Are your investments in the best possible hands?
A recent independent article reported that one of the UK’s largest investment adviser firms had some of the poorest performing investment funds.
This investment house manages over 10% of the £1.39 trillion currently invested in UK retail funds. This has been mainly achieved through an aggressive adviser acquisition program spanning a 30 year period.
Independent reviews have repeatedly highlighted that a large proportion of their funds perform poorly, when compared to other same sector funds.
To add further to the pain of poor fund performance are the high costs associated with running their business model. Charges are approximately double the industry average.
The survey further revealed that in most cases, clients are often unaware of the poor long-term performance of their investment funds and the high charges.
As independent financial advisers we are authorised and regulated by the FCA and reading this report resulted in a whole range of emotions and questions from us that we thought our clients, and indeed anyone holding investments should be asking themselves.
• Do you know who your investment funds are managed by?
• Have you reviewed your investment funds recently?
• Do you know if your investments are still using the whole of market model?
• How often do you review your investment fund running costs?
The list goes on, but the one question that really struck a chord with us, as independent advisers, was the point of independence and the whole of market advice.
Is your investment fund provider still providing whole of market advice?
For the business model of this particular investment house to continue to be financially successful, they continually acquire financial services firms. These firms then transfer their clients into their investment funds and worryingly, to their restricted model.
For a client that initially engaged an independent financial adviser, one that offered whole of market advice, this transfer would be questionable, and we would ask anyone coming to us for a review of their investments whether they were explicitly advised that they are leaving the whole of market investment model when transferring their investments.
Is your investment fund as good as it claims?
The FCA, the body that regulates the financial services market, requires fund management companies to complete an annual value assessment report on the fund range they offer consumer investors.
The criteria they use, and how they conduct this assessment, are left to the company’s own discretion and interpretation of the regulations. It is this which has led to the industry questioning the value of reporting.
When self-assessing itself the leading investment fund manager in question reported that only 3 of its several hundred funds performed unsatisfactorily and were not offering value for money.
Furthermore, 23 of the 31-unit trust funds with a 5-year history with this investment house have performed worse than at least half of their sector peers, yet from these 31 funds, they rated themselves in 24 instances as either ‘good’ or ‘broadly delivering value’.
One of our Financial Services directors, Matt King, added “The one thing we need to take away from this recent report is that anyone that holds investments with one of the UK’s largest investment fund providers, or if they are making pension contributions to one of their funds, they must seek a review by an independent financial adviser as a matter of urgency. This is especially true if they original engaged and contracted with an adviser that was providing whole of market independent advice, as this may no longer be the case if their portfolio has been moved as a result of a change to the business.”
If you would like one of our independent financial advisers to review your investment portfolio, please get in touch. You can telephone us on 020 3697 7147 or email us at firstname.lastname@example.org to make an appointment on a no fee, nor obligation basis.