Fair and decent living
It feels to us as though advisers, for the most part, earn a fair and decent living. We are not suggesting that active manager’s do not. But to equate their professions, and therefore their value propositions, is not reasonable in spite of the similar cost to the end client.
Active fund managers are in the business of delivering excess returns and their offering is a scalable product. Financial advisers, in quite stark contrast, sell a non-scalable service, rather than a scalable product. In our experience, they are mentors, coaches and financial advisers to their clients and need to deeply understand individual clients’ needs and have a personal, hands-on relationship with each.
Are their fees too high, on average? If you looked at their margins rather than their revenue, we suspect you would conclude they do not have too much fat in their fees.
Rory Maguire is managing director of Fundhouse
