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Why Clarity Matters for Investors

Morningstar's Ana Georgiou talks to Holly Mackay, founder of Boring Money, about ways that asset managers can improve communication with clients

Anastasia Georgiou 8 May, 2019 | 8:49AM

 

 

Anastasia Georgiou: Hello, and welcome to Morningstar. I'm Ana Georgiou and I'm here with Holly Mackay, the founder of Boring Money and we're going to be talking about value.

Hi, Holly.

Holly Mackay: Hello.

Georgiou: So, we just heard you talk about how to evidence and articulate value. Can you talk about the misalignment between the investor and the asset management in terms of what they perceive value to be?

Mackay: I think performance is the most important thing for the end investor, as you'd expect. But one thing we found that I wasn't expecting to see when we talked to end investors is how much clarity is a really key pillar of value for people. And I think asset managers are terribly bad at saying to someone when they set up their objectives; this is what we're trying to do, this is how we're going to treat your money and this is the sort of outcome you should expect. So, I think there is a massive disconnect between the peace of mind that people really value and the asset management community are not giving that to people and the communication is being sent out are leading people largely baffled. And you don't want people to be baffled if they're going to rely on you to look after their long-term capital.

Georgiou: So, what do you think the asset manager could be doing to, I guess, manage what like I would see as their compliance risks in terms of some of the information that they're sending out versus sort of engaging with the end investor and illustrating that value?

Mackay: I think there are minimum things that people obviously have to do. There is a certain suite of documentation, which you have to produce, but they can above and beyond that. And I think there is a tendency from asset managers to blame the regulator for a lot of the content, I don't particularly buy into that. I think you can seek to challenge what you do. Take factsheets for an example. They're like the sort of brown water stain on my bathroom ceiling. I've been walking past it for so long, I no longer see how ugly it is. Factsheets are like that. I challenge asset managers, go and read one of your factsheets, does it tell people what you want to do. How could you be more inventive, how could you have a digital factsheet, how can you use pictures, design, how can you rethink the language of all of this to really clearly say with no jargon, this is what we're going to do with your money.

Georgiou: Are you seeing any asset managers doing anything different?

Mackay: Not – I'm struggling to find a way to say, yes, Ana, but not really. A lot of the content is really beige, and I think there is no differentiating factors. If I had to pick any of the main big brand asset managers and say this is what they stand for, I'd really struggle with that and I think this committee think, I think this group think. And so the good ideas that do come out in these businesses are getting diluted down and people are worried about sticking their necks out. And so I think there is a dearth of good content, good comms and just bold leadership across the industry.

Georgiou: Thank you very much, Holly.

Mackay: Thank you.

Georgiou: Thank you very much. 

This article is part of Morningstar's special report on What the Experts Say

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author

Anastasia Georgiou  is the product manager for Adviser Workstation in the UK.

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