SCM campaigns for transparency

SallyG

http://www.trueandfaircampaign.com/facts-figures/

http://www.ftadviser.com/2012/01/30/ifa-industry/trade-bodies/ima-defends-misleading-cost-research-2HymUmnU4yv3KHJbVRxnvK/article.html

dunstonh

Seems to be a campaign to shout but not one that looks at the reasons.

There is little evidence of price competition in the UK – over 80% of investment funds increased their fees between 2001 and 2011.1

We know why that happened. The platform review (rather than the RDR) should help that situation and see charges fall back as fund houses will be back in control instead of platforms.

68% of money invested in active funds within the UK largest retail fund sector charged an identical Annual Management Fee.2

Why look at the AMC when it is the TER that matters? AMC is typically a rounded figure. So, it is unsurprising that most go with the benchmark figure of 1.5%.

In 2009, the UK had the 4th highest total charges out of 19 countries (ranked by country of domicile).3 Weighted by assets, UK funds charged 79% more than US funds.

Try comparing like for like. The UK pricing currently is packaged (manufacturer, administrator and distributor all rolled into the price). Overseas pricing is typically factory gate pricing (which we are in part moving to with the RDR next year and will finally be in place with the platform review a year later. Overseas pricing tends to be just the fund. You need to add the administrator (i.e. platform) and retailer charges on top. Too many of these campaigns or "research" companies compare the fund element in isolation with the current UK position which is packaged.

If you compare it to buying a car, the price in the UK is "on the road". That is how UK pricing currently is. If you equated the overseas pricing methods you would get a price for the car in kit form. You would then need to add all the costs on top for the various things (building it, the retailer you buy it through, the various tax, fluids etc). Then when you add them all up, lo and behold, the cost comes out to something similar.

49% of the UK workforce is not saving enough for retirement.

Ironically, the reduction in charges seen in financial service products over the last 15 years led to lower profit margins and the abolition of the home salesforces. For all their sins, they were successful in getting people to save and invest for the medium term and to pay towards retirement. The "forced" people to do something. That has gone. It now requires people to use their common sense and budget successfully. Unfortunately, a good proportion of the population cant do that.

Not sure that that has to do with transparency though.

As always, I am not saying things are perfect or right in some areas. However, I am just presenting a balance to these things.