A ‘health warning’ for fees are among proposals sent to the UK financial regulator in response to its asset management market review.
Vanguard, which markets itself as a low-cost fund manager, argued for the fee warning so that investors better understand the impact of fees on returns.
The firm is among others that have responded to the Financial Conduct Authority (FCA) Asset Management Market interim report, which closes today.
Sean Hagerty, head of Vanguard’s European business, said: “Performance is a potential. Costs are a certainty, hence why investors should focus as much, if not more, on costs. A ‘health warning’ on the impact of costs would be a clear sign of intent from the industry that it’s putting the needs of the investor first.”
Another firm, SEI, placed the main focus of its response on how investment consultants work with pension schemes. The firm, which is a fiduciary asset manager, was critical of the current system.
It is not fair on trustees to have to choose asset managers and a system of delegated manager selection should be used instead, the firm said.
“We believe it is extremely challenging for a lay trustee to select a manager, especially on the basis of a beauty-parade which may last only 45 minutes,” said SEI.
Investment consultants “generally absolve themselves” of responsibility for the selection decision by putting forward two to three fund managers for the trustees to choose from, the firm’s response said.
SEI recommends that manager selection and ongoing monitoring should be delegated to a fiduciary manager, letting trustees spend more time on asset allocation.
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