Value for money

As the FCA kicks off the challenge for asset managers to assess the value they deliver customers, we’re hitting the phones to talk to the end customer (advised and non-advised) about what they perceive value to be.


It’s super clear that KIIDS are frankly a waste of time. No-one reads them. They are not doing their job which is to inform the customer. Yes I have only personally spoken to 10 people so far on this specific Value project but we’ve been testing these concepts more broadly with focus groups and deep dive interviews for more than 2 years now. Of the 10 people in the last week, only one person has ever opened up a KIID and that was in frustration and as a last resort because he couldn’t find the fees anywhere else.

This is a clear example of how transparency is not the same as clarity. Parallels are drawn with Apple’s terms and conditions.


As for understanding the mandate, the aim of the fund, even the most confident investors do not know this in more detail than the asset class, the region and (sometimes) the fact that it is aiming for capital growth/preservation/income. I’ve talked to people about Fundsmith Equity, RIT (investment trust), Aviva funds, Janus Henderson Strategic Bond, Vanguard LifeStrategy and Woodford Equity Income – nobody knew what the benchmark was but the benchmarks they used in their heads were the FTSE100 and cash. The bond investor didn’t know what a strategic bond was, let alone the benchmark. So the first response to how they go about assessing value is typically for people to work out if they’ve done better than the FTSE.

FCA: Evidencing value for money

Are you grappling with the FCA’s requirement for fund managers to assess and report on Value? Are your plans in place to hit the September 2019 deadline? If not, we can help.

As for comparing like with like, this is “impossible” but across the board consumers are clearly very frustrated at not being shown returns net of fees. “I’m not an idiot. I know there are charges. And that’s fine. But just tell me what they are!”


Jargon is consistently called out. Accumulation and unbundled and share class alphabet soup are key repeat offenders. There is some value perceived in comms although interestingly enough not one of my 10 people to date has ever called an asset manager, visited their website or read their material (beyond my frustrated man who opened a KIID to look for the charges) – it all comes from the platforms and/or advisers.  One person had been to Terry Smith’s Annual Shareholder’s Meeting – “this is impressive – I want to see the whites of their eyes.”


As we continue this work, we would like to talk to asset managers who are thinking about value – it’s pretty hard to assess this without asking the people who are paying for it! And there are some very clear messages starting to come through on where value is perceived – and where scrabbling to deliver ‘value adds’ to justify fees is falling flat. As an aside we could all start thinking harder right now on how we do a better job of being clear on charges, and on showing performance which takes these into account.


If you’d like to talk to Holly about this piece of work, please contact her here.

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