Transparency Times Edition #11 March 2017

March 2017

“TIME FOR ASSET MANAGERS TO FEEL THEIR SHARE OF THE PAIN” This month’s contributors are: Lee Robertson

CEO, BA FCSI, Chartered Wealth Manager Page 50

Xavier Porterfield CFA, Head of Research, NCFX Page 26

Steve Conley

Managing Director, Workplace pensions Direct Page 12

Clare Reilly

Head of Corporate Cevelopment, PensionBEE Page 28

Roland Meerdter

Dan Mikulskis,

Page 16

Page 52

Co Founder, DOOR

Dan Brocklebank

Director, Orbis Investments Page 32

Head of DB Pensions, Redington

JB Beckett UK Lead, Association of Professional Fund Investors Page 34

The official publication of The Transparency Task Force. FREE to members of the Transparency Task Force, membership of which is also FREE

...is the campaigning community dedicated to driving up the levels of transparency in financial services, right around the world.

...is the official publication of the Transparency Task Force. It is a great opportunity for our community to share news and views, insights and ideas, right around the world.

...is how we bring people togethor to discuss and debate the key issues and to listen to thought leaders on the vital topic of transparency in financial services.

...is awarded to one individual/organisation at each of our Transparency Symposia, in recognition of the contribution they are making to encourage greater transparency.

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The Transparency Times | www.transparencytaskforce.org | March 2017 | Edition #11

ANOTHER VERY SPECIAL EVENT:

...on 17th May will be focused on a question of fundamental importance:

“What is the true purpose and potential of the Pensions Industry?”

The symposium will be particularly interesting to those that hope and believe that the pension capital markets could, and should, become a ‘force for good’ for our planet and society as a whole; as well as enabling the efficient provision of financial security in old age.

The idea for the event was wholly inspired by a talk given by David PittWatson, Executive Fellow of the London Business School; David delivered a highly impactful and thought-provoking talk that showed so clearly the wisdom of establishing purpose as a bed-rock for thought leadership and policy-making.

This will be a not-to-be-missed event if you are in any way interested in the development of a more progresive approach to pensions policy-making and believe that Socially Responsible Investing and Environmental, Social and Governance factors are important; as well as looking at the ‘bigger picture’.

Richard Harrington MP, Pensions Minister is our Keynote Speaker

As Tracy Blackwell, Chief Executive of Pension Insurance Corporation put it so brilliantly recently: “It’s hard to lose your way as an industry if you focus on the why!” Perhaps it is possible for the pensions industry to formulate an over-arching vision statement articulating its purpose? Would such a vision statement help to guide and steer pensions policy? Maybe it would to create a sense of collective purpose amongst pension professionals? We are hopeful that this event will help to galvanise support for the idea that the pensions industry could, if it chose to, become a key driver for improvements on many fronts that are of such grave concern to so many. This conference will be used to share insights on this most-vital of all topics and if all goes to plan delegates will have the chance help build consensus on how the pensions and investments industries accept their responsibilities moving forward.

There will be fantastic presentations and panel sessions - here’s the line-up of key participants: - Richard Harrington MP, Pensions MInister - David Pitt-Watson, Executive Fellow, The London Business School - Leon Kamhi, Executive Director: Head of Responsibility at Hermes Investment Management - Catherine Howarth, Chief Executive, ShareAction - Nicholas Morris, Visiting Fellow at the Martin School, Oxford; Adjunct Professor, Faculty of Law, New South Wales - Hugh Wheelan, Managing Editor, Responsible Investor Magazine - Steve Conley, Managing Director, Workplace Pensions Direct - Nico Aspinall, Chair, Resource and Environment Board, Institute & Faculty of Actuaries -Tracy Blackwell, Chief Executive, Pension Insurance Corporation - Tony Greenham, Director of Economy, Enterprise & Manufacturing, the RSA. Book yourself a place swiftly; places are limited and demand for them is expected to be very high -

CLICK HERE TO BOOK YOUR PLACE When & where?

Wednesday 17th May, 9:30 to 17:00 Pension Insurance Corporation, 14 Cornhill, London EC3V 3ND Edition #11

| March 2017 | www.transparencytaskforce.org | The Transparency Times

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CONSULTATION RESPONSE:

15TH MARCH 2017 | TRANSPARENCY TASK FOR HM TREASURY’S CONSULTATION ON PSD2

Many thanks to the TTF’s Foreign Exchange Team

1. The purpose and status of this document This document has been put together by members of the Transparency Task Force’s Foreign Exchange Team to provide input to HM Treasury’s Consultation on: Implementation of the revised EU Payment Services Directive II 2. About the Transparency Task Force The Transparency Task Force (TTF) is the collaborative, campaigning community dedicated to driving up the levels of transparency in financial services, right around the world. We believe that higher levels of transparency are a prerequisite for fairer, safer and more efficient markets that deliver better value for money and better outcomes to the consumer.

Furthermore, because of the correlation between transparency, truthfulness and trustworthiness, we expect our work will help to repair the self-inflicted reputational damage the Financial Services sector has suffered for decades. We seek to effect the change that the financial services sector needs and the consumer deserves.

The TTF is free to consider what is ultimately best for the

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consumer without commercial conflicts and we are perhaps unique in being made up of a truly pan-industry crosssection of individuals that includes market participants, researchers, academics, legal professionals plus those representing trade bodies and professional associations.

As such we are well-placed to establish consensus that does not merely reflect the wishes of one particular “tribe” or another.

Our approach is collaborative - we seek a win/win/win; whereby consumers, market participants and the efficacy of government policy can all benefit from the work we do.

Market reaction has been extremely responsive to our clarion call for collaboration for the benefit of the consumer and the benefit of the reputation of the sector; so much so that in just 22 months we have developed six teams of volunteers, each team focused on a set of transparency-related issues and desired outcomes:

• The Market Integrity Team • The Foreign Exchange Team • The Banking Team • The Costs & Charges Team • The Stewardship & Decision-Making Team • The International Best Practice Team 3. About our response Our response has been created by members of our Foreign Exchange Team, which is made up of 8 individuals with tremendous experience and expertise in the Foreign Exchange market.

Whilst those individuals have varied backgrounds and are connected to a wide range of organisations they are united in their belief that the workings of the Foreign Exchange market have ample scope for improvement; we see it as a market that is unsatisfactorily opaque and as a consequence we see it as a market that does not operate efficiently. Ultimately, it is the customers and clients of the Foreign Exchange

The Transparency Times | www.transparencytaskforce.org | March 2017 | Edition #11

RCE RESPONSE TO for producing this response market that suffers as a result of these shortcomings.

Furthermore, we believe that the reputation of the Foreign Exchange market is damaged by the market behaviours taking place within it; and consumer confidence is reduced as a result.

The members of our Foreign Exchange Team, as with all the 160+ individuals involved in all 6 of our Teams are working in a collaborative and co-operative manner on a completely voluntary basis.

Please advise if further information is wanted in relation to How to Respond, A4 on Page 42 of the consultation document.

Our response is focused on Questions 1, 17 and 18.

4. Response to Question 1 Question 1: Do you agree with the government’s proposed approach to implementation of the PSDII? Bearing

Edition #11

in mind the maximum harmonising nature of the PSDII, do you think the structure of the regulatory regime will allow the UK’s competent authorities to enforce the regulations in a fair and equal way towards all payment service providers?

The TTF does agree with the government’s proposed approach to the implementation of PSD2, particularly in relation to the Treasury’s decision to copy-out the legislation, except where it would reduce costs for businesses and consumers (4, Consultation).

As it stands, if the regulations are implemented as drafted, consumers will remain at the mercy of the broker when making cross border, international payments and changing currency. The current draft regulations artificially restrict competition in the payments market, at both an EU and UK level, driving up costs for businesses and consumers alike. There are attempts within the

legislation to push payment service providers towards implementing transparent and understandable pricing structures for consumers and businesses. In the introductory section of the draft regulations, under point 84, we find the following wording: “In order to strengthen the trust of consumers in a harmonised payment market, it is essential for payment service users to know the real costs and charges of payment services in order to make their choice. Accordingly, the use of non-transparent pricing methods should be prohibited, since it is commonly accepted that those methods make it extremely difficult for users to establish the real price of the payment service. Specifically, the use of value dating to the disadvantage of the user should not be permitted.”

