View more on these topics

FCA asset management study ‘bigger than RDR’ for forcing down costs


Investors are overpaying by as much as £100m a year per platform due to disparity of fund manager skill, according to Nucleus.

Chief executive David Ferguson says the FCA’s recent study into asset management is “way bigger” than the RDR, which pales in comparison.

Speaking at the platform’s annual conference, Ferguson said: “If the asset management market study plays out as the FCA intends – and we think it will – fund managers will have to bear the sharp end of the pressures on fees.”

He calls into question the fact that asset allocation often drives the bulk of investment returns yet active management costs so much more than passive.

Ferguson also claims not a single multi-asset fund has outperformed its equivalent Vanguard Life Strategies over multiple timeframes.

He said: “In 2014 we said the asset management sector was oversupplied, overpriced, underperforming and under attack from all sides.

“We said the regulatory examination of fee transparency and commercial pressure from index funds would help drive a collapse in fees pretty much all across the board.

“The great big 30-year party was over and the hangover kicks in.

“With the publication of the interim study on asset management, this got pretty real.”

Neither advisers nor clients benefit from their “supposedly advantageous” collective buying power, he says, while retail funds also cost about four times as much as the institutional equivalent.

Ferguson also notes a huge spread between the intellectual property, or talent, of fund management and its cost.

He says Nucleus clients are overpaying by as much as £100m every year across the Nucleus wrap alone.



High Court rejects asset manager judicial review of FOS complaint

An asset management firm has lost an appeal against a compensation order from the Financial Ombudsman Service after claiming it did not provide personal recommendations. The firm also claimed FOS’ decision was at odds with the finding of an FSA report. Full Circle Asset management provides model portfolio discretionary investment services to clients. Between October […]

FCA logo glass 620x430

FCA urged to abandon ‘all-in fee’ proposal

Asset managers have urged the FCA to abandon the “all-in fee” proposal suggested in its interim study on competition and rethink how managers’ incentives are calculated. In November, the regulator put forward a number of reforms for the market, including an all-in fee, which would force disclosure of transaction costs in a fund’s total costs. […]


FCA spends over £1m on asset management study

The FCA has so far spent over £1m carrying out its study into competition in asset management. Following a Freedom of Information request submitted by Money Marketing, the FCA said the total costs of the market study stand at £1,000,370. The costs cover the period between 19 November 2015, when the study was launched, to […]


What the FCA needs to understand about advice vs guidance

The recent statement by FCA chairman John Griffith-Jones that the divide between guidance and advice has become hard to define exposes a worrying lack of understanding of the value of regulated advice. Regulated advice can be easily distinguished from guidance. The six main features that set them apart are: The scope of advice versus guidance […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment