Sleeping with the enemy

Posted by Robin Powell on August 2, 2016

Transparency.

For those of us who’ve worked out how it operates, it’s hard not to feel resentful of the investing industry.

Depending on where in the world they are, investors are typically losing between a half and two-thirds of their potential returns in costs. Compounded over, say, 40 years, that can rise to three-quarters or even more. As well as making fund managers some of the highest-paid professionals in the world, the fees and charges consumers pay are lining the pockets of an array of intermediaries who, frankly, do little or nothing to deserve being paid at all.

 

 

As a result, around the globe, thousands of people are retiring every day with insufficient funds to last them for the rest of their lives.

But, on their own, neither anger nor righteous indignation achieves anything. Unlike some of my fellow campaigners for an overhaul of asset management, I don’t believe that the growth of intermediation is purely down to greed. We all need to earn a living, and the nature of asset management affords a myriad of opportunities to extract value while adding little or none in return. It’s mainly down to human nature that costs and complexity have spiralled out of control.

 

 

I also know there’s an increasing number of people within asset management who realise the system isn’t working. Reformers need to work alongside those insiders to change things for the better. This isn’t a time for rabble-rousing but diplomacy.

That’s why I’m proud and honoured to have been appointed an Ambassador for the Transparency Task Force. The TTF is a not-for-profit organisation, based in the United Kingdom, which campaigns for greater transparency in the financial sector, both in the UK and overseas. Its members are all volunteers — some from within the City, and others, like me, from outside it. No, we don’t always agree, but we are united in our aim to align the interests of the investing industry with those it is ultimately there to serve, i.e. consumers.

Transparency in investing is a noble and vital cause. Together, it’s a battle we can and will win.

 

Related post:
Transparency — the time for talking is over

Robin Powell

Robin is a journalist and campaigner for positive change in global investing. He runs Regis Media, a niche provider of content marketing for financial advice firms with an evidence-based investment philosophy. He also works as a consultant to other disruptive firms in the investing sector.

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