Advisers add far more value than fund managers
Adviser fees are firmly on the agenda, and about time too.
As I’ve said before, there are no right or wrong answers on questions of fees. It’s up to individual firms to charge for their services however they see fit.
But the commentator whose views most coincide with my own is Brett Davidson, founder of FP Advance. His recent article for New Model Adviser, IFAs must challenge weak fee competition, is a must-read.
Here are the highlights:
On active fund management
“Dress it up however you want, but the fund management industry appears more focused on itself and maintaining its lifestyle than its customers. It has been that way for a long time and it is hard to believe it has taken until now for that house of cards to look like it might come tumbling down.”
The importance of fund fees
“Costs need to fall, and not just by a little. Advisers have a rôle to play in this by selecting managers that will deliver for their clients. That is more likely to be low cost or passive funds.”
“I have a problem with firms that are merely managing money for clients and doing little else. Managing money is a task that does have some value, but not 1% a year worth of value.”
“Good advisers add value and should be the highest paid in the financial services food chain. Not all advisers, just the good ones.”
“Price-fixing by the regulator is not the answer, but expect to see a spotlight being shone on all layers of the retail financial services food chain, and expect the cream to rise to the top.”