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True Potential warns about FCA adviser fees focus

True Potential warns about FCA adviser fees focus

True Potential’s managing partner has dismissed market predictions as guesswork after a year of surprises which saw his company’s portfolios register good performance.

David Harrison said 2016 had been a bad year for experts who thought a British vote to leave the European Union and a Donald Trump victory in the US presidential elections would send markets plummeting.

He pointed out that anyone holding FTSE 350 investments after the Brexit vote would have seen their values increase, while there was no “cliff edge” after the US election result.

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Mr Harrison said: “What can we take from all this? Many ‘expert’ predictions have been exposed as little more than guesswork but it’s a mistake to dismiss signs and trends that are supported by facts.

“Markets are volatile and impossible to predict over anything but the very shortest time frame.

“Advisers and their clients in diversified portfolios have had a good year because they are better able to withstand market volatility.

“Our own £2bn True Potential portfolios are among the most diversified anywhere, with the ability to blend from 120,000 holdings, 28 asset classes and eight world-class fund managers.

“That level of advanced diversification is essential in the current climate and it is a trend that is certain to continue through 2017.”

True Potential's aggressive portfolio grew by 16.71 per cent between 1 January and 16 December 2016 while its balanced portfolio grew by 12.6 per cent and the defensive one grew by 7.02 per cent.

Next year will mark True Potential’s tenth anniversary and Mr Harrison said he had “great confidence” in the company’s proposition and in its advisers.

He said: “Big themes for 2017 will certainly be the combined power of advisers and technology as well as a greater focus on costs.

“The Financial Conduct Authority’s asset management review is already looking at ongoing fund fees and transparency.

“They have signalled adviser fees will follow. But low cost doesn’t mean only using passives, although they have an important role.

“Reducing costs means everyone in the cost formula: funds, platforms and advisers. This is already happening.

“By offering our own financial products with no charge tax wrappers, funds with prices benefitting from our scale, and scientifically diversified portfolios our advisers are saving their clients over £32m a year in fees.”

Mr Harrison said advisers should expect more change as the FCA seeks to plug the advice gap, but he said the savings gap represented a bigger danger.

damian.fantato@ft.com