This clause, if implemented, would force providers to disclose to consumers the ‘real costs and charges’ of using their service - and introduce real competition into the payments market. We applaud this clause and see the goal of transparency as being absolutely crucial to the proper functioning of markets.

With regard to the pricing structures presented by foreign exchange providers,

| March 2017 | www.transparencytaskforce.org | The Transparency Times

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we then find on Article 45.1 (d):

exchange rate’ in Article 4 (27):

“(d) where applicable, the actual or reference exchange rate to be applied to the payment transaction.”

“‘reference exchange rate’ means the exchange rate which is used as the basis to calculate any currency exchange and which is made available by the payment service provider or comes from a publicly available source”

One interpretation of this clause supports the goal outlined in clause 84, but it is far too ambiguous in the original legislation as it allows the broker to put the reference rate or the actual transaction rate on the transaction.

The concept that the actual exchange rate wouldn’t in any case be available with the transaction is ridiculous, as clearly that will be on the transaction in any case. The transaction rate cannot be the reference rate.

FX deals have a cash cost to consumers. Our view is therefore that the total difference between the reference exchange rate and the actual rate (the cost) should be evident before making the payment transaction, otherwise there’s no way of knowing what is being charged. If the client does not know what they must pay, then the goal of making the market work properly is lost.

Finally, there is a definition given for a ‘reference

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This clause undermines any claim to enhancing transparency in foreign exchange.

The definition allows a provider to simply use the rate at which the exchange is undertaken as the reference rate, and thereby hide their cost to the client. The provider is entitled, under this definition, to use their own rate - which includes the PSP’s profit percentage - without having to disclose the difference between their rate and an independent exchange rate on the day as a charge to the consumer.

The rate set by the PSP in this scenario is a construct with no regulatory oversight, set entirely at the discretion of the PSP, potentially with no basis in the publicly available, aggregated exchange rate.

When the difference between the publicly available independent rate and the PSP’s rate are minimal, the consumer may not notice or consider the impact - even if at larger volumes the impact is huge. Moreover, such attention to detail requires high levels of financial literacy. The question of what should be used for a reference rate is easily solved

by independent companies that provide FX reference data. It is possible to source accurate, live, independent rates that cannot be traded on by the broker, but that precisely reflects the mid-rate of the market.

Obliging brokers to use an independent and nontradeable rate on an exante basis and apply it as a reference to the ticket creates an environment where the trade and its measurement are fully separated, allowing the full costs to be accurately understood against an independent yardstick.

The lack of obligation to reference trades objectively frustrates efforts to achieve transparent pricing structures.

This in turn allows brokers to charge what they can get away with and stops clients from being able to choose between providers on a rational basis. The fees being charged by financial intermediaries should be clear.

The goal of PSD2 is to support competition in the payments market, and a small change to the wording during the implementation process would support the directive’s intent.

Question 17 Do you agree with the proposed approach to consent, authentication and communication?

Given the positive impact for consumers, we would encourage the Treasury to ensure that AISPs are provided clear reasoning for denial of access. Article 68

The Transparency Times | www.transparencytaskforce.org | March 2017 | Edition #11

PSD2, regulation 56 (draft PSRs) reads: “An account servicing payment service provider may deny an account information service provider or a payment initiation service provider access to a payment account for reasonably justified and duly evidenced reasons relating to unauthorised or fraudulent access to the payment account by that account information service provider or payment initiation service provider, including the unauthorised or fraudulent initiation of a payment transaction.” (7) The TTF welcomes the clear timeframe and reasons for denial of access that shall be reported to the Competent Authority. The level of detail provided in the regulations will allow for clarity and transparency in the access process. Past experience with PSPs accessing payment account services have shown that clear criteria, and a timely notification process for PSPs and users alike, should go some way to eliminate anticompetitive practices - and allow AISPs to provide their customers with a consistent, undisrupted experience.

Similarly, the Treasury should ensure that real time transaction data is available to AISPs from ASPSPs. There is one point however that we would like to request clarification on. The FCA’s current version of the form for ASPSPs to use to fulfil their reporting requirements, in Section 4, Denial of Edition #11

Access, Q1 asks whether access has been denied to a single payment account, all payment accounts, or to a specific category of payment accounts, as a result of fraudulent or unauthorised access. Will there be an escalation procedure in place that would allow the PISP/ AISP to work with the ASPSP, before they experience a total denial of access to all payment accounts held by that provider to avoid disruption for unaffected consumers?

Question 18 Do you agree with the information and payment functionality that will be available to AISPs and PISPs? The TTF welcomes the information and payment functionality that will be available to AISPs and PISPs. Given the comprehensive licensing requirements for AISPs, and the clarity provided in the draft regulations for denial of access and liability requirements, AISPs should be able to access consumer’s data with minimal risk to the ASPSPs. As the Treasury has noted in the consultation, the introduction of AISPs will have huge implications for comparison websites, and transparency for consumers.

The changes will enable businesses to produce tailored recommendations and quotes for individuals, empowering consumers to make truly smart and dynamic

choices when it comes to choosing and switching major providers. Ultimately this transparency will deliver less inertia and therefore more competitive financial services.

We would also like to support the Treasury’s position regarding clause 6.24, which recommends the inclusion of additional types of payment accounts in the development of Open Banking API Standard. The inclusion of PISPs and AISPs in the development of the CMA’s API Standard would streamline the process of implementing PSD2, and be cost effective for the industry.

7. Suggested next steps We hope that our input through this submission has been helpful. As a next step we propose further dialogue by way of a meeting, to elaborate properly on the important points that we have raised and deal with any initial questions or comments that you may have.

Thank you for the opportunity to respond to your consultation.

All enquiries please to: Andy Agathangelou, Founding Chair, the Transparency Task Force andy.agathangelou@ transparencytaskforce.org +44 (0) 7501 460308

| March 2017 | www.transparencytaskforce.org | The Transparency Times

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VERY IMPORTANT: ABOUT HOW YOU CAN BECOME ‘PART OF THE SOLUTION’ If you’re completely new to our community and want to know ‘what it’s all about’ here are the basics: The Transparency Task Force is the collaborative, campaigning community dedicated to driving up greater levels of transparency in financial services, right around the world.

We believe that higher levels of transparency are a pre-requisite for fairer, safer and more efficient markets to deliver better outcomes and better value for money to the consumer.

Furthermore, because of the correlation bet ween transparency, truthfulness and trust worthiness, we hope and expect that our work will help to repair the self-inflicted reputational damage the sector has suffered for decades.

We operate through volunteer-led Teams. All the Transparency Task Force Teams have a conference call on the first Tuesday of the month, so the next “Team Calls” are on Tuesday 4th April, at the following UK times: Banking Team: 9:00 to 10:00; for those that want to drive up the professionalism in banking and in particular, want to help business account holders get treated more fairly by High Street Banks Foreign Exchange Team: 10:30 to 11:30; for people that understand the opacity that exists in FX and want to put right what is very, very wrong in that market!

Market Integrity Team: 12:00 to 13:00; get involved with this team if you want to help shine a light on the importance of ethical behaviour in the financial ser vices sector and want more of it!

Costs & Charges Team: 13:30 to 14:30; for those that want to help all types of investors get better value for money from all types if investments; by helping to shine a light on all costs in all their forms Stewardship & Decision-Making Team: 15:00 to 16:00; if you understand the ‘a symmetry of information’ problem that the financial services sector is dogged by and how it can lead to poor stewardship and decision-making, please help us illiminate the opacity and obfuscation that is getting in the way of optimal outcomes International Best Practice Team: 22:00 to 23:00; wherever you are in the world (we have members from every continent), if you want to help the nations around the world to learn more efficiently from each other, get involved - we’re working on a Global Transparency Index and it’s at a very exciting stage!

