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IMA's Godfrey: why we've failed on fund costs and my proposition
by Daniel Godfrey on May 17, 2013 at 13:28
Invstement Management Association chief executive Daniel Godfrey outlines where we've gone wrong on fund charges and outlines his solution to the dilemma.Godfrey (pictured) writes:
The search for a way to explain fund costs and their impact on performance in a way that actually helps consumers, rather than leaving them scratching their heads, may not have cost as much blood as the search for the Holy Grail, but it probably has cost as much in treasure and generated many times as much heat as light.
The reason we’ve failed so far is that as 'experts' we’ve been asking too much of a solution.
We want it to be accurate to ten decimal places, personalised to every investor, to work equally well for a unit holder as for a prospective investor, to encompass the known outcomes of the past as well as the uncertainties of the future.
A wise former chairman of mine was fond of saying: ;Don’t let the best become the enemy of the good.' We shouldn’t allow the search for perfection to stop us from getting a really good answer.
Making a difference
As an industry, this search for perfection has left us accused of obfuscation - that we must have hidden charges and we want things to stay that way.
It may be unfair, but it’s up to us to develop ideas that achieve something really useful and robust if we want to move on in an environment of trust.
And this is essential if asset managers are to fulfill their potential to make an important and positive difference both to consumers and to the economy.
So I have a proposition that I want to ask a broad range of stakeholders to help me with. This includes asset managers, clients, advisers, the media and consumer representatives.
I want us to work together to build a simple solution and to develop a methodology that makes customers better informed without needing a PhD in fund accounting.
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