Just over four months into his role as chief executive of the Investment Management Association and Daniel Godfrey is saying the right things.
Last week’s proposal for fund mangers to apply a relatively simple calculation to highlight the total cost of investing in a fund should benefit investors trying to get to grips with what they are really being charged whilst keeping this cost in the context of overall performance.
Some of the debate around hidden investment charges may well have generated more heat than light, often sparked by those with their own agendas to peddle.
But this is no time for fund groups to go on the defensive. As Godfrey points out in an article which appeared on our website last week, some of the criticism over charges may be unfair but it is up to fund groups to provide a clear and simple explanation of what investors are paying for.
Arguments over the value of long-term active investing will never be won if the general public feel they are being hoodwinked by an industry which is too scared to be upfront about charges.
Last year’s IMA guidance to members on increased disclosure- including providing three year average figures for broker commission and transfer taxes- was a step in the right direction but Godfrey’s plan is a further leap forward.
As the proposed figure will be based on all costs incurred by the fund over a year, it will not be personalised to take account of shorter holding periods and therefore does not go as far as the personal annual statement of charges proposed by David Pitt-Watson. But there is always a balancing act between cost and value when looking at what is achievable.
Godfrey’s plan would also allow advisers and investors to drill deeper to get approximate details on specific costs, such as broker research, and in time compare this on a historic basis.
Of equal note is the IMA’s recent stance on so-called “soft commissions” with a review underway into how asset managers are using client assets to pay for things like broker research and corporate access to firms’ senior management.
Godfrey’s agenda may well have been heavily shaped by a perceptive feel for the way the regulatory winds are blowing.
But nevertheless, the fresh thinking he has so far displayed on a number of issues is to be welcomed. Let’s hope his members are listening and willing to fall in line.