If you care about the financial services sector and want it to do a better job of looking after the needs of its customers and clients please join the 150+ people that are operating as volunteers within the Transparency Task Force Teams.

It doesn’t matter how experienced or how senior you are.

It doesn’t matter if you’re an expert or not.

All that matters is that you understand the potential power of transparency in helping to drive the changes that are needed, and that you’re comfortable working collaboratively with others - the Transparency Task Force is very much a ‘team sport.’

If you or anybody you know want to become ‘part of the solution’ by being involved with one or more of these TTF teams please make contact without delay through andy.agathangelou@transparencytaskforce.org THANK YOU VERY MUCH - YOU MIGHT MAKE THE DIFFERENCE THAT MAKE’S ALL THE DIFFERENCE!

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The Transparency Times | www.transparencytaskforce.org | March 2017 | Edition #11

GENERAL INFORMATION:

Is brought to you FREE by: Dan Agathangelou

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If you would like to have a transparency-related article pulished in the next edition we’ll need your copy (250 to 2,500 words) by April 14th plus your bio, photo and logo. Thank you!

Edition #11

| March 2017 | www.transparencytaskforce.org | The Transparency Times

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ANOTHER VERY SPECIAL EVENT:

...on 17th May will be focused on a question of fundamental importance:

“What is the true purpose and potential of the Pensions Industry?”

The symposium will be particularly interesting to those that hope and believe that the pension capital markets could, and should, become a ‘force for good’ for our planet and society as a whole; as well as enabling the efficient provision of financial security in old age.

The idea for the event was wholly inspired by a talk given by David PittWatson, Executive Fellow of the London Business School; David delivered a highly impactful and thought-provoking talk that showed so clearly the wisdom of establishing purpose as a bed-rock for thought leadership and policy-making.

This will be a not-to-be-missed event if you are in any way interested in the development of a more progresive approach to pensions policy-making and believe that Socially Responsible Investing and Environmental, Social and Governance factors are important; as well as looking at the ‘bigger picture’.

Richard Harrington MP, Pensions Minister is our Keynote Speaker

As Tracy Blackwell, Chief Executive of Pension Insurance Corporation put it so brilliantly recently: “It’s hard to lose your way as an industry if you focus on the why!” Perhaps it is possible for the pensions industry to formulate an over-arching vision statement articulating its purpose? Would such a vision statement help to guide and steer pensions policy? Maybe it would to create a sense of collective purpose amongst pension professionals? We are hopeful that this event will help to galvanise support for the idea that the pensions industry could, if it chose to, become a key driver for improvements on many fronts that are of such grave concern to so many. This conference will be used to share insights on this most-vital of all topics and if all goes to plan delegates will have the chance help build consensus on how the pensions and investments industries accept their responsibilities moving forward.

There will be fantastic presentations and panel sessions - here’s the line-up of key participants: - Richard Harrington MP, Pensions MInister - David Pitt-Watson, Executive Fellow, The London Business School - Leon Kamhi, Executive Director: Head of Responsibility at Hermes Investment Management - Catherine Howarth, Chief Executive, ShareAction - Nicholas Morris, Visiting Fellow at the Martin School, Oxford; Adjunct Professor, Faculty of Law, New South Wales - Hugh Wheelan, Managing Editor, Responsible Investor Magazine - Steve Conley, Managing Director, Workplace Pensions Direct - Nico Aspinall, Chair, Resource and Environment Board, Institute & Faculty of Actuaries -Tracy Blackwell, Chief Executive, Pension Insurance Corporation - Tony Greenham, Director of Economy, Enterprise & Manufacturing, the RSA. Book yourself a place swiftly; places are limited and demand for them is expected to be very high -

CLICK HERE TO BOOK YOUR PLACE When & where?

Wednesday 17th May, 9:30 to 17:00 Pension Insurance Corporation, 14 Cornhill, London EC3V 3ND

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The Transparency Times | www.transparencytaskforce.org | March 2017 | Edition #11

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Edition #11

| March 2017 | www.transparencytaskforce.org | The Transparency Times

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ARTICLE: Steve Conley

A BUSINESS CONSULTANT’S THOUGHTS ON TH TRANSPARENCY

by Steve Conley | Managing Director | Workplace Pen

When looking out for the best interest of firms and their workers, it’s important to be transparent and, as far as possible, to use transparent solutions. Workplace Pensions Direct (WPD) was established in 2013 to simplify auto-enrolment for small businesses. WPD started trading as a business consultancy in January 2015 in advance of the small firms staging later that year.

The purpose of WPD was to serve the underserved small business, that is to deliver affordable payroll and pension advice covering the full spectrum of auto-enrolment tasks; from payroll, through admin tasks to pension set-up, maintenance, and review.

WPD saw a gap in the market. Large employers either had in-house experts or else were well served with available outsourced solutions. This was not the case for small businesses. It was simply a matter of where’s the affordable expert for 95% of businesses?

completed at set-up and on an ongoing basis are time consuming, and therefore expensive.

Dr. Iain Clacher of Leeds University estimated in Nov 2015 that these tasks would take the small employer 17.5 days at set up and 3 days per month. The report identified that outsourced solutions were available for several thousand pounds, but small employers were only willing to pay £500. Earlier that year, Standard Life had estimated that it would take a business adviser between 20 and 40 hours per case to deliver a comprehensive solution, recommending fee levels of £150 per hour.

Expert solution for a daily rate of less than £1

The solution to delivering an affordable expert solution was to use technology. WPD invested in a scalable and reliable technology platform, and call-centre support, so that the whole process can be completed over the course of just 90 minutes of telephone

The adviser must be expert, experienced and insured on all aspects of auto-enrolment.

They also must be affordable.

The full spectrum of tasks that are required to be

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conversations. This makes the process sustainable, scalable, and affordable for small firms; with WPD pricing for micros starting at less that TPR’s research of national average of £440. Set up with WPD starts from £390 to get you safe, and £19 per month to keep you safe (plus VAT).

That’s an ongoing expert solution for a daily rate of less than £1.

The A to Z of Employer Tasks The full spectrum of tasks that are required to be completed are as numerous as letters in the alphabet. There is a full A to Z of duties. Failure on any one duty may result in a fine.

A key question to ask is, do the solutions in the market do what they say on the tin? Are they transparent? Are they full A to Z solutions?

The A to Z of Employer Tasks for small businesses are covered in the following ways:

The Transparency Times | www.transparencytaskforce.org | March 2017 | Edition #11

HE IMPORTANCE OF

nsions

Direct

• The Pensions Regulator (TPR) make it appear simple as ABC. TPR states that it took small firms 10 hours work over 12 months to comply with the law. What they mean is complete a Declaration of Compliance.

This is one task, letter C say.

TPR add that 60% succeed with no advice costs. WPD tested 50 Declarations completed by the client and 100% were incorrect. This opaqueness encourages employers not to pay for advice for the rest of the alphabet, from D to Z. We believe this is storing up problems for the future.

• Pension Schemes offering ‘free’ solutions to employers, provided you use their scheme. WPD consider these schemes to be unfair, unclear, and misleading.

They would not be allowed in a regulated market, and fail ethically. These can be either high charging for employees or have service elements missing. Also, many opportunities for cost savings in scheme design can be missed. There is a real risk with these ‘free’ schemes that members, or even their employers, may be materially disadvantaged.

payroll auto-enrolment tasks only – pension tasks are excluded as code of ethics requires that they be expert, experienced and insured.

Sometimes Accountants are shoehorning clients into one pension scheme, missing out the requirement to compare schemes and choose one appropriate for the firm and its workers.

• IFAs offering pension autoenrolment tasks only, but excluding payroll tasks. The cost of delivering a bespoke service taking 20 to 40 hours can be expensive, or the firm may discount for the future opportunity to cross-sell.

Ethically this latter point could be seen to be in conflict with the spirit of the consultancy charging rules.

Only the scenario where an expert, experienced and insured business adviser acts as a fiduciary on behalf of the client across the full A to Z spectrum, can their best interest of the firm and its workers be put first. In other words, an expert acting in the best interest of the client firm and its workers is good for transparency.

