Well, lets just say we are not counting our chickens just yet…
Nevertheless, we were encouraged to hear David Cameron slam traditional investment fund managers this week saying “I think one of the things that saps people’s enthusiasm for saving in investment products is just a sense that they do not understand the fees and charges.”
We hear you Prime Minister! Although somewhat cynically we were speculating whether this is as a result of reviewing the charges on his offshore unit trust investment which has brought him so much unwanted press in recent weeks!
BDB’s evidence based investment philosophy was born out of a shared sense of frustration at the traditional methods of investment and the opaque nature of the way fund managers have historically charged for their services. We continue to regularly meet clients who feel they are getting a very good deal on their portfolio only for us to lift the bonnet to find huge hidden costs being incurred by their managers in addition to the quoted management costs.
We have studied the impact that even a small increase in cost can have on a pension portfolio over a lifetime. Even a tiny annual difference in charges can compound to make a life changing sum over the lifetime of a pension portfolio. This is why one of the core beliefs within our philosophy revolves around driving down all costs. After all, this is the only way to increase long term returns without taking more risk.
We are hearing of downward pressure on the fees of traditional managers within our profession and will watch with interest how this story develops. We would welcome any movement towards transparency on costs within investment products, however, we have experienced similar noises before only for it to end disappointingly.
The truth is (and the evidence shows us) that the traditional approach will always be up against it, due to the costs and risks the investors must bear due to their manager’s active attempts to outperform the markets.
If you are disillusioned with the returns from your traditional portfolio or would like to learn how much it is really costing you we would love to help.
Why not talk to us about it? There is a better way, and it doesn’t require a crystal ball!