Transparency seems to be the foundation stone of most of the regulation emerging from the FCA – the logic presumably running that, if crucial pieces of information are readily available, relatively up-to-date and, most importantly, easily accessible, advisers and clients are in a better position to make an informed judgement.
This brings us to that staple of the investment world, widely known as the ‘factsheet’. This is a beautiful thing – one or two sides of A4, full of meaningful, relevant information on individual funds or portfolios. Having been around the industry for a considerable time, factsheets are perhaps the one source of information collateral I have used and viewed the most.
Read more from Andy Parsons: The evolution of fair value in the MPS sector
Of course, we are in a privileged position, here at Defaqto, in that we have developed strong relationships with the majority of wealth managers over the past 15 years and are provided with up-to-date information on a regular basis from some 120 DFMs, covering 2800-plus MPS portfolios.
Even so, from time to time, we do still have occasion to refer to a factsheet to confirm, check or supplement our data. I would be willing to bet that the majority of advisers supplement their due-diligence and recommendations with fund or portfolio managers’ factsheets.
‘Take our word for it’?
All this being so, it baffles me why some investment firms have been reluctant to disclose information that would usually help one of their most important distribution avenues, the professional adviser. Many of the earlier Fair Value Assessments often had a staggering lack of information, with many not stating much more than ‘these funds are still good, take our word for it’. While that may well be true, it is not helpful.
Since the introduction of Consumer Duty, transparency has improved considerably – however, there does still appear to be, among some providers, a desire to make it incredibly difficult to find statements and information on websites referring to their funds and/or portfolios.
Which brings me back round to my biggest frustration – the availability of factsheets. I can, to a degree, appreciate why some groups choose only produce them quarterly: they cost money, have a limited life span, are out-of-date the day after they are published – plus, for newer propositions with less than a year’s performance, there is not too much to show and tell.
I must ask, however, why in this day and age are some MPS providers producing factsheets on a regular – often monthly – basis but then restricting their availability? Surely little can be more annoying for a busy adviser or paraplanner, who quickly wants to check a cost or confirm aims and objectives, than to be faced with a requirement to register or, worse still, a statement on a website asking them to call for further information.
Excuses, excuses
I just do not buy the excuse that, through factsheets, providers are giving away their investment secrets and that what they are investing in may be copied by a competitor – after all, factsheets do not explain and cover off the in-depth analysis and rationale an investment team or manager goes through.
Furthermore, performance is in the past, and no guide to the future, but it does clearly showcase what an investment management team has delivered. Adviser due-diligence should ferret out any firms that are simply mirroring another’s investment picks and they would have a problem in justifying their selections.
The old cynic in me suspects that, where you are faced with a ‘call for further information’ statement on a provider’s website, this has been decided from a sales perspective so they can get someone on the phone to sell to. The question is, what about those who simply want to undertake some analysis and due-diligence?
Accessibility to factsheets for more formally structured investments is the norm, so why do we still have this opaqueness within the MPS world? Over the past several years it has been the fastest-growing segment and yet transparency has not kept up. It is time that changed and factsheets became accessible to all.
Andy Parsons is insight manager (investments) at Defaqto
“It baffles me why some investment firms have been reluctant to disclose information that would usually help one of their most important distribution avenues, the professional adviser.