Examples of transparency failures 1. Employer chooses a scheme that is perceived as free to the employer:

• Accountants offering Edition #11

| March 2017 | www.transparencytaskforce.org | The Transparency Times

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• It is not free to the employee. Provider recovers operational expenses fully from the employees’ pension pot.

might be considered to be consultancy charges from providers via other services and products, not in the spirit of full fee transparency.

• Often charging maximum employee fees, providing minimum value on the service or investment solutions. This maximises margin for the provider.

3. Business adviser shoehorns all clients into one scheme, without due regard to its suitability for the firm or its workers.

• Often there are costly restrictions on scheme design, e.g., net pay deduction only, only one definition of earnings basis, lack of portability, contribution charges, absence of freedoms at retirement, etc.

1. Business adviser purports to offer an A to Z solution, but fails to complete key tasks, e.g., Optimum Scheme Design, Scheme comparison and selection, Payroll Set-up, Declaration of Compliance, etc. Limited offering is marketed as a full solution.

2. Business adviser fails to disclose conflict of interest, e.g., the intention to market regulatory products to employees, or failure to disclose revenues from the cross-sell of non-regulated products, such as Health & Safety introductions. This

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4. Pension scheme markets itself direct to the employer as a price comparison website, or as a business adviser; Claiming it acts in the client’s best interest.

The WPD Proposition WPD offers a clear and transparent pricing structure for small businesses. Set fees. No hidden extras. No additional revenue streams.

Set up from £390 + VAT. Duty of care. WPD keeps clients safe. From as little as £19 per month, monitoring the employer’s changing circumstances and their pension scheme. WPD helps the client, workers, and payroll professionals comply with the law.

other conflicts of interest.

WPD is not a pension provider.

No self-dealing. WPD chooses workplace pensions from the whole of market, placing the client’s best interest first.

WPD offers a comprehensive end-to-end AE compliance solution, full spectrum of A to Z support.

WPD brand values are: excellence, fairness, service, simplicity.

WPD is the only business that guarantees auto-enrolment compliance, if our clients get fined, we pay it.

WPD is one of the largest AE consultancy firms in the UK, operating through a partner network of over 500 business advisers nationally, and having staged over 1,000 businesses so far.

At WPD we pride ourselves on our values. Key to this is being transparent, and offering transparent solutions.

No conflict. Auto-enrolment is WPD’s only business, so there is no cross selling or

The Transparency Times | www.transparencytaskforce.org | March 2017 | Edition #11

Steve is: • Managing Director of Workplace Pensions Direct which simplifies auto enrolment for small businesses directly and through a national network of 500 business advisers • Chief Executive of the Values Based Adviser international operation helping individuals connect with values-based advisers, organisations and investments, and helping social entrepreneurs in developing countries set-up values-based investments • Director of Investors in Community a unique new way for both organisations and individuals to find projects that matter, give to our communities and see the impact • Director of The Blair Project using motorsport as a tool for engagement to enthuse and inspire young people to pursue careers in science, technology, engineering and digital industries • Former Head of Investments of HSBC • Former Head of Savings & Investment Strategy RBS Group • Former Head of Wrap & Innovation Santander • Former Chair of British Bankers’ Association Bancassurance Steering Group He has worked at a senior level in the pensions and investments sector since 1982 and is known for bringing the first wrap platforms and the first retail multi-asset funds to the UK. He has been a chartered insurance professional since 1989, twice Jubilee Prize winner at IIM and twice Broker Prize winner at BIIBA.

Edition #11

| March 2017 | www.transparencytaskforce.org | The Transparency Times

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ARTICLE: Roland Meerdter

HUNTING CLOSET INDEXERS

by Roland Meerdter | Co Founder | DOOR

Hunting closet indexers is a seemingly noble pursuit; no investor should be paying high fees for empty promises. But proponents of the hunt are falling into their own traps. Over-reliance on past performance is the most prevalent of all biases and foundations of poor decisions in investing. One misguided industry practice (so-called ‘closet indexing’) is colliding and risks colluding with another (reliance on past performance).

Ex post performance results alone (e.g. tracking error) tell fund investors too little about whether a fund is a closet tracker. Yes, a closet indexer will have a low tracking error but is it sufficient to delineate that, say, ABC Fund is and XYZ Fund is not a closet indexer through the use of a hard and fast ‘over/ under’ of tracking error TE< 4? Over what time period and under what market conditions? At best, a tracking error threshold is a necessary, but by no means a sufficient, condition to label a product as a closet indexer.

drive a manager’s future activity levels. These are the various Degree of Investment Freedom levels a manager may use in her investment and portfolio construction processes. Accounting for these (both ex post and ex ante) is the very crux of understanding how a manager not only has been but also may in the future be ‘truly active’.

How do we get futureminded about assessing the decision-making processes of managers? A robust way to understand a manager

who purports to be active is to analyse the potential and realised use of investment flexibility.

Here is the basic outline of my thinking as it pertains to hunting closet indexers: 1. What fund investors need to know is not so much what the manager has done but may do or, at the extreme will do in positioning a fund with expectations for the future.

Performance figures, however manipulated, do not tell us this.

This thinking is rooted in an archaic approach that assumes no transparency or access to information beyond performance figures. Who is leading this hunt?

To build a robust picture, fund investors can look at the components of what may

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2. To know what the manager may do in the future requires an understanding of the tools and flexibility that she has at her disposal and how she is likely to use them in varying situations. Though we cannot know with certainty, we are able to gather sufficient information to understand what the ranges of possibility are. This should be our starting point.

None of this speaks to talent. Just because a manager has a high Degree of Investment Freedom score, how well she might use it is an entirely different matter. Understanding the combination and interaction of the range of freedoms and how they might be used is the role of the professional fund investor. Efficiently

getting and organising the information to perform this challenging task is the what Door is all about.

3. Degree of Investment Freedom is the framework for understanding the underlying drivers of investment decisions and ultimately performance. It provides transparency to the decisionmaking levers that may drive future positioning of a fund’s portfolio and ultimately performance (near or away from an index or on an absolute basis). Overlaying an understanding of a manager’s philosophy and investment approach helps to guide investors’ expectations.

An analysis of DIF scores enables fund investors to understand and measure how and when a manager may diverge significantly from the underlying index – whatever asset class that index represents. Tracking error is just too blunt and dull a weapon.

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Roland Meerdter is the Co Founder of DOOR – the digital platform for the exchange of fund due diligence information. Previously, Roland was the Managing Partner of Propinquity – a research and strategic advisory focused on what’s next in the investment management industry.

Prior to founding Propinquity in 2009, Roland was a Managing Director and global head of manager/fund research and due diligence for Deutsche Bank where he worked for nearly a decade. He started his career as an analyst with a multi-family office.

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ARTICLE: Better Finance

BETTER FINANCE FULLY DISCLOSES THE RESU ESMA’S QUANTITATIVE STUDY ESMA would not disclose the names of the funds it identified as “potential equity closet indexing funds” in its investigation results released in February 2016 (see annex 3), leaving fund investors in the dark. This is why Better Finance decided to replicate the ESMA study as closely as possible and – using the same quantitative analysis performed by ESMA - to disclose the list of the sampled funds (attached), including those that are potentially “closet indexers” according to ESMA, and also those funds – more numerous - that ESMA did sample but did not analyse for lack of data. Better Finance used the same source as ESMA (the Morningstar fund database).

Replicating in December 2016 the ESMA study performed in 2015, Better Finance could sample 2,3321 UCITS equity funds using ESMA’s sampling criteria (see annex 3 for details).

Better Finance broke them down into four categories:  6% (147 funds) do not report any benchmark in their prospectuses according to Morningstar, making it impossible to provide the metrics used by ESMA to identify potentially falsely active funds, i.e. “active” share”, “tracking error” and “R squared” (see annex 3 for definitions). For example, 5.7% of Luxembourg domiciled funds do not mention any benchmark, 12.2% in Ireland, 1.5% in the UK and 5.3% in France.  50% (1,172 funds) do report a benchmark but

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apparently do not provide enough information for Morningstar to compute the metrics selected by ESMA for those funds. For example, 34.1% of Luxembourgdomiciled funds do report a benchmark but still do not disclose their active share, tracking error or R-squared in the Morningstar database, 36.1% in Ireland, 60.8% in the UK and 64.0% in France.

