Facts & Figures

For years British investors have been completely misled by the investment management industry in relation to transparency of charges and investments.

The issues of hidden fees, lack of clarity and convoluted language have dogged the investment industry for the past decade. Nothing has changed, with the odds consistently stacked against consumers being able to make informed and competitive decisions regarding their investments.

The fundamental problem is that it has paid investment management companies to be confusing and opaque. In addition, there has been no regulatory or behavioral incentive for the industry to behave differently. Investors deserve better.

The time for change has come. The time for action is now.

The Hard Facts

  • The UK Investment Industry is profiteering from their retail clients – UK funds pass back just 6% of large fund economies of scale vs. 33% in the US.
  • Nearly half (45%) of UK clients do not know how their investments are performing and nearly a third (29%) don’t know the charges.
  • In retail funds alone, double charging and ‘cartel-like’ pricing is costing the public £2.6 billion every year.
  • UK retail investors are currently paying 58% more than US retail investors.

OAP – Old and Poor

  • Over half (58%) of British workers would rather spend spare cash on a holiday than save it for their retirement.
  • 49% of the UK workforce is not saving enough for retirement.
  • More than 1/5 of Britons do not have any savings and 35% have less than £500 set aside.

"The easiest way to make money is to take it from
other people; that is what the financial services
industry does…" Pauline Skypala, FT fm, 9th September 2013

Posted By: True and Fair, 2:05 am

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From Knowledge to Action

  • There is little evidence of price competition in the UK, with Lipper research finding that among funds that had changed their fees (up or down) between 2001 and 2011, 80% had raised them.1
  • 68% of money invested in active funds within the UK largest retail fund sector charged an identical Annual Management Fee.2
  • In 2009, the UK had the 4th highest total charges out of 19 countries (ranked by country of domicile).3 Weighted by assets, UK funds charged 79% more than US funds.
  • 49% of the UK workforce is not saving enough for retirement.4
  • More than one fifth of Britons do not have any savings and 35% have less than £500 set aside for retirement.5
  • SCM Private has calculated that one of the largest hidden elements – dealing costs – amounts to £2.7 billion pa in UK retail funds alone. Using the same assumptions, these costs would be £18.5 billion pa in the whole UK savings and investment industry.6

Sources

Sources:

1 Time May Change Me – Mutual Funds’ Management Fee Changes by Lipper, October 2011

2 SCM Private Analysis of 233 active funds within the IMA All Companies Sector with total assets under management of £63.4 Billion utilising latest Morningstar data available as at 23rd January 2012.

3 Mutual Fund Fees Around the World by Ajay Khorana, Henri Servaes and Peter Tufano, May 2007

4 The seventh annual Scottish Widows UK Pension Report, June 2011

5 More than a fifth of Britons have no savings, Daily Telegraph, 1st April 2010

6 SCM Private Analysis based on Morningstar data of 2,162 UK unit trusts with total assets under management of £591 Billion, utilising latest Morningstar data available as at 23rd January 2012. The average fund turnover was found to be 65% pa and based on the overall asset allocation the weighted average dealing cost was estimated at 73bp. According to the IMA, the total UK retail industry is worth £560.3 Billion and the total UK investment industry £3.9 trillion as at November 2011.