision-making process when it has a material impact on the investment or it has the potential to affect the long-term value of the investment. Fidelity’s ESG integrated approach covers all the assetclasses, sectors and markets in which they invest.
The sudden urge to talk about ESG is nothing to do with what the IGC feel, it has everything to do with ticking boxes, but – and – pasted statements like this, have no place in IGC reports.
I suspect that Fidelity are pretty unbothered by whatever Kim and her committee have to say. They have the consultants (like Redington) to bother them and they have large employers tweaking their tails.
I can’t give the Fidelity IGC a red for lack of effectiveness, but I will give them an amber, they really should be probing more and not filling their report with promotional material from their provider.
In conclusion
Fidelity come across from this report as complacent, arrogant and lazy – towards their IGC. The IGC is clearly not happy about the level of support it is getting but they would be better off complaining about why they have no explanation for falling admin standards, high transaction costs and genuine engagement on subjects such as ESG. They should publish what Redington told them or accept that the benchmarking project is a waste of time.
This is not a bad report, it is quite a classy report. But it asks more questions than it answers and doesn’t leave me thinking I’ll be getting any answers anytime soon.
If Fidelity are serious about IGCs , then they had better listen to Kim Nash and give her some more support.
