Ousted Investment Association chief Godfrey calls for manager pay reform

Godfrey Daniel Investment Association 2015Ousted Investment Association chief executive Daniel Godfrey has called for reform of manager pay and more clarity on fund fees in his first interview since his departure from the trade body.

Speaking to the Financial Times, he says he stands by his previous attempts at the Investment Association to reform manager pay and for fund managers to provide more information on how their costs are structured.

“The board agreed that clients are absolutely entitled to say ‘I know you can earn a lot of money from managing my money, so please reassure me that you do well when you do well for me, and not when you don’t’,” he says.

“We need a radical simplification of executive remuneration,” he says, and as part of this investment managers should get more involved in company executive pay and renumeration.

Godfrey was ousted from his position at the head of the trade body last month, after a revolt from some member firms such as M&G and Schroders, who are thought to have been unhappy about his goals and his approach.

However, Godfrey is not backing away from the Statement of Principles that was at the centre of the member revolt, which urged for more transparency and putting clients first. He says that fund managers need to be more open and transparent about their fund fee structures.

“The industry needs to focus on meaningful transparency. I don’t think the industry has a problem with transparency, but it needs to be meaningful, and help consumers and advisers make informed choices. Some fee structures could be simplified and that would make them easier to understand,” he says.

“Complicated products are not necessarily a bad thing, but we have to explain why you can trust what’s under the bonnet — the costs of running it, the likely outcomes and what the risks are — very clearly.”

However, one area he was reluctant to discuss was his departure, which was abrupt, and which he says “has already been more documented than it deserved”.

However, Godfrey says in his next move he intends to remain in the investment management industry, and hopes to firm up his plans early next year.