The long, slow pension rip-off — Is anybody interested?
Posted by Robin Powell on May 4, 2016
Every day, newsdesks have to make quick decisions on dozens of stories, and whether they’re worth covering. It’s what we journalists call “copy tasting”. Which stories get reported on depends on a number of factors — for example, how busy a news day it is — and often it comes down to the personal choice of the news editor on duty. Inevitably, there are some very big stories that go uncovered.
An example came last week when David Cameron was quizzed at Prime Minister’s Question Time about the lack of transparency surrounding fund management fees by a Conservative MP who recently discovered that he was paying three times as much in charges on his investment portfolio than he had been led to believe.
The Prime Minister replied by saying that lack of understanding of the true costs of investing is “sapping people’s enthusiasm” for saving for retirement.
Of course, I’m not a dispassionate observer. I’ve said for years that fees and charges are far too high, that they aren’t properly advertised, and that most people (including many investment professionals) have little clue about the impact that compounded costs have on long-term returns. But I do find it extraordinary that this story went almost totally unreported.
The FT, which has consistently shown more interest in this issue than any other newspaper, did cover David Cameron’s intervention. But the only other news organisation to do so was The Independent, in the form of an excellent comment piece by Ben Chu.
In his article, Ben spells out quite how big a story this is; how, for example, hidden charges can add up to more than twice the quoted annual management charge; how the Investment Association ousted its former chief executive for trying to promote greater transparency; how some fund managers are now paid more than investment bankers despite most of them consistently failing to beat the index; and how fund houses unduly influence financial advisers by offering them expensive tickets to sporting events.
Why, then, did no mainstream news outlet choose to follow up on the Prime Minister’s words? Ben gives his own opinion in his final paragraph:
“Because the newspapers and broadcast bulletins were filled all week, instead, with a row about anti-Semitism in the Labour Party. So much easier to understand, so much more entertaining, than the long, slow, pension rip-off, which will mean you will have a poorer retirement than necessary.”
I agree with Ben Chu’s assessment. Much has been said about how commercial conflicts of interest mitigate against objective investment journalism. True, these are lean times for traditional media and fund management companies provide much-needed advertising revenue. Ultimately, though, the problem is less to do with the reluctance of journalists to bite the hand that feeds them than with the nature of journalism itself.
Newsdesks need to give their readers, viewers and listeners what they want, and people are generally more interested in personalities than in issues; more focussed on the here and now than the long-term future. They want to stay in their comfort zone. More than anything they want to be entertained; and they don’t want to have to think too much.
Some day, somehow, this story will be properly told. By then, for many pension savers, it will be far too late.