By Ian Fraser
Published: Sunday Herald
Date: September 30th, 2012
Fund managers are ripping off their customers through a minefield of hidden charges, misleading advertising, and obfuscation over performance, according the founders of new campaign aimed at ensuring investors get a fairer deal.
Alan and Gina Miller – a husband and wife team who held senior roles in the City before launching SCM Private in June 2009 and the True & Fair Campaign on January 31 – also blame third parties such as IFAs for syphoning out investors funds and giving savings and investments a bad name.
“The very people who deserve to be told the truth about charges, and who need the greatest encouragement to build up adequate savings are being deceived,” said Gina Milller, who formerly advised fund management firms on their marketing. “People in the industry have forgotten their ethical responsibilities. We are campaigning – imploring – the investment industry to think about the ordinary saver and significantly boost transparency.”
Alan Miller, who was chief investment officer at New Star Asset Management, having previously held senior roles at fund managers Gartmore and Hermes, said: “one could argue much of what is done by fund management firms is legalised fraud and the regulator in the UK has done nothing to change that.”
The Millers are calling on the Westminster government, and the EU, plus the Financial Services Authority to require the fund management industry – which has assets under management of £4.2 trillion in the UK alone – to become more transparent about performance and fees.
They want to see a single figure, which pools all charges made by a fund, divulged by every fund, and said they are putting this into practise at their own London-based firm SCM Private, which invests directly in low-cost exchange-traded funds.
Alan Miller said that the FSA’s Retail Distribution Review, which is due to shake up the way investment products are distributed and sold from January 2013 is only going to make matters worse. “The new prices that asset-management firms will quote from January 1 will not include important additional fees like platform fees and advice fees. This will lead to consumers being further misled. Full transparency and a single number would have been much better.”
Gina added: “The reason we’re doing this is we have the knowledge and the independence. It doesn’t matter if the City doesn’t like what we’re doing do. We’re passionate about the fact that somebody somewhere has to stand up to the City. It’s our way of putting something back.”
Charlie Parker, investment editor at CityWire, said: “Sometimes poachers are the best gamekeepers. There’s probably no-one in Britain who has a clearer view of the excesses of marketing-fuelled asset management than Alan Miller.”
An edited version of this article was published in the Sunday Herald on September 30th, 2012