True Potential is launching a range of low-cost passive funds, in a bid to mirror successes its new American private equity investors have witnessed in the US.
In January True Potential announced a “significant” investment from FTV Capital, which has bought a minority shareholding in the Newcastle-based network.
True Potential managing partner David Harrison said the private equity investors had highlighted several themes already well developed in the US.
“When it comes to some of the directions that the UK market seems to be going in, the US is already there. There is big pressure in the US over costs,” he said.
“That has helped us bring forward a series of funds we will be launching soon, which are a new range of passives where if we don’t make any money for the client, we don’t charge our investment management fees.”
If we don’t make any money for the client, we don’t charge our investment management fees. David HarrisonBrad Bernstein, managing partner at FTV Capital who now sits on the True Potential board, said cost is already a big issue in the US.
“The US is far ahead is the cost of asset management products. We think that over time there is going to be much more pressure, much more focus on low cost, better value asset management products for clients,” he said.
“When we talk about the question of a focus on fees, what has had a big impact on that is the low interest rate, low income environment.
“When you look at the current environment and you look at the returns - people have realised costs are critical.”
Mr Bernstein said his company was attracted to the UK in general because of the changes introduced by the Retail Distribution Review and to True Potential in particular because of the technology and investment products it provides, which he described as “next-generation”.
Adviser View
Andrew Whiteley, a financial adviser with Hertfordshire-based Provisio Wealth Management, said: “In 2008 we offered a low cost investment range using index trackers and ETFs because lower costs mean more performance for the client.
“I would agree that the move towards low cost funds is one that will continue to gather pace but I don’t think it is necessarily an active or passive argument. Clients are not going to argue against paying lower fees.”
