Poacher turned gamekeeper…
Wednesday, 27 May 2009
…or it takes a thief to catch a thief is another expression!…but the meaning is when someone has specialist knowledge which can then be used by another.
I was interested to see comments made in the FT by Edward Hocknell, a senior partner at Baillie Gifford.
Firstly he said “The financial services industry has gone completely bananas in the past few years," says Mr Hocknell. He blames excessive remuneration and “believes performance-related bonuses turn fund managers into divas.”
He says: "We don't pay people huge annual bonuses. It's a terrible thing for fund managers. If they've had a fantastic year, they already think they're very much cleverer than they really are, so if you give them a bonus on top of that, they think they're masters of the universe. Conversely, if they've had a bad year, they get depressed, so giving them a small bonus makes them even more depressed”
Mr Hocknell is also critical of remuneration structures on an industry level. He labels hedge funds and private equity fees "ridiculous".
"It's called financial services, but there's a big question as to what service we're providing at that price. If you're taking that much money out in fees annually, there's no way there's any money left for clients at the end. It's not that people are terribly wicked, but our industry got so complicated and there were so many layers that the ultimate beneficiaries were forgotten."
Such an article in the FT does not warrant front page news and with so much news, these comments often get lost in a sea of words. Yet the words are endemic of so many fund management groups.
He is saying they are overpriced. I agree. In fact investors should not accept these charges and vote with their feet..NOW.
Most of all these fund managers have lost sight of who they service. That is you, the investor.
If you have investments, ISA, pensions etc, you will employ fund managers. Have you thought of asking the fund manager who manages your money, how they are remunerated? The chances are they will be incentivised through bonuses. Now look again above and see what Mr Hocknell makes of the bonus culture.
It is in the interests of every investor to establish how their funds are managed, what are the risks, what are the costs and how the managers are paid. They may say they are serving you but as Mr Hocknell says… “..our industry got so complicated and there were so many layers that the ultimate beneficiaries were forgotten."
Of course you can take no action, yet remember, in the words of Joseph Stiglitz, winner of the 2001 Nobel Prize for Economics, who said “you cannot decide at the end of this life that you need to save more in the next one”. It is important to review your investments NOW.
posted by Murray Round Wealth Management @ 16:16,
The Authors
Nicholas Round
Nic is the Managing Director of Murray Round Wealth Management Limited, who seeks to ensure the advice provided is truly independent. Based in Shropshire with clients local, national and worldwide, Nic has strived to find the best possible service for his clients needs, by researching and studying the market, trends and philosophies. Nic strongly believes Asset Class Management will bring his clients Financial Freedom, Independence and Happiness.
Kirsty
Kirsty is our communication guru. Managing information requires considerable due diligence and her passion for organisation gives the clarity we all seek. From Shropshire, with a Psychology Degree and much travelling, she is now back in Shrewsbury...and London often, keeping us all at Murray Round focused.
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