Time to rebuild the public’s trust in financial services

If a member of the public wants to distrust fund managers and investment advisers it is not very difficult.

Read any national newspaper or delve into the comment boards of any popular consumer site and you will find all manner of accusations and verbal brickbats.

Whether this is fair or not, it strikes me that at some stage, investment advisers and fund managers need to consider a fight back. But we have to define the problem first.

We live in a deeply sceptical world. Consumer groups seem to be in rude health, yet they face a hugely divided industry among both providers of fund management services and among IFAs.

There is a line of public relations which has seen a few fund groups build a startling momentum based on condemning what has gone before as well as current practice.

I suspect that this is not entirely fair, but in part it may be a natural consequence of the fact that this is a medium and long-term industry.

By way of illustration, how many 10-year old or even 20-year old contracts have you recommended recently? Presumably very few but you may have clients still in possession of those contracts because the costs of coming out are too high or a guarantee still applies. Clients may have some relatively high charging but also very high performing funds.

Indeed investment clients in the UK are probably sitting in a huge range of investments accessed in many different ways over the years on several different types of charging contracts.

As a proper investment adviser, you may have been able to consolidate these, but not every investor will. Some will have fallen away from being advised. It certainly makes for a messy sort of foundation from which to rebuild confidence.

There are other issues that we know all too well. These are a divided industry, extremely difficult markets and uncertainty about the regulatory landscape.

When I hear advisers debating the issue of charges, or the recommendation of esoteric products, their defence partly depends on their attitude to investment.

Financial planning passive advocates buy into some of the arguments about cost, whereas active advocates emphasise value while insisting they are not losing sight of cost. Others say they avoid structured products where possible or at least the wrong sort of structure.

With markets there is little you can do, though the clients of investment advisers hopefully have done better. They have also had someone trusted to explain what is happening through the past four years.