A question I’ve been pondering over the past few days is this: Should I respond to the extraordinary press release issued by the Investment Association last week, which categorically stated that there isn’t an issue with hidden fees fees and charges in UK asset management? Or, by doing so, would I be lending credence to “research” that frankly isn’t worth the name?
The only comment I will make is that we shouldn’t be at all surprised by some of the nonsense which the former journalists and spin doctors the trade bodies employ in their communications departments routinely come out with. The fund industry has benefited enormously over the years from poor standards of financial illiteracy, a broadly compliant media, huge political influence, hands-off regulation and a culture of smoke and mirrors with regard to costs and net performance. It remains an awesomely profitable industry. It’s only to be expected that the IA and its members will do all they can to maintain the status quo — or at least to delay the inevitable advance of transparency for as long as they can.
There’ve been several instances in the past of powerful industries dealing with inconvenient evidence by completely denying it and ridiculing those who present it. The most obvious example is the tobacco industry in the 1960s and 1970s; another is the NFL’s handling of mounting evidence of traumatic brain injury in former players. The good news for consumers is that you can only hold back the evidence for so long.
Otherwise, there’s little I can add that my fellow transparency campaigners haven’t said very articulately already. Here are the highlights:
Con Keating, Head of Research, BrightonRock Group
“I have read many hundreds of empirical financial studies and reports, perhaps even thousands. This report is by far the worst – so bad that it is offensive, insulting both our common-sense and intelligence.”
Gina Miller, True & Fair Campaign
“It was the IMA under Richard Saunders that produced an intellectually bankrupt and thoroughly amateurish piece of research in 2012 that we proved was totally misleading.
“The tone then, as now, was a PR exercise to show how wonderful the UK fund management industry is, how there are no hidden costs to speak of and how amazing all active funds are.
“Now under new management and a new name, the IA is still producing nonsense. This new research paper is not worth the paper it is printed on.”
Andy Agathangelou, Transparency Task Force
“I just don’t think the IA press release endears them to the market at all, and given the avalanche of adverse publicity they had when Daniel Godfrey’s ceased to be their chief executive, you’d think the IA would have learned a few lessons about how to avoid adverse publicity by now.
“I’m not so sure they have; but I am sure that if I was a fee-paying member of the IA I’d demand to know who signed off that press release, it’s just so churlish and needlessly provocative, in my opinion.
“If the IA are convinced it is complete then perhaps the IA would be willing to stand by it and guarantee to pay compensation to any investor that ever has, or ever will, pay any kind of charge beyond what is disclosed in this research?”
Henry Tapper, Pension Playpen
“The Investment Association has no earned authority, no integrity and has no place at the policy debate.
“It has always called upon the solidarity of its membership to provide the powerful lobby to ensure it retained control of the costs and charges debate. It relied either on a Labour Government with insufficient gumption to take them on, or a Conservative Government with too many fingers in their pie.”
Robin is a journalist and campaigner for positive change in global investing. He runs Regis Media, a niche provider of content marketing for financial advice firms with an evidence-based investment philosophy. He also works as a consultant to other disruptive firms in the investing sector.
