As star fund manager Neil Woodford criticises the industry for overcharging, is he correct?
Gina Miller is founder of the True and Fair Campaign and SCM Private, says Yes.
We’ve been highlighting high fees, hidden charges, index cloning and other scandalous industry practices for five years, and have been actively campaigning via our True and Fair Campaign since 2012 for new legislation to end these practices. It is fantastic to see other fund managers, like Neil Woodford, join the growing chorus of voices demanding change and a fairer deal for UK savers and investors. These issues are not new, and have been happening for decades. But as we found (and possibly Woodford has as well), you only fully appreciate the extent of hidden charges when setting up your own firm, and realise how much other companies charge in undisclosed fees, intermediary layers and inefficiencies. Hidden fees erode savers’ returns, and penalise them through pernicious costs that are deliberately obscured and misleading. It is time this shoddy practice ended, and the more people prepared to stand up and call time on this rip off, the better.
Mark Dampier is head of investment research at Hargreaves Lansdown, says No.
Platforms have been cutting the cost of investing, although some fund managers have yet to follow suit. The largest of the fund platforms have taken the opportunity of regulatory changes to use their scale and distribution power to drive down the cost of investing for the consumer’s benefit. And the move towards commission-free share classes has improved transparency and focused minds on issues such as “other expenses”, which boost a fund group’s earnings beyond the headline annual management charges. A one price approach, as used by managers such as Neil Woodford, is surely the way forward. Ultimately, the big groups need to reduce their fees. Woodford has backed up his words with action by offering his new funds for prices as low as 0.6 per cent – 50 per cent cheaper than the fund he was previously managing. And investment platforms have made fund switching very easy – investors can now simply vote with their feet.