- Mercer’s expert presented some press data points which highlighted the challenge and raised the questions around the perception that fund managers have underperformed and the high margins they have for active management.
- Our expert presented Mercer’s model for a fairer approach linking performance to fees and cost of passive alternatives.
- From the adviser group circa 50% felt they were overpaying for active management.
- The group agreed it was a complex challenge linked to clients, advisors and the structure of the model.
- Potentially there are too many funds created to sell/drive revenues for fund management firms.
- It is likely that fees will be reduced in the future due to the challenge from the younger generation of clients who do not understand the value of the revenue and only see the price.
- Performance and transparency of value exchange between charges for funds and relative performance is becoming harder, particularly when performance is not great and client have a range of other issues where they would prefer to invest.
- Currently clients don’t question fund fee levels but this is likely to change and firms need to consider the future models.
Experts: Nick Rosenblatt, Mercer Global Investments
Facilitator: Rod Bryson, Capgemini