1- Using the same sampling criteria as ESMA, the number of funds is nevertheless lower for this replication study. This is most probably due to the evolution of the Morningstar database in the meantime (some funds may have closed, merged, or no longer meet the sampling criteria).

In all, 57% of UCITS equity funds escape scrutiny because of a lack of available information in Morningstar.

Only a minority of all UCITS equity funds (43%) can be analysed using the ESMA methodology and source :  36% (848 funds) of all funds are sufficiently transparent (regarding ESMA metrics in the Morningstar database) and – based on those metrics – do seem to be truly active.  Up to 7% of all funds and up to 16 % of sufficiently transparent funds (165 funds) show characteristics that flag them as being potential closet index funds according to ESMA (active share below 60% and tracking error below 4%); for example, 46.4% of those funds are domiciled in Luxembourg, 7.8 % in Ireland, 7.2% in the UK and 15.7% in France.

Other worrying findings by Better Finance

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ULTS OF ITS REPLICATION OF A complementing review of investor disclosure documents revealed that more than a third (34%; or 21 funds out of 62) of the funds with the highest potential of being closet indexers according to ESMA (active share below 50%, tracking error below 3% and R square above 0,95)2 do not disclose their benchmark’s performance alongside their own performance in their KIID3. This does not seem to comply with EU Law and makes it impossible for retail fund investors to assess the relative performance of these funds vis-à-vis their benchmark.

Also a majority of those funds seem to have underperformed their benchmark over the last five years. Better Finance did not check their performance versus low cost index funds (such as ETFs) using the same index.

for charging “active” fees (from 0,75% to 3,00% per annum) to investors in these potentially falsely active funds (according to ESMA), instead of fees of between 0,05% and 0,30% typically charged for index ETF funds.

It also calls upon ESMA and national regulators to provide much more transparency on funds’ metrics and to expand their investigations to the majority of EU domiciled active equity funds, including those that were not analysed

by ESMA:  the majority of active equity “UCITS” funds (not included in the ESMA study): - Those which did not disclose a benchmark in their prospectuses (147 funds in ourstudy),

Call for more transparency from fund managers and from regulators

- And those which did disclose a benchmark, but for which Morningstar could not compute their “active share” and/or their tracking error (1,172 funds in our study);

Better Finance calls upon the national regulators and upon the asset managers involved to provide clear reasons

 and all the active equity “AIF” funds that are distributed to retail investors in the EU.

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“Restoring savers’ and investors’ confidence is key for growth and jobs in Europe as highlighted by the EU Authorities. Let’s walk the talk. These findings are further clear proof that EU regulators must not eliminate the standardized and supervised disclosure of the long-term and relative past performance of retail investment products to their benchmark, as they unfortunately plan to do in the implementing rules for “PRIIPs” said Guillaume Prache, managing director of Better Finance.

Disclaimer: Better Finance has not identified any closet index fund. It has only recreated and published the list of funds that ESMA sampled earlier, including those ESMA identified itself as “potential equity closet indexing funds”, based on its sampling criteria and on its quantitative analysis; we refer to ESMA’s 02/02/2016 press release and statement. Better Finance’s quantitative study therefore bears the same limitations as the ESMA one.

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The data used for the study carried out by Better Finance and based entirely on the methodology and criteria of the ESMA study, references the period from 2010 to 2014 only. It is a one shot study limited in time. Variables that formed part of the selection and filtering criteria therefore may very well have changed since then.

ANNEX 1 Please see separate annexes 1A, 1B, 1C, 1D and 1E. • Annex 1.A - List of All Funds (2332 funds) • Annex 1.B - List of funds with No Reported Benchmark (147 funds) • Annex 1.C - List of funds with Insufficient Data (1172 funds) • Annex 1.D - List of funds that are Potential Active Funds (848 funds) • Annex 1.E - List of funds that are Potential Closet Indexers (165 funds) Replication of the ESMA study on closet indexing Annex 2: Other worrying findings by Better Finance 1. The vast majority of UCITS equity funds are benchmarked (94 % of them according to Morningstar), and this is a good thing for EU savers and investors ... if the current disclosure requirements last and are enforced!

Contrary to what one could believe from hearing many statements from asset managers criticizing “benchmarked” asset management and favoring

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“absolute” performance and “freedom” from benchmarks, only 6 % of UCITS equity funds (as selected by ESMA) are not benchmarked.

And this is good news for savers and retail investors in Europe, since “absolute” performance has little relevance and can by highly misleading, at least over the long term, which is the horizon of most European savers. It does not - when disclosed on its own - enable savers to assess whether this absolute performance is good value for them. This is why current EU regulation requires fund managers to disclose the 10-year4 performance of their chosen benchmark (whenever they have one) alongside to the 10-year performance of their fund.

However, this rule seems insufficiently enforced (see item 2 below). Worse, ESMA and the other ESAs propose to eliminate all past performance disclosure altogether and any reference to the benchmark performance (past or future) in the future “KID”5 that is supposed to replace the current KIID... and this despite numerous formal warnings against such a move against investor protection, including a unanimous and public one from ESMA’s own Stakeholder Group.

At the very least, the performance of retail investment products should be benchmarked against inflation, to protect investors from the “monetary illusion”. This is why Better Finance, like the OECD, always analyses long-term

investment returns in real terms, i.e. net of inflation.

2. Our complementing review of investor disclosure documents revealed that more than a third (34%; or 21 funds out of 62) of the funds with the highest potential of being closet indexers according to ESMA6 (active share below 50%, tracking error below 3% and R square above 0,95) do not disclose their benchmark’s performance alongside their own performance in their KIID7 although they do disclose a benchmark in their prospectus.

Better Finance believes this does not comply with EU Law and makes it impossible for retail fund investors to assess whether and to what extent these funds have been “hugging” their benchmark.

The UCITS KIID Regulation (No 583/2010) in its article 7.1(d) requires that the ‘Objectives and investment policy’ section of the KIID mention “whether this approach includes or implies a reference to a benchmark and if so, which one”.

Article 18 requires that “where the ‘Objectives and investment policy’ section of the key investor information document makes reference to a benchmark, a bar showing the performance of that benchmark shall be included in the chart alongside each bar showing the UCITS’ past performance.”

Therefore, when a fund’s benchmark is disclosed in the fund’s prospectus (according

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to Morningstar), it should also be disclosed in the ‘Objectives and investment policy section’ of its KIID, and its 10-year (article 15.1 of the UCITS KIID Regulation) past performance should also be disclosed alongside the one of the fund in this document.

A failure to do so, in our view, seems to violate EU Law, and certainly prejudices fund investors.

It is quite worrying that this issue was not disclosed to fund investors and to the public by ESMA following its own “complementing review of investor disclosure documents” last year on these same funds, a review which ““tended to confirm the quantitative analysis results”.

This is a serious issue for investor protection. ESMA’s only recommendation to investors when it released its closet indexing study last year was: “In order to put investors (both retail and professional) in a position to make an informed investment decision, ESMA suggests that they should make use of all the documentation available to them when selecting a product. When considering an investment in a UCITS equity fund, regardless of the style of fund management, investors may also wish to compare the key elements of the product to those of a number of other products (including some that adopt a different management style).

Although past performance is not a reliable guide to future returns, there may also be value in assessing whether a Edition #11

fund has been able to achieve the objectives referred to in the fund documentation.”

How can retail investors follow the ESMA recommendation if the fund’s benchmark performance is omitted in the KIID? The 2-page KIID was created in 2010 precisely to enable retail investors to access key information on investment funds, the fund prospectuses being too long, too complex, and not written in plain language.

In the past Better Finance has even found a retail fund that does disclose its benchmark’s performance in its KIID, but a false one.

