Jeff Prestridge  

Hail the long-term investor

Jeff Prestridge

Jeff Prestridge

I am a big believer in this country’s diverse investment management industry.

It helps enrich and empower long-term investors, enabling them to take control of their financial destiny in later life.

It has been doing this for 150 years, ever since Foreign & Colonial Investment Trust – still going strong today – popped up on the scene.

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Indeed, it is a flag waver for the very best that the financial services industry has to offer.

A world leader – and we should be mighty proud of it. A slice of the financial services community that bar the odd scandal – think rogue trader Peter Young and Morgan Grenfell Asset Management in the late 1990s, think imploding split capital investment trusts (again, late 1990s) – has escaped with its reputation intact. Unlike the banking sector.

Unlike some, I am not polarised when it comes to support of any particular investment process – active or passive – or fund type (investment trust, unit trust or fund). All  camps have their merits.

Waitrose versus Lidl when it comes to active versus passive. If I had to come down on one side I would say Waitrose (most active fund managers are cerebral and half decent at their job).

I prefer investment trusts because of the key role independent boards play, especially when it comes to charges.

But the key is that the investment industry as a whole continues to strive to provide investors with best value for money – and the tools through which to build long-term wealth.

It is also fantastic that a vibrant investment platform market has developed as an adjunct to this industry, enabling investors to construct, build and change portfolios with ease.

To be able to see how their investment Isa, self-invested personal pension or share portfolio is progressing at any time of day or night. At the mere press of a button and the entry of a password or two.

Yet, no industry in this age of perpetual motion can stand still for long, none more so than the investment and investment platform sectors where ongoing regulatory intervention heightens the need for change and a greater focus on the investor.

This constant regulatory scrutiny forces both industries to keep delivering even better value for money for customers – whether it is through more competitive charges, greater pricing transparency (that triggers more competition) or delivering the service they claim to offer (for example, active rather than closet index tracking).

Slight shifts of the pendulum in favour of investors. 

The latest part of the regulator’s work has manifested itself in a number of proposals to improve the competitiveness of the investment platform market. It wants providers to address a number of key concerns.

These include high exit fees stymying transfers – and competition – between providers, opaque charges (making platform price comparisons nigh impossible), the promotion of model portfolios that are riskier than many buyers think, and the poor deal that investors get if they hold large cash balances on the platform.