Planners unite to attack fund managers
A raftof high profile financial planners and industry figures have launched a scathing attack on the funds management industry for a list of deficiencies they say are a result of managers putting their interests before those of the end client.
Count Financialmanaging director Barry Lambert,Associated Planners Financial Servicesmanaging director Ray Miles, soon-to-be managing director ofAustralian UnityRohan Mead, principal of Retirewell Financial Planners Tony Gillett, and industry consultant Wes McMaster have all united to criticise the industry.
Lambert, part of the group speaking at a funds management conference in Sydney, says the funds management industry does not put the client first and is “about looking after itself”.
“The industry should be talking about how to get a better deal for the client, but they are more concerned with how to make a dollar,” Lambert says.
He attacked managers for index hugging, saying clients are not getting value for the fees being paid and would eventually go the way of direct investment.
McMaster, Miles, Mead and Gillett all denounced benchmarking, arguing it was deceptive and did not inform clients of the risks being taken to produce returns.
McMaster says fund managers have been guilty of changing style due to market conditions without informing investors, and Miles agrees, saying some Australian equities funds have at times held up to 40 per cent of assets in cash, and that “we could have done that ourselves if we wanted”.
Both McMaster and Gillett denounced soft dollar commissions, saying clients are paying for these through higher management expense ratios, with Mead saying managers should together “have the guts to say no”.
Miles says the feeling is that fund manager fees are too high, with McMaster saying they need to be simplified to become comparable across all funds.
McMaster also claims planners thought that business development managers did not add value and that they were only there to increase fund manager sales.
Mead adds they are not playing enough of a product development role for managers, while Gillett claimed more practice management is important to smaller dealers.
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