Better Finance will ask ESMA for a full investigation into this matter.

To make matters worse, ESMA and the other ESAs are at the same time proposing to eliminate all past performance disclosure in the future “KID” that will replace the current “KIID” for funds, whilst also eliminating all requirements for the disclosure of benchmark performance (past and future). It will therefore be impossible for EU savers to follow ESMA’s recommendation, although ESMA publicly acknowledges at the same time that past performance disclosure is indeed useful in the case of retail investors needing to assess whether their fund is really active, and – more generally - whether it has been able to achieve its objectives.

Besides, even in its case against past performance being a “reliable guide to future returns” (if only such a thing could exist for equity markets!), ESMA’s argument is self- defeating as it intends to replace relative past performance (of products versus their benchmarks) disclosure with “future performance scenarios” that, “based as they are on historical data, will be heavily impacted

by PRIIPs past returns.”8 These future “scenarios” will therefore certainly be an even less “reliable guide to future returns”, as they will expressly pretend to be exactly that, and nearly always be wrong as well as highly misleading.

3. Our review also finds that a majority of those funds with the highest potential of being closet indexers according to ESMA seem to underperform their benchmark.

The performance of those funds relative to their benchmark is difficult to evaluate since: - Again 34% of those funds fail to disclose their benchmark’s performance in their KIID; - For some funds, the relative performance over the last five years mentioned on the public Morningstar website is different from that of the one in the KIIDs. Yet, amongst those funds, we found only very few that did not underperform their benchmark over the last

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five years. Better Finance did not analyze their past performance versus that of low cost index funds such as ETFs using the same benchmarks.

4. Better Finance requests to improve fund investor protection or, at the very least, to preserve its current level.  Urgently amend the PRIIPS RTS9 to avoid a major regression in investor protection in Europe and keep:  standardized,  supervised,  long-term (at least the 10 year minimum currently required for UCITS funds, although this should be longer for pension investment products)  and relative to the manager’s benchmark pastperformance disclosure (net of fees unlike in the current draft RTS for “future performance scenarios”).  In the KIID and in the future “KID”, mention the exact name of the benchmark and provide the web address (url) where the retail investor can cross-check the performance data with an independent source. This of course implies that index providers need to be transparent and accessible with regard to the past-performance data of the indices used in retail funds. This is a long-standing request from BF that has remained unanswered so far.

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 Make the current KIID compliant with MiFID information rules by replacing annual performance histograms (bar charts) with 10-year cumulative return line charts.

Indeed, OECD surveys confirm that only a minority of EU citizens is able to compute simple compounded returns. Therefore most are unable to figure out - from annual bar charts - whether a fund significantly over or under-performed its benchmark over the last 10 years. In compliance with MiFID, which rightly requires for investment information to be intelligible to readers, fund managers should be required to compute and disclose the cumulative 10year return lines of their chosen benchmark alongside that of their fund, so that retail investors can really see whether, and to what extent, the fund over or underperformed its benchmark.

It is only through the use of a cumulated line chart that retail investors can actually understand that this fund massively underperformed its benchmark10 and, in our view, misleads retail investors by claiming it is an index fund, i.e. that it aims to replicate its index performance, which obviously it does not.  Better enforce the current EU rules for product disclosures (KIID) so that all the funds that do have a benchmark actually disclose it in their KIID, along with relevant, accurate and nonmisleading disclosure of the

10-year performance of the benchmark alongside the one of the fund, so that retail investors can see - among other things - whether a fund has been “hugging” its benchmark or not, and whether it has delivered value over a cheaper index fund or not.

Annex 3 Replication of the ESMA study on closet indexing THE ESMA STUDY: METHODOLOGY AND LIMITATIONS Following a Better Finance request from October 2014, ESMA started to investigate potentially falsely active equity “UCITS”11 funds (also called “closet indexers”).

On February 2nd 2016, ESMA released some of the long-awaited results of its investigation. Closet indexers are funds that claim to be “actively” managed whereas in reality they merely follow market indices, charging far higher fees than low-cost index-tracking funds such as ETFs do. The promotion and distribution of such funds as “active” is very misleading to the investor and causes detriment because the investor is paying for a service that he or she is not receiving.

1. ESMA METHODOLOGY AND FUND SELECTION CRITERIA On 2 February 2016, ESMA issued a statement highlighting the issue of closet index tracking funds

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Actual example: - Current KIID disclosure (annual bar charts):

- Cumulative relative returns disclosure:

and describing the analysis it undertook to “determine whether any indication of closet indexing can be found at an EU-wide level”.

The ESMA analysis was twofold:  It used quantitative metrics, which indicated that up to 15 % of the UCITS funds ESMA sampled were potentially falsely active,  and reviewed the investor Edition #11

disclosure documents of the funds concerned, and “found they tended to confirm the quantitative analysis results”.

ESMA, however, did not disclose the funds that were uncovered by its investigation as being potentially falsely active, nor did they disclose in which countries they are domiciled, leaving EU investors in the dark. When a request by Better Finance for ESMA to release the results of its investigation

and actually disclose the names of the dozens of funds suspected by ESMA of engaging in “closet indexing” was declined, Better Finance took the decision to replicate the ESMA study and release the results.

In this respect the key objective of the study is to replicate to the extent possible the quantitative methodology and the fund selection criteria of the ESMA study.

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ESMA explicitly specified that the Morningstar commercial database was used as the data source for their study.

Using specific criteria, ESMA then filtered the universe of available funds limiting the study to “UCITS with a significant size, a proven track record and a management fee in the typical range of funds with an active management style”.

Having applied these filtered criteria to the Morningstar database, ESMA was left with a sample size of over 2600 funds. It then removed those funds for which it could not retrieve the necessary data (Active Share (“AS”), Tracking Error (“TE”) and R-Squared) during the period 2010201412 inclusive, which led to a final sub-sample of 1251 funds to be analysed.

In order to replicate the ESMA study as closely as possible, Better Finance also used the Morningstar database and filtered the full universe of funds using the same criteria as ESMA, both explicit and implicit. The following criteria were therefore used to filter the Morningstar database to produce this study: Explicit Criteria from the ESMA statement:  UCITs only  Equity funds only  Only funds domiciled in EU Member States  Not categorised as indextracking  With inception date prior to 1 January 2005

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Implicit ESMA study criteria:  Surviving funds only  Oldest share class only  Fund size > 50 million  Management fee starting > 0.65% In order to faithfully present the findings of the study, the same criteria and time period were used as those

by ESMA. Better Finance also disclosed the funds that ESMA excluded from its analysis because it could not retrieve the necessary data.

Active Share represents the proportion of portfolio holdings that differ from those in the benchmark index.

Tracking error is a measure of the volatility of excess returns relative to a benchmark and R-Squared reflects the percentage of a portfolio’s movements that can be explained by movements in its benchmark.

The relevant period of time in which the analysis took place was between 1st January 2010 to 31st December 2014 (again, this is the period chosen by ESMA). Over this 5-year period, TE and AS figures were calculated based on one-year intervals.

The funds were then split into the different categories mentioned below, depending on whether they met the AS, TE and R-squared thresholds for at least three of the five years used in the analysis.

In line with the ESMA methodology, the analysis for this report was conducted against each fund’s Primary Prospectus Benchmark

(source: Morningstar). The Active Share figures for each year were calculated using the end of year portfolio holdings compared against the primary prospectus benchmark of the fund.

For the TE and R-squared figures, data on monthly total returns was used, compared against the primary prospectus benchmark of the fund. The TE statistics have been annualised to make it comparable to the ESMA figures.

This report therefore separates the results into four different categories; the last two being the same as ESMA’s:  Equity funds that do not report a benchmark  Equity funds that do report a benchmark but do not provide Morningstar with the necessary data to compute AS, TE and R2 These first two categories were not included in ESMA’s analysis.  Potential actively managed equity funds (within the list of those which do report a benchmark and for which Morningstar has sufficient data)  Potential equity closet indexing funds (ESMA’s “classification 1”: Active share < 60% + tracking error < 4%).

