This week I have been looking at some of the provider blurb that I have been collecting at recent conferences and seminars: VCTs with and without capital preservation, existing funds of funds and new fund launches, risk-rated asset allocated passive portfolios, equity income funds, and emerging income funds.
What is the point of even looking at any of this material? In fact, what was the point of even going to any of these events in the first place?
We now find ourselves in a position where product providers (who are regulated firms) and their key personnel (who are regulated individuals) use their knowledge and expertise to design solutions which may help our clients to meet their financial planning objectives. Or not.
We attend the presentations, and meet the key people. Occasionally they even let us meet some of the most uncharismatic individuals. They could be a liability in the marketing department, but they are the experts, the ones who really do know what they are talking about, ultimately the ones we are going to decide to trust with our clients’ assets. Or not.
Yes, we do know the primary objective of marketing is to persuade, and that your sales teams are incentivised to discuss (sell) certain products over others.
We know that providers are going to put the most positive spin on their product offering, and are unlikely to tell us not to buy. In fact, I still remember clearly the fund manager who with spectacularly unusual honesty said that whilst the long term story was good, even he would not invest his own money at that moment.
I also remember the fund manager who privately told me, shortly before winning an award for fund performance, that now he had three years under his belt, and an award to boot, inflows would accelerate dramatically, but that the vast majority of investors would have missed the best fund performance he could generate.
Product providers like advisers. We give them unprecedented access to the people with the money they want to invest. We build up the trusted relationships with the investors with the assets from whom they want to derive profits. We provide them with that most valued marketing tool, the third-party endorsement.
Relationships of trust are being destroyed wherever we look: banks, food producers, journalists, MPs, church, care homes. And yes, investment managers too.
So we want them to do something for us. Tell the truth. Behave with integrity in product design, marketing, promotion, administration, compliance. Even more basic, keep to the rules.
Every single one of us is regulated. Advisers are expected to abide not only by the rules, but also by a code of ethics. Advisers (and our clients) should be able to trust that you do too.
And then I won’t look at all that product information and wonder how much of it is true, how much is spin, or how much is lies before sending it straight to recycling because I simply can’t tell the difference anymore.
Gill Cardy is managing director of the IFA Centre