Colin McLean, managing director of SVM Asset Management, told FTAdviser that fund managers underperform all the time, so stories are often needed to mask or explain this.
“People need to build a good framework for assessing these things, you need to question the premise underneath a glossy summary.
“Sift through things and find numbers that are comparable, disregarding what can’t be.”
He stated that it can be hard for advisers, who are often pressed for time, in assessing new options for clients, noting that centralised panels and analytical tools can be useful for those who are unable to get out and actually meet the managers.
Greg Heath, managing director at Derbyshire Booth Financial Management, said that the jargon and spin has definitely gotten worse since the introduction of the Retail Distribution Review.
“It is bad enough for IFAs but poor clients, even the smart ones, are left in the dark. You only have to read the money blogs to realise ordinary investors are making poor decisions on poor information.”
He added that this firm tends to outsource research using the likes of Trustnet and Morningstar, as “it allows us to compare like with like”.
Graeme Mitchell, managing director at Lowland Financial, called the current state of affairs “a joke”, saying that one of the reasons he moved to using model portfolios was to avoid the need to sift through fund brochures.
“I can understand why the big brands want to put their own spin on things, but when the spin gets in the way of simple information about the product, it just takes up more of our time, which leads to higher costs for the investor.
“I think one of the trade bodies needs to step in and help to standardise the information that’s needed, creating some kind of common template.”
Of course ‘key investor information’ documents have feature in the industry since 2012, when they were introduced under the fifth iteration of the Undertakings For The Collective Investment Of Transferable Securities (Ucits) rules for regulated investment funds.
Dropping an ‘i’ to become just ‘key information’ documents, they are set to be rolled out for all packaged retail and insurance-based investment products (Priips) from the end of next year, as regulators attempt to make it easier for retail investors to compare products.
This includes funds, structured products, unit-linked and with-profits life insurance contracts, while pensions and pure protection business are out of scope.
A spokeswoman for the Association of British Insurers added that the industry is actively engaging in the consultation process and keen to see feedback from the consumer testing for key information documents, to ensure consistency and simplicity for customers when comparing products.
“The ABI has also started work with a Pensions Language Steering Group, to encourage simple and consistent terms across the sector.”
The Investment Association’s head of training and education Victoria Nye told FTAdviser that she is currently working on a new project aimed at helping improve the accessibility of a clear glossary of industry terminology for investors.
“We’ve already got a glossary on our website, but we want to make it more of a living list, something that advisers can stick on their websites for clients to use.”
She explained that it wants to help clarify specific terms at various levels of detail and is actually in the process of enlisting advisers to help with the task. The Wealth Management Association confirmed it was also adding to existing guidance on its website, along with the new glossary.
For its part, earlier this summer the Financial Conduct Authority launched a communications discussion paper, aimed at encouraging firms and consumer groups to deliver information to consumers in more effective ways.
It suggested more innovative ways of engaging products and services, for example by using videos or infographics, to present information in a way that is easy to understand.
peter.walker@ft.com
