Only greater transparency will allow fund managers to earn clients’ respect

Listen to this article

00:00
00:00

From Mr Alan Miller.

Sir, I refer to the excellent article “Changing attitudes force fund managers to rethink” (September 2) by Kate Burgess, highlighting the business pressures facing fund managers as clients demand lower fees. It is clear that investors are increasingly becoming aware that they have been ripped off by their fund managers for years.

Our research at SCM Private has shown that most retail investors are shown just 50 per cent of the real total costs/fees, and just 40 per cent of their investments held disclosed on a regular basis.

As if this is not unscrupulous enough, our most recent research has revealed yet another practice that puts clients at risk, rather than the investment house. Up to 100 per cent of clients’ investments can be lent out to undisclosed borrowers in exchange for a wide range of undisclosed collateral.

If investment companies, the Investment Management Association and the Financial Services Authority are sincere about having investors’ interest at heart and truly appreciate it is their clients’ money that they are recklessly gambling with there needs to be a thorough industry-wide overhaul of transparency levels. A systematic root and branch review to earn back the respect of investors, rather than empty promises and missed opportunities, is urgently required. Investors are entitled to 100 per cent transparency of investments, fees and risks.

There is a perfect opportunity on the horizon as it is not long before the Financial Conduct Authority replaces the FSA with a new remit. Let us hope it takes transparency and investors’ interests more seriously than the old guard. Only then will investors trust their fund managers and want to invest again. Surely this is in everyone’s interest?

Alan Miller, Co-Founder and Fund Manager, SCM Private, London SW1, UK

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't copy articles from FT.com and redistribute by email or post to the web.