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Bradshaw slams &#39wasted cash&#39 in funds

The UK retail fund management industry is dominated by lazy money sitting idle in poor-performing or expensive funds to the detriment of investors, according to industry commentator Paul Bradshaw.

Speaking at the CII Sofa post-Sandler conference in London last week, Bradshaw said he was appalled by the number of investors whose money is being wasted either in expensive trackers or poorly performing active managed funds.

He said investors are wary of incurring capital gains tax on transferring or encashing their funds while IFAs are horrified at being accused of churning if they recommend that an investor change funds.

Bradshaw, the co-foun-der of Skandia UK, said he was shocked by aspects of the UK industry after returning to it after 10 years in Italy. He questioned whether IFAs should automatically get renewal or trail commission unless they actively review their clients&#39 portfolios.

Bradshaw accused Sandler&#39s review of naively criticising the market over its proposal for off-the-shelf “stakeholder” products, saying that without advice, the products will be missold.

Bradshaw said: “Regulators here have a horror of churning. What we call churning, the Italians call service. Leaving money in poor-performing funds for long periods is ridiculous.”

Best Investment deputy managing director Jason Hollands says: “It is true that there is a lot of inertia out there and a lot of the blame for this has to fall at the feet of advisers.

“Many advisers do not do anything to earn their renewal commission.”

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