Fund charges debate distracting from real issue

Fund charges debate distracting from real issue

The debate over fund charges is doing nothing to help consumer trust in the asset management market, an industry professional has warned. 

Speaking at a Next Wealth conference in London this week Petronella West, chief executive of Investment Quorum, said consumer trust was the first issue the market should be looking to solve rather than continuing the argument surrounding charges. 

Fund charges had been pushed into the spotlight by European regulation Mifid II, which was introduced in January last year.

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Under the rules firms are required to disclose all costs and charges that an investor in a fund or other investment product must pay.

Ms West acknowledged there were currently too many funds in the market, but said the fund manager industry would "sort all that out for themselves" eventually. 

She said: "There are too many funds probably with retail fund charges that asset managers are sitting on, there's lots of stuff that needs to be cleaned up and hopefully the regulator will gradually get to all those bits.

"So what we'll end up with is a market looking at consumer trust, which is the first thing we need to solve.

"Because actually the consumer is still very distrustful and things like the charges debate doesn't make the consumer feel any more confident, because they just think they are being over charged all the time and they can't see what the value is." 

She added: "The fund charge is about the fund charge, it's about the value we are adding by blending funds and making sure we're keeping on top of all the different ones." 

Ms West took up the position of chief executive at Investment Quorum in 2018 when former chief executive Lee Robertson left the company as part of a management buyout. 

Mr Robertson, who was also speaking at the conference, suggested a new approach to adviser charges would see companies should soak up platform charges to drive down investment cost and increase returns for clients.