The regulator also attacked the relatively high fees paid by UK investors trading “products listed on exchanges”, saying “firms offering share dealing services often fail to deliver best execution”.
“Clients of wealth managers and stockbrokers are likely to face similar issues,” it added.
It is difficult to be certain exactly what the FCA’s remarks mean for wealth managers.
But the patent risk is that the FCA feels while the Market Study is addressing pricing and transparency in investment product ‘manufacturing’, the cost and quality of product ‘distribution’ remains unclear.
Put plainly, the regulator may feel that driving down wealth management costs is an important part of creating a better retail investment system for the public at large.
It may also be concerned by features such as the lack of standard public disclosure of wealth management portfolio performance, as is the case in the fund world.
The last time wealth managers faced a major intervention was in the FCA’s ‘suitability’ thematic in 2015, which levelled several criticisms at the industry over its selection of investment for clients.
Are we going to see another major intervention? The risk appears to have increased.