Using the same sampling criteria as ESMA, the number of funds is nevertheless lower for this replication study. This is most probably due to the evolution of the Morningstar

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database in the meantime (some funds may have closed, merged, or no longer meet the sampling criteria).

Therefore some funds that may feature in the Better Finance sample may not appear in the ESMA sample and vice versa.

2. LIMITATIONS The results disclosed by ESMA confirmed that investor detriment is potentially severe since ESMA found that up to 188 funds, i.e. 15 % of the UCITS funds it analysed, could potentially be falsely active based on quantitative measures available.

A complementing review by ESMA of investor disclosure documents “tended to confirm the quantitative analysis results”.

This already alarming number would probably have been even higher if ESMA had:  not excluded more than half of the active equity UCITS funds it sampled (1,349 out of a total of 2,600; this was due to the lack of necessary data in the Morningstar fund database);  included also the equity funds that are widely sold to retail investors in major markets like France or Germany, i.e. “AIF”13 funds, not only the Pan-European “UCITs” ones.

ESMA - unlike the Norwegian regulator – refused to disclose the funds that were uncovered by its investigation as potentially falsely active, nor did it disclose in which countries they are domiciled, leaving EU investors in the Edition #11

dark. Moreover, despite having already taken more than a year to perform a quantitative and qualitative investigation, ESMA then left it up to the National Competent Authorities to deal with this huge case of potentially wronged investors.

Almost a year later, none of them14 have so far publicly identified any falsely active fund, either from the list of up to 188 UCITS funds produced

by ESMA, or elsewhere.

However, investors holding those funds have waited long enough and can certainly not wait any longer for any hypothetical action, with no timeline to rely on, from unidentified national regulators and unidentified fund managers.

To read the original press release published by Better Finance click here

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ARTICLE: Xavier Porterfield

HOW BENCHMARKS HIDE YOUR TRADING COST

by Xavier Porterfield | CFA | Head of Research, New

Transparency matters. Occasionally, as Agatha Christie might agree, transparency is unhelpful, but when it comes to real world financial transaction costs, transparency is a great thing.

Without it you’ll be murdered.

This essential axiom is central to ESMA’s guidelines on the implementation of Mifid II. “‘A high degree of transparency is essential to ensure that investors are adequately informed as to the true level of actual and potential transactions in shares, depositary receipts, exchange-traded funds (ETFs), certificates and other similar financial instruments irrespective of whether those transactions take place on regulated markets, multilateral trading facilities (MTFs), systematic internalisers, or outside those facilities. This high degree of transparency should also establish a level playing field between trading venues so that the price discovery process in respect of particular financial instruments is not impaired by the fragmentation of liquidity, and investors are not thereby penalised’.

Financial intermediaries seek to earn profits by charging a spread to facilitate transactions. In much the

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same way that kings of old earned seigniorage by clipping the gold coins in circulation, earning the spread reduces the size of the gold coin, bond, currency or other financial instrument being exchanged.

Transparency in how much is getting clipped will tend to reduce intermediaries’ profits on individual trades. If intermediaries get too greedy this tends to discourage market participation.

Benchmarks, properly specified, should provide an element of transparency, to enable participants to lower search costs. Thus goes the theory.

In practise, the way a benchmark is constructed and used can increase search costs substantiallywitness the use of ECB fixings or WMR for currency transactions. These benchmarks are created by liquidity providers themselves, who are able to trade on the information their benchmark setting contributions provide.

This does not so much hide market impact, as guarantee

that the cost due to market impact is maximised.

Market impact is a key component of implicit trading costs. Essentially it measures the cost incurred of participating in the market.

Sometimes this cost can be positive, such as when a participant seeking to buy Euros against dollars is able to find a seller easily, without moving the price. The more common user experience is highlighted by a study a study conducted by Newchange FX, comparing the cost of execution of trading EURUSD at the 4pm fix relative to the daily time weighted average price. The study found the cumulative difference in Net Asset Value to be around 4% per annum.

Benchmarks do not include implicit trading costs, such as spread or market impact. If the benchmark is created using post trade references, based on actual transactions, the benchmark is not even capturing the price formation process. If a benchmark does not capture

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TS Change FX

the price formation process it cannot really help promote price transparency, and it certainly cannot help market participants understand their implicit transaction costs.

The only way to way to understand FX costs is by using an objective, independent reference price that is not manipulated, deliberately or otherwise, by the trading process. It is essential to compare apples with apples, like with like. It is also important not to offer more sophisticated market participants an opportunity to adversely affect your rate.

With interest rates around the world at historically low levels, the cost of transacting foreign exchange is more important than ever beforeâ&#x20AC;Ś and it shouldnâ&#x20AC;&#x2122;t take Miss Marple to figure them out.

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Xavier began his career at Idea Global, a research house based in London in 1997. He then joined FX Concepts to work in research in 1998 and stayed there until moving back to Paris in 2009. Since then Xavier has been involved in research and development in the currency field, and has been instrumental in the development of the New Change FX benchmarks.

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ARTICLE: Clare Reilly

PENSION TRANSFERS: WHY CONSUMERS NEED AND DESERVE GREATE

by Clare Reilly | Head of Corporate Development | Pe

For many years the pensions industry has knowingly exploited consumers with unnecessarily complex products, hidden fees and opaque language. But now, we have evidence that pension firms are using delay tactics to actively discourage consumers from taking action to combine or move their pension pots.

The ability to switch quickly, easily, and at an agreed date, is essential for a healthy functioning marketplace.

When customers can easily take their business elsewhere, this puts pressure on providers to keep fees low and improve products. It also ensures that successful, innovative firms thrive and unsuccessful firms change or exit the market.

Switching is particularly important in pensions because being stuck in a poorly managed fund can have a big impact on your level of income - and happiness - in retirement.

It’s essential that people can move or combine their pension pots easily so they can take ownership of their

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savings and engage with their retirement.

But despite this being both the agenda of the Government and in the best interests of consumers, there are some big pension providers who seek to do just the opposite.

Whilst there are some bestin-class providers who use safe electronic transfers to release funds in under 10 days - other providers are doing everything they can to hold on to funds for up to 180 days to earn more fees and deter switching completely.

And they can because the law currently protects them - there are just no rules forcing them to transfer swiftly.

PensionBee has recently launched a 10-day pension switch guarantee campaign

to raise public awareness of the lengthy delays faced by some consumers when they try to move or combine their pension pots.

There are three different types of standard defined contribution (DC) pension transfer issue: ● Schemes not using electronic transfers consistently, even when they have the capabilities ● (Primarily) trust-based schemes refusing to move off paper-records ● Other deliberate delay tactics to deter switching, such as requesting original birth certificates to be sent by post It’s all extremely confusing for consumers, who just want to

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ER TRANSPARENCY

ensionBee move ‘their money’.

There is no standard process. So, depending on who your old provider is, the transfer can be completely seamless or a nightmare of calls, onerous paper forms and trips to the post office that drags on for months with no end in sight.

What we need is a uniformity of process for consumers and a proper set of switching rules for pensions, as we have in other regulated industries.

We can improve the pensions transfer experience in just three steps, and the 10-day pension switch guarantee is how we do it: ● All providers have to

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use electronic transfers consistently - no more paper forms! ● There’s a maximum time limit of 10 days on standard DC transfers ● A safe list of FCA-regulated personal pensions and authorised master trusts to help raise awareness of and prevent scams None of these solutions are new; each has already been proposed in various government papers from at least 2012 onwards. But, more importantly, all are possible because they are already happening, we are just yet to see any formal push to implement them as a set of proper rules.

The 10-day pension switch

guarantee means that providers will be mandated to use electronic transfers for all standard DC pensions (the bulk of all transfers).

When advice is needed, there are exit fees, other non-standard circumstances, or the receiving scheme is not on the safe list - then the 10-day timeframe does not apply. Consumers should be informed immediately of whether the 10-day transfer standard applies at the outset of the process.

