Fund Managers Show Their True Colours!
We have written often about the failing of the banks to truly look after their clients who invest with them.
Scandal after scandal has appeared in the press and it was no surprise to hear that last year Barclays sacked Anthony Jenkins who was brought in in the summer of 2012 following the departure of Bob Diamond, who left in the wake of the Libor scandal.
Paraphrasing comments in the Daily Mail, he was appointed to steady the ship and he wanted to reduce the importance of the investment arm. It seems that his boss Sir Mike Rake thought differently and wanted to retain its global presence as a major investment bank.
Apparently Barclays are close to naming former JPMorgan banker Jes Staley as chief executive, signalling a renewed focus on an investment banking division that has been pared back over the past three years.
The Daily Mail comments on JP Morgan:
“No bank has paid more in fines for abuse of markets and clients in the period since the financial crisis, shelling out some £26billion for wrongdoings.
It has been involved in every form of bad banking, ranging from Libor fiddling, to anti-competitive behaviour on corporate bonds, illegal credit card practices, misleading investors over ‘toxic mortgages’ and losing billions in high-risk hedging activity.”
It really could not be more damning.
We then read Lloyds staff are being castigated by management for not selling enough products, even though this was proved to be bad for their customers in the very recent past!
Ok, so we know that the investment side of banks have a terrible track record on putting their customers first.
They are only interested in themselves.
It’s called greed and self-interest.
In many respects the above is an example of why we operate the way we do:
- Act with integrity and put the client first
- Be explicit about how we help and the costs involved
- Take time to really understand their needs and concerns
- Work for them and not a product provider
- Actually care about the job we do for them
- Have a long relationship based on trust
Not exactly rocket science is it?
And…
…this brings me to yet another revelation, this time involving The Investment Association. Our thanks to Gina Miller, founder of the True and Fair Campaign, for bringing this to our attention.
The IA say:
“The Investment Association represents UK investment managers. We have over 200 members who manage more than £5.5 trillion for clients around the world, helping them to achieve their financial goals. Our aim is to make investment better for clients, companies and the economy so that everyone prospers.”
They then state their principals, which include:
- Always put our clients’ interests first and ahead of our own
- Take care of clients’ money as diligently as we would our own
- Only develop, offer and maintain funds and services designed to add value for clients and help them achieve their financial goals
- Make all costs and charges transparent and understandable
- Disclose to investors the source and value of any other material benefit we receive as a consequence of our role as investment manager
Sounds perfectly reasonable you would think?
Well yes, but here comes the but with the announcement:
- Two large well-known consumer brands, M&G and Schroders are set to leave UK trade body in 2016
- Three more well-known consumer brands, Aberdeen (includes Scottish Widows), Invesco Perpetual and Fidelity also reported to be considering leaving the same UK trade body
As at August 2015, these companies represent 29% of retail investor funds.
Reported reasons for departures are:
- The IA had become “far too aggressive over reforms on the transparency of fund performance fees and transaction costs”
- Dissatisfaction over UK trade body Statement of Principles, this outlined “behavioural standards such as the need for fund managers to put clients’ interests ahead of their own.”
So these companies object to transparency & putting the clients’ interests ahead of their own!!
Gina Miller said:
“It beggars belief that a non-legally binding statement of principles which simply contain practises which every other reputable non-investment firm carries out without hesitation, should be considered contentious.
It is clear that many in the traditional UK fund management industry are not interested in promoting the best outcomes for its clients or putting customers first. These reported departures and associated explanations reveal a complete lack of any willingness to be opaque, let alone transparent.
In the past we have argued that the UK investment industry acts like a cartel and these moves add further weight to our argument.
This should act as a final wake up call to the UK Regulator and the Treasury that they need to urgently act to reform this industry’s anti-consumer practises.”
Well said Gina.
It’s called greed and self-interest.
It reminds us of the true definition of class:
“Being able to – but choosing not to”
These types can – and choose to.
Needless to say that here at DMFP we do not use retail funds and active fund managers as we can access inexpensive institutional class index funds that do exactly what the IA believe in.
We also like to think that we act with integrity by putting the client first!
Are you are an investor who was not aware about this?
Does this concern you?
If so then you can revamp your portfolio and almost certainly save yourself money that you pay in annual charges.
Take Action
Are you are an investor who was not aware about this?
Does this concern you?
Do you invest with a bank or have active funds with those mentioned above?
Is so then let us know and we can give you an unbiased and informed opinion on your hard earned investments.
We have yet to find we cannot help clients save money and/or reduce the risks they are taking.
Feel free to contact us here.