http://www.moneymarketing.co.uk/smoke-and-mirrors-how-pensions-will-suffer-due-to-hidden-fund-charges/?cmpid=amalert_2024261&utm_medium=email&utm_source=newsletter&utm_campaign=mm_daily_news

Oh, here we go again. Yet another investment consultant trots out that same tired old analogy between investment providers and supermarkets. Here’s what Graham Bentley has to say regarding the, increasingly desperate, attempts of fund managers to obscure their charges.

“Most companies do not declare what it costs them to administer their business. Tesco doesn’t tell you how much it spends on every bit of the business. I’m not sure what marginal benefit there is for customers to make their decisions on a fifteenth of a basis point on varied underlying costs.”

Graham – please do stop with this ridiculous Tesco comparison. It is (and always has been) a complete red herring.

Tesco don’t need to give you a breakdown of costs because the products themselves exhibit complete cost transparency. When I buy a tin of beans, I know what I will be paying and I know, with a pretty high degree of certainty, what I will be acquiring for my money.

.With a fund, however, the picture is very different because what I receive (i.e. the gain on my investment) is not known to me when I make the purchase and, because that return is directly affected by the charges levied, I do need to know exactly who is taking what away from my fund.

If you want to use a supermarket analogy, try this one on for size.

Tesco sell you a tin with ‘some beans’ inside. You don’t know how full the tin is until you have paid for it and got it home. The amount of beans in any particular tin will depend upon the costs Tesco incurred getting that individual tin to the shelf.

In that situation, I suspect consumers would be much more interested in a breakdown of Tesco’s costs

 

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Considering how much companies go on about this (we’re customer focused, we are 100% committed to our customers, we are completely ‘customer-centric’ etc etc etc) it’s astonishing how utterly awful so many of them are at delivering it.

So, here’s the Park Financial ‘easy guide’ to how to actually ensure good customer service happens.

1) Take every member of your staff aside and drill this simple concept into their head. IF A CUSTOMER HAS A PROBLEM WITH MY COMPANY’S SERVICE, WHAT CAN I DO TO SOLVE IT

2) Keep hammering that point into them until they totally get it. Make sure they realise that it’s not ‘what can John do to help when he gets back from lunch’.
It’s not ‘what can XYZ department do to sort this out’.
It’s not ‘I’ll email Tom about this. He can deal with it when he’s back next week’

It’s what can YOU do about it? What can you do RIGHT NOW?

3) If you have some staff that can’t or won’t absorb this simple instruction, sack them. Get in replacements who can

If you do that and if every man and woman on your team abides by it, then, my children, you will have good customer service.

If you don’t, all you have is a stupid ‘mission statement’ on a whiteboard in head office.

That’s what we believe here at Park Financial but, clients, you can help us here too.

If you find we haven’t lived up to this standard at any time, let us know. We won’t have meant to fail you. It will just be that the particular ‘way to help you’ didn’t occur to us on that occasion.
If you tell us, we’ll know better for next time

3 years ago, the financial regulators took a decision to ban commission payments on the sales of pensions and investments.
On the face of it, this was a great idea because there was little doubt that the commission arrangements allowed for all manner of sharp practices to take place.
The banks (never shy about a bit of that themselves) were horrified. Without all that easy commission on the table, how would they continue to sell their wares. The answer, of course, was that they wouldn’t. So cue a mass exit of banks (who probably found that LIBOR-rigging was much more profitable anyway) from the retail financial services market.
Great news. Cowboys rousted out and everyone’s happy, right?

Wrong.

Because the result of this massive drop in adviser (aka salesman) numbers was that many people now found they couldn’t get any advice at all – or, if they could, they simply couldn’t afford it – and since buying a savings or pension product is hardly a purchase to get the pulse racing, people just didn’t bother. These people began to be known as the ‘financially excluded’ and, seeing what was happening to them, the Government began to realise that, sometimes, even weak advice can be better than no advice.

So, the talk now is of bringing commission back – a mere three years after it was shown the door.

Good thing or bad thing?

Well, as for the banks, they will be back selling some people unsuitable products – of course they will. That’s just what they do. But, alongside that, they will also be selling a lot more people products that actually serve them well.

This, then, is the dilemma that legislators have. If the price of nine people being insured, saving money, funding pensions etc, is one person being sold an unsuitable product, is that worth accepting?

Well, even though it is painful to contemplate the grasping fingers of avaricious banks (which will already be twitching with excitement), given that the one person would, on discovering their banks chicanery, have access to redress via the Financial Ombudsman Service, I would have to say yes, it probably is worth it.

Yesterday found me embroiled in a lengthy debate with an investment analyst. Now, let me say, straight off, such chats never amount to my favourite conversations – simply because the combination of his role and my views sets us, inevitably, on a collision course right from the off.

That said, yesterdays adversary is as friendly and affable a chap as I have encountered in his field so I guess, if I had to have this particular dialogue, better it be with him than any other.

Still, after the best part of an hour, we had managed to find scarcely a scrap of common ground – but the call ended in good spirits anyway.

I have no doubt that my adversary utterly believed in the opinions he was holding forth. There is not, for one moment, a thought in my head that his enthusiasm was feigned in any way. No. His conviction is, I am sure, absolute  – yet this is in spite of him being unable to offer one shred of evidence to support his views.

Only on later reflection did it occur to me that this must be how Richard Dawkins would feel after a lengthy discourse with Archbishop Justin Welby.

How, I wondered, could he cling so doggedly to this belief that investment analysts add genuine value in the process of fund selection in the face of, well, zero hard facts that prove it so?

Of course, the behavioural psychologists have the answer.

That belief system is his whole career. To abandon it would be to abandon his entire professional life. To abandon, in effect, himself. Even to question it as anything other than an unassailable truth would produce in him a cognitive dissonance with which few men could comfortably exist.

 

 

 

RBS head of credit, Andrew Roberts, says “China has set off a major correction and it’s going to snowball”

Neptune’s chief economist and chief investment officer, James Dowey, however, begs to differ. His view is “I believe the market’s gloom and doom is over the top”

Well they can’t both be right.

So, which one is the raving idiot? Well, neither of them. They probably each know an awful lot about investment markets.

But which one thinks he knows more than he does? Well, I’m guessing that will be both of them  – because overconfidence is just what investment ‘experts’ do.

Daniel Kahneman once observed:
“People and firms reward the providers of dangerously misleading information more than they reward truth tellers”

Which, if like me, you are one of those people telling the truth, is a real bitch

http://www.ftadviser.com/2015/12/11/investments/multi-manager/f-c-s-potter-early-not-wrong-on-asian-overweight-MCx2IC86X3EjmkSH8PWnNN/article.html

Here’s Gary Potter from F&C trying his best to explain away his teams investment decisions in Asia.

Say what you will about Gary, he’s got creative genius – that much can’t be denied.

‘We weren’t wrong, we were early’ – I LOVE it

All I can say is look out Mrs Potter because if Gary ever has an affair, he’ll be saying ‘If I’d done this when I was single, it’d all be okay. See darling, I wasn’t wrong, I was just late’

I have some sympathy. Two weeks ago, I bet Newcastle would win 2-0. Okay, they were thumped 5-1 but my bet was right. It was just a week early

Let’s get serious for a moment. For the record, Gary, being early – in this situation – IS being wrong and no amount of brass-necked, brave-facing of the matter is going to change that.

Fund managers eh? What will they come up with next?

http://www.moneymarketing.co.uk/members-lose-500k-from-worst-performing-auto-enrol-defaults/?cmpid=pmalert_1745913&utm_medium=email&utm_source=newsletter&utm_campaign=mm_daily_news

What a pointless piece of ‘research’ this really is. Hasn’t JLT got anything better to do with it’s time?

Unless you can identify, in advance, which will be tomorrows poor performing funds (and let me be emphatic here – you CAN’T), what use is knowing that some funds will under-perform others.

In terms of value, I put this right up there with the news that ‘choosing some lottery numbers will result in a big win’.