Mr Woodford runs an estimated £33bn across Invesco Perpetual funds, St James’s Place mandates and the Edinburgh Investment Trust. He is quite simply ‘the’ star fund manager in the UK and has an enviable performance track record to justify his allure.
There were no fewer that 11 stories relating to the Woodford departure written across our various teams here at FTAdviser following the news. Readership stats suggest we didn’t overestimate reader interest: three of these stories were in the top five most read for the week; the original breaking news piece is already the sixth most read article of the year to date.
Among the most interesting of the avalanche of coverage that followed the bombshell announcement was the rapid re-rating of Mr Woodford’s main funds. Within hours, Chelsea Financial Services, Whitechurch Securities and Bestinvest confirmed they had suspended their ratings on his Income and High Income funds.
Jason Hollands, managing director - business development and communications at Bestinvest, said at the time the firm had “suspended the buy ratings on all his funds”. He later confirmed that the ratings for the Income and High Income funds had been downgraded from four stars to three to reflect the rating on Mark Barnett.
Some analysts, for example Rayner Spencer Mills Research, were more cautious in their warnings, but by any measure that’s a hell of a reaction. The question is, was it justified?
The manager taking over when Mr Woodford eventually departs next April, Mark Barnett, has worked alongside his big name colleague for 17 years.
Speaking to FTAdviser sister title Investment Adviser, Mr Barnett sensibly refused to be drawn on stylistic differences and said he will be spending the next six months meeting clients and getting to know the smaller companies at the tail end of the Income and High Income portfolios.
I wrote in a column earlier this month that I’m not convinced we should be so focused on star fund managers - who are, after all, just the public face of a large team in most cases - and should instead focus on the fiundamentals of a fund’s value to a given client. I stand by that.
Will the essential proposition of these funds change? I doubt it. Obviously this is major news and it is rightly being watched closely, but equally clear is that advisers must see through the hyperbole and panic and take a considered decision when the time is right.
Give it some Ssas
Concern over the lack of proper regulation of small self-administered pensions or any requirement for a professional administrator to set up and run such schemes continues to create problems for advisers and providers alike.
This week, Neil MacGillivray, head of technical support unit at James Hay Partnership and newly-elected chairman of the Association of Member-Directed Pension Schemes, told FTAdviser this week that members are being refused bank accounts for Ssas - and some are even being asked to move to another bank.
Mr MacGillivray said that he know of three banks, one of which is a high street bank, refusing to open accounts over fears that the schemes can be abused for pension liberation scams, but declined to name those involved, stating that the trade body is conducting an ongoing investigation.
The news follows on from our revelations last month that pension providers are refusing transfers to Ssas and serves to further emphasise the need for regulatory action to allay fears over Ssas and take the pressure away from providers.
Loss-leading low-value advice
Continuing the major theme of the post-RDR world, the ‘advice gap’ for lower-value mainstream clients, this week a major survey published by Aviva confirmed what many already knew: advisers are generally not walking away from their non-wealthy clients.
The survey, which gathered the repsonses of 1,200 advisers, found that around half service clients with less than £50,000 to invest, meaning there has been little change since the new rules came into force.
What it did reveal, however, is that in order to maintain a service at this end of the value chain advisers are taking a hit to their bottom line, with one in five saying they service these clients at a loss. A further 22 per cent have yet to decide how to deal with them.
Andrew Beswick, intermediary director at Aviva, told FTAdviser many adviser firms have capital in the bank that might be able to soak up some of the loss - and that others may be taking a longer view of client profitability and serving clients at a loss today in the hope they become profitable tomorrow.
In truth this is no different to how many advisers operated pre-RDR, with many telling us they have always served clients with little to invest at a loss or, at best, broken even. It just goes to show how relationship-led advisers are that they refuse to abandon clients that cannot meet fees - I hope most find a way to continue to do so.
