THE TOP CLASS WEDNESDAY UPDATE SAYS ‘NO DECORATIONS TILL DECEMBER’
We live in bifurcated times, siblings. Families fight over Brexit. Friends feud over Russian interference in our elections. And colleagues carp over whether Mike really should still be in Strictly Come Dancing. Apparently. What we need is something to heal us. A cause we can all get behind. That which unites us is greater than […]
THE TOP CLASS WEDNESDAY UPDATE IS THINKING ABOUT THE IMPORTANT STUFF – PART 2
After Mike’s Update of a couple of weeks ago, it’s a total joy and a welcome break from industry stuff and wider nonsense to welcome a new lang kitten to the world. Steve Nelson, who many of you will know as @langcatsteve, is the proud dad of Eva Nelson-Lebov who turned up yesterday. Eva and […]
TEN THINGS WE LEARNED FROM STATE OF THE ADVISER NATION 2018. NUMBER 7 WILL DRIVE YOU WILD!
So, it’s my second to last working day before paternity leave starts and I’m ticking off items on the to-do list faster than an [insert witty metaphor here that I’m too busy to think of]. Our second annual State of the Adviser Nation (SOTAN from hereon) research is in the field and Chester McSillypants here […]
THE TOP CLASS WEDNESDAY UPDATE DOESN’T KNOW WHAT ADVICE IS ANY MORE
Back from half term, just as you all go off on yours. In a week where timescales have proved to be pretty contentious, it’s tempting to make a political crack about that, but I’m going to resist. So let’s just Get Update Done and I think if we all really put our own agendas to […]
THE TOP CLASS WEDNESDAY UPDATE IS THINKING ABOUT THE IMPORTANT STUFF
It’s been getting on for 4.5 years since I joined the lang cat and still I get caught out by some of the differences between England and Scotland. Not the obvious things, like weather or length of tenure in major sporting events, but smaller details like holidays. So, while England is head down hard at […]
Mental health awareness is for life, not just for #WorldMentalHealthDay
Regular visitors to the lang cat will know that we are keen to encourage people to talk about mental health. Many would agree that working in financial services can be stressful. The competitive environment and performance expectations can lead to long hours, poor work life balance and a “work hard / play hard” culture. Confessing […]
THE TOP CLASS WEDNESDAY UPDATE PREFERS PROFITABLE EXOTIC SPICES
And so here we are again, siblings. As soon as one Update is done with, the next one hoves into view, and sometimes I can’t help but believe that these small ways in which we mark the passing of the weeks until the last syllable of recorded time do nothing but light fools such as […]
THE TOP CLASS UPDATE DOESN’T KNOW HOW TO BEGIN TO THANK YOU
A lot to get through this week, but in place of the usual top-of-Update whimsy, please accept heartfelt thanks from all of us to all of you who supported our 20 Mile CatWalk, which we completed on Saturday past. We had an amazing day, which is nice for us, but much more important is the […]
THE SEARCH FOR VALUE
Amidst absolutely no fanfare whatsoever 30th September saw the implementation of one of the main changes as a result of the FCA’s Asset Management Market Study. Over two years since the final report and getting on for 4 years since the terms of reference was issued, it’s fair to say it’s not been a speedy process, but finally, some of the biggest changes coming out of this study are finally live.
So, what has actually happened? All the new rules can be found in PS18-08 (itself published in April 18..), and centre around the issue of value for money. As of now, Authorised Fund Managers (AFMs) must publish a statement setting out a description of the assessment of value, either in the fund’s annual report or in a separate report. In either case, the statement must be published within 4 months of the end of the relevant annual accounting period. No big bang implementation, but these reports need to be published over the coming months. Value for money is subjective, however this is the criteria these reports need to assess….
1: Quality of service
The range and quality of services provided to unitholders.
2: Performance
The performance of the scheme, after deduction of all payments out of scheme property as set out in the prospectus. Performance should be considered over an appropriate timescale having regard to the scheme’s investment objectives, policy and strategy.
3: AFM costs – general
In relation to each charge, the cost of providing the service to which the charge relates, and when money is paid directly to associates or external parties, the cost is the amount paid to that person.
4: Economies of scale
Whether the AFM is able to achieve savings and benefits from economies of scale, relating to the direct and indirect costs of managing the scheme property and taking into account the value of the scheme property and whether it has grown or contracted in size as a result of the sale and redemption of units.
5: Comparable market rates
In relation to each service, the market rate for any comparable service provided:
(a) by the AFM; or
(b) to the AFM or on its behalf, including by a person to which any aspect of the scheme’s management has been delegated.
6: Comparable services
In relation to each separate charge, the AFM’s charges and those of its associates for comparable services provided to clients, including for institutional mandates of a comparable size and having similar investment objectives and policies;
7: Classes of units
Whether it is appropriate for unitholders to hold units in classes subject to higher charges than those applying to other classes of the same scheme with substantially similar rights.
COLL 6.6.20R (Assessment of value).
In addition to the above, over the next 18 months the AFM board will need to appoint two Independent Non-Exec Directors. And they will be covered by the Senior Managers Regime. This should focus the mind, especially for some of the potentially trickier points (4, 5, 6 & 7) above. Hands up if you’d fancy signing off, under SMCR, that your charges represent value for money relative to comparable services? For some funds this could be a difficult discussion…
Now, it’s very early days for this, and repeating the point made above there was never going to be a big bang implementation. These reports will be published as and when over the next 12 months. Having said that, the silence has been deafening. No material from the FCA to promote these changes, and especially to highlight what (if any) role advisers need to play. Should advisers be using these reports as part of their research and due diligence process? No one knows…
And surprise surprise there is no evidence (based on my google skilz) of fund groups publishing any material relating to these changes. Naively I had expected at least one fund manager to go early with these changes and take the moral high ground (“We’ve always strived to deliver VFM, so here we are…”) but as far as I can tell no one has. Move on please, nothing to see here as the .gif says
But despite the silence, this still feels like a huge change. The combination of the new rules, the reasonably prescriptive content of the reports, and the step change in internal governance should be a powerful one. So much so we’ve decided to devote the entire afternoon of our annual DeadX event on this very topic. We’ve lined up a great range of guest speakers all of whom will get into the detail of what value for money means for asset managers, advisers, platforms, NEDs and most importantly, customers. You can find full details at https://www.langcatlive.co.uk/ – over half the tickets are already sold, so don’t hang around. We’d love to see you there.
THE TOP CLASS WEDNESDAY UPDATE JUST WANTS EVERYONE TO PLAY NICELY
So I was at the Schroders Platform of the Year Awards last night, in which this sector of the industry proves each year that there really is no such thing as austerity. Good times. Anyway, it was a fun night, and the question I got asked most was ‘have you done tomorrow’s Update yet?’ and […]
