So this morning I was talking on Twitter about an interview on Radio 4 with Neil Woodford, during which he mentioned that he thought the charges of active managers were high and needed to come down.
I then got feedback from some who pointed out that Neil is now operating in a lower charging environment. Fair enough, but that wasn’t my point.
The issue I have is just how short term his change of heart has been. With his new investment firm yet to celebrate its first birthday, I don’t think it would be unfair to say that he is still relatively new to the world of lower charges.
The important point, for me, is that I would consider it to be easier (cost-wise) to set up a new investment firm, outsourcing what can be done externally and with a fresher approach for charges. What is much harder is to effect a lower charging environment for an existing and substantial investment firm.
Having been a loyal employee of one such substantial firm for a long time, it just seems a little uncomfortable for him to then jump ship and suddenly pour scorn on the charges of that company and its competitors. It just feels too quick a turnaround and, frankly, rather unfair.
The larger investment houses will need to reduce costs of course, but for the well-established firms that will take time. The last thing we want them to contemplate is closing shop and simply starting new ventures – investors would suffer.
I am all for lowering charges and adding value for investors. It just seems a little too close for comfort.
Philippa Gee is managing director of Philippa Gee Wealth Management