- evestor welcomes findings of Financial Conduct Authority's (FCA) Asset Management market study
- FCA's sweeping reforms to help improve financial wellbeing for savers
- Changes will help cut costs and improve returns
- evestor confident it will end excessive fees and save investors £1bn
The final findings of the FCA's study of the asset management industry is news that consumers have been waiting for. The city regulator has outlined the need for investors to be provided with greater transparency and clearer information about the fees they pay.
A move to a single, 'all in fee' will make it easier for consumers to determine exactly what they're paying and more importantly, what they're getting for their money when they make investments. This will help put an end to the massive over-charging that has needlessly dominated the industry for decades. Consumers have been blinded by complex and confusing fee structures, and duped into paying for the so-called 'expertise' and 'hard work' of fund managers.
The reality is that consumers are exploited to the tune of at least £1bn a year for investments that don't perform any better than far cheaper alternatives.
The FCA estimates that there is around £109bn in 'active' funds and if we conservatively estimate that a 1% fee is applied to this amount, we're looking at around £1.1bn in charges. These are charges that investors simply don't need to pay.
Findings from the FCA's study highlight that many active funds offer similar exposure to passive funds, but some charge significantly more for this. These 'active' funds require little ongoing management and certainly no level of time or work that justifies paying increased fees. Consumers have paid well over the odds and it's pleasing to see remedies that will stop this.
Outcomes from the FCA study will strengthen the duty on fund managers to act in the best interests of investors. This will involve them having to clarify the expectations around value for money and to provide a single 'all in fee'. This should help consumers to properly understand and question the investments they are making, and the actual costs of these in the short and long-term.
Leading by example
When we set-up evestor, we did so with you – our investors – in mind.
Our business model is based on acting in the interests of our investors and the simple premise that investing should be available to everyone at the lowest cost. We believe fees should be absolutely transparent from the outset, not wrapped up in jargon or outrageous claims about beating markets.
We have no upfront fees, and our annual fees are less than 0.5%, with no hidden extras. Better still, these low fees still get you access to financial advice, which should be the norm, but sadly isn't.
Investing shouldn't be a bewildering or expensive experience - customers should know exactly what they are paying for, and they should never pay over the odds.
Hopefully the FCA's reforms will signal an end for fat cat fund managers and signal better value and returns for investors.