Mark Polson founder of the Lang Cat, said the move was very interesting as there was an element of coming full circle to it.
20, 30 years ago asset managers were going direct to clients, he said. Arguably Hargreaves Lansdown got its start a few decades ago partly because it promised investors it could get them a better deal than they were getting at the hands of asset managers direct offering.
“There are billions of pounds held in these direct client back books that have been built up over decades. The question asset managers are asking themselves now is what will happen if they open them up? Will clients move somewhere else if they see can easily see what they have, or are they likely to keep the money where it is?”
However, Polson added, there are also a lot of firms, looking at these books and seeing a soft target.
A firm like M&G either has to stick or twist. Either they can leave that book of business and run the risk of those clients being attracted away, or it can bring it out into the world and take control of it. It looks like they are disrupting their own business before someone else does, which is generally a smart move.”
There is no doubt that modernising the offering both in terms of accessibility and charges is a good move, but it does raise an even bigger question: how much client money is stuck in such funds throughout the industry paying excessive fees? And, perhaps more importantly, how long is it likely to stay that way given the ongoing demand for transparency and the increased pressure on costs.
