View the article online at http://citywire.co.uk/wealth-manager/article/a728267
Why Hargreaves Lansdown rejected 0.2%
by Danielle Levy on Jan 15, 2014 at 12:59
‘It is up to the fund manager to decide what they want to charge. We have said put forward your best foot.’
Gorham said Hargreaves' decision to pressure fund groups to offer the best prices was no different to how supermarkets negotiate deals for their customers.
'They say to suppliers, you have got the product, we have a massive shop window and we think our clients should get a better deal. The suppliers then decide what they want to do. That is exactly same way we like to treat it.'
When asked if the direct-to-consumer platform is concerned about the potential impact of discounted prices on the margins of the asset management companies, Dampier said prices of active funds could go even lower.
‘I think active managers could drive down their costs more. There are huge costs. If you looked into asset management companies you see a sales director, a marketing director, someone who makes the tea. That is incredible. There are layers upon layers of management,' he said.
'I shouldn’t really say it as I will upset some of my colleagues and friends, but they are definitely top heavy in my view. There could be quite a lot of change and don’t even move me on to the salaries as you well know. And I am not talking about fund manager salaries either.'
Gorham, meanwhile, expects asset management companies will look to overcome a potential hit to their margins by increasing volume.
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