Such complexity makes it difficult for investors and the broader community to judge whether fees earned are for genuine management or “mediocre performance flattered by favourable external factors” said the Investment Association’s chief executive Daniel Godfrey.
“This is an increasing source of reputational damage to business and of concern to investment managers,” he added, explaining that “simplification will help our members in their engagement with companies with the objective of supporting strategies and incentives that lead to long term, sustainable wealth creation for the benefit of our clients, the companies themselves and the economy.”
The creation of the working group comes hard on the heels of the recent issuance of the IA’s new statement of principles and the creation of a pounds and pence charges figure designed to further improve the transparency of the sector.
Speaking to International Adviser‘s sister publication Portfolio Adviser recently, Godfrey said such moves are part of a broader response to what he sees as the biggest challenge facing the sector: articulating clearly, in as simple a way as possible, the value added by the sector.
“Our biggest challenge is going to be responding to the questions we will be asked as we take a much more direct role in the financial well-being of millions of people. It is a great opportunity to grow but it comes with a great deal of accountability and scrutiny.”
The working group brings together representatives from both the investment community and the corporate world to look at the issue and, the IA said it expects to present its proposals in the Spring of next year.
The working group includes:
- Russell King, remuneration committee chairman, Aggreko PLC and Spectris PLC
- Helena Morrissey, CEO, Newton Investment Management and chair, The Investment Association
- Edmund Truell, chairman, strategic advisory board of Lancashire and London Pensions Partnership
- David Tyler, chairman, J Sainsbury PLC
- Nigel Wilson, group chief executive, Legal & General Group PLC
- Daniel Godfrey, CEO, The Investment Association