Electronic transfers are not only quicker, but they are much safer for customers as payments are tagged and

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traced, so no money can go missing. No more error-prone manual paper processes and cheques lost in the post!

Fast electronic transfers are entirely possible as they are already happening in the UK via Origo in 10 calendar days and over in Australia providers must transfer in 3 days or less. There’s already a 7-day switch guarantee on UK current accounts, and standard DC transfers are no more complicated.

The switch guarantee also seeks to simplify the messaging on pension scams - and can be included as part of the HM Treasury and DWP scams consultation recommendations.

Not all schemes are a scam, so it will help to start differentiating between what could be a scam, and what is definitely not - by using clear, objective criteria: ● Transfers to schemes operated by an FCAregulated firm or authorised master trust are on a safe list - these transfers should be conducted electronically and in 10 days or less ● Transfers to non-authorised schemes are not on a safe list, so require extensive manual due diligence and take six months or less This approach means

that standard transfers to legitimate schemes on the safe list can be sped up, enabling providers to slow down non-standard transfers and those to questionable non-authorised schemes.

supported by a Fintech coalition of Nutmeg, Moneyfarm and Scalable Capital - all of whom either offer or are set to offer FCA-authorised pension products this year.

This increases safety for consumers as ceding providers have more time to focus on non-standard transfers, and thwarts scammers who insist on moving quickly. It also maintains an end-to-end time limit for both types of transfer, essential for accountability in the industry.

Unless we have uniformity in the transfer process, we are going to be critically unprepared for the Pensions Dashboard, a platform that lets savers see all their pension pots in one place for the first time. It’s essential that a standardised process on pension transfers is up and running before launch - the first thing people will want to do when they see old pension pots scattered about is move them!

PensionBee believes that these issues need to be addressed urgently. We urge you to write a letter to your MP via our campaign page. So far we’ve have had a really great response from MPs, who all agree that consumers need to be able to take control of their savings easily and simply. Now is the time to implement a proper set of rules.

The 2015 HM Treasury consultation on transfers already acknowledged that improvements in scheme administration are required, especially in trust-based schemes. We welcome a new regulatory framework for master trust schemes to classify which schemes can be placed on a safe list. We urgently need this safe list!

The campaign is publicly

Here at PensionBee we think it’s high time that the pensions industry had some basic switching principles.

Like other regulated markets the process should be free, quick, easy, and happen at an agreed date. We know it’s possible, because some providers already do it.

We call upon members of the Transparency Task Force to support the 10-day pension switch guarantee by writing to your local MP and spreading the word amongst your own networks.

Help us bring greater transparency to pension transfers!

PensionBee is an online pension manager that helps customers find and combine their old pensions into a brand new online plan, managed by the world’s biggest investment managers.

Customers can add more pensions as they switch jobs, make new contributions and see a forecast of their retirement savings amongst other things. We exist to simplify the pensions industry and make it easy for consumers to save for their future.

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Clare Reilly is Head of Corporate Development at PensionBee, where she is responsible for strategic and commercial partnerships. Clare has spent her career working in the not-for-profit sector in a range of development roles, including as Head of Fellowship Development at the Royal Society of Arts. Prior to joining PensionBee, she worked for Citizens Advice as Corporate Relationships Manager. Clare holds a BA from University College London and an MSc from the University of Oxford in Russian and East European Studies.

Comment from ORIGO OPTIONS: Origo is the not-for-profit fintech company that manages Options Transfers – the automated pensions transfers service - currently used by 90+ brands and in successful operation since 2008. The latest statistics for the 40K transfers processed through the service for the month of February 2017 show an average 10 (calendar) days to complete, with 20% taking less than 6 days to complete.

This demonstrates that automation delivers to time for consumers. For transfers that become delayed due to complex assets, or contributions outstanding etc. – using an automated transfers service enables early detection, continuous monitoring and automated reporting & escalation, helping servicing teams manage customer expectations.

Paul Pettitt, MD of Origo says; “Helping to deliver improved outcomes for consumers by making shared processes across the industry more efficient is core to Origo and initiatives that champion the consumer can only be positive.”

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ARTICLE: Dan Brocklebank

TIME FOR ASSET MANAGERS TO FEEL THEIR SH RECREATED FROM A PROFESSIONAL ADVISER BLOG PUBLISHED 10TH MARCH, CLICK HERE TO

by Dan Brocklebank | Director | Orbis Investments

The FCA’s initiative to improve investor outcomes is a refreshing and much-needed step in the right direction. In particular, we fully support the FCA’s objective of enhancing the value for money that investors receive from their asset managers. The FCA and the industry should work together to encourage, identify and promote fresh thinking on ways to better align the interests of investment managers and their clients, especially regarding fee structures.

Consider the problem that is highlighted on Page 93 of the FCA’s Interim Report: “The prevailing fee model incentivises firms to grow assets under management which is not necessarily aligned with investors’ best interests”.

Under the industry’s typical “flat” fee structure, managers are paid a percentage of assets managed regardless of their performance. While this is a fiercely competitive industry and individual managers no doubt try their

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best to outperform, firms often face an overwhelming business incentive to focus primarily on growing assets under management. Socalled closet trackers stand out as one of the more egregious manifestations of a mismatch of incentives.

Our view is that the ideal solution to many of the industry’s current problems would be to find ways to better align the interests of asset managers and their clients, most obviously through fee structures that reflect the quality of the services provided. Active managers’ investment management fees should, ideally, depend on the value added for clients while invested and be calculated based on the returns a manager achieves over and above an appropriate benchmark, after deducting any elements of the cost of ownership within the manager’s control.

If active fund managers were to align their interests with their clients in this manner, they would be forced to focus on delivering value for money.

Managers who fail to deliver value for money over the long term will struggle to remain in business, as they should.

That is the competitive reality for most other businesses, and investment management should be no different.

Traditional performance fees have a bad name in the European fund management industry—and for good reason. Typically, these fee structures provide the investment manager both a guaranteed share of assets under management and a share of any excess returns generated for clients. This creates a poorly aligned “heads we win, tails you lose” proposition for investors, which was highlighted in a paper published by the Cass Business School in 2014 and cited by the FCA in its recent report.

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HARE OF THE PAIN ACCESS THE ORIGINAL The 2014 Cass Business School report, “Heads we win, tails you lose” sets out a better approach to traditional “2 and 20” performance fees through a performance fee structure which also incorporates a penalty for managers, in the form of a refund to clients of previously paid performance fees, when managers underperform.

It is only by feeling their share of the pain that the long-term interests of asset managers and their investors can be better aligned. The discussion of symmetrical fee structures is not merely academic.

In an era of complaints about hidden charges and growing disappointment with active management, investors deserve better fee structures.

Indeed, the FCA notes in its report that there might be a place for “pricing models where the risks and rewards of performance are shared between the investor and the asset manager”. We could not agree more and would fully support any initiative to encourage managers to come up with well-structured symmetric performance fees as a consumer-friendly solution.

Importantly, ensuring a better alignment of interests would not simply improve issues around pricing or value for money; it would also most likely obviate the need for some of the additional regulation, costs and complexity proposed by the FCA in an industry that is already heavily regulated.

A number of firms— ourselves included— are already offering fee structures that are designed to more closely align the client’s experience with the fee being paid. Some of these innovations include refundable fees, a 0% base fee in which clients only pay for outperformance, and the absorption of operational costs normally passed along to clients.

Dan Brocklebank is a Director and Head of UK at Orbis Investments. Having studied PPE at Brasenose College, Oxford he qualified as a Chartered Accountant with Arthur Andersen. Bitten by the investing bug in the wake of the collapse of the dot com bubble, he joined Orbis Investments in 2002 as part of the investment team. Orbis currently manages approximately $30bn in a small number of primarily equity strategies globally. For the last 9 years Dan was responsible for Orbis’ team of global industry analysts based in London. At the same time, he has worked with Orbis’ institutional and retail customers to help them understand Orbis’ long-term, fundamental and contrarian investment approach. Dan has a particular interest in Orbis’ goal of making long-term investing simple and accessible to all and he is a Director of Orbis Access, Orbis