Investment managers are not doing well enough to make progress and defend their reputation, says star fund manager Neil Woodford.
In a report from the CFA Society, published today, and covering challenges around communication and transparency in the investment industry, Woodford says: “Part of the reason that we don’t do well enough is because of the complexity that has been laid on to that quite simple function of taking savings and investing them on behalf of people.
“All of those involved in the process have added layers of complexity to fee structures that have diluted returns that should find their way back to the providers of capital.”
“Our industry has been extremely adept at creating a mystery. What we would like to move to is a system where the difference between the gross and net return for the investor is the amount we charge for doing the job we do.”
Aberdeen Asset Management chief executive Martin Gilbert, who also contributed to the report, says a growing professional profiles of accountants and lawyers would also spin the progress in the industry further.
He says: “These organisations have codes and standards of conduct, educational requirements and disciplinary structures. I like to think that the broader promotion of these bodies – and of the standards by which they regulate their activities – might have helped to rein in some of the excesses in the run-up to the global financial crisis. It would still be valuable today.”
Elsewhere, the CFA Society report had looked into the difficulty of finding the cost of investment, the need of financial education as well as the urgency of having regulated qualification requirements for investment professionals.
Will Goodhart, chief executive of CFA Society of the UK, says: “Our members perform an important social function, but it is one that is not well understood.
“It is also one that is widely criticised. Some of the criticisms directed at the profession are a consequence of our failure to explain ourselves; others are more fundamental and should be addressed.”