Investment fees are at the top of the agenda for Australian regulators, but new research out of the UK suggests clients’ attention is directed elsewhere.
The focus on fees by government and regulators in Australia has been "myopic", says superannuation consultant NMG.
In new Trialogue article titled Do clients really care about fees?, NMG cited a study on defined contribution pension providers by the firm's UK partner Jane Craig.
The study polled 15,000 UK pension members from 10 providers about what they wanted from their pension fund.
The top answer was unsurprisingly "A good return on my money"', but Ms Craig was surprised by the lack of priority given by members to fees.
The option "Charges in line with industry average" was only the 13th most popular answer out of 23 options.
"So what consumers say they want isn’t necessarily being reflected in regulatory actions. That isn’t to say lower fees aren’t in members’ best interests, but it does indicate a narrow approach," said NMG.
In Australia at least, there is some evidence that regulators are shifting their approach, said NMG – pointing to the focus on outcomes in the proposed CIPR regime as well as the focus on product design in the Financial System Inquiry.
"The move away from the myopic focus on fees and costs in favour of a more nuanced view of what matters to members is to be applauded and is in line with what consumers – or UK pension fund members at least – identify as being of value," said NMG.
"Consideration of member outcomes takes account of the range of influences that can affect a member’s final position rather than simply pushing toward the lowest-cost solution for all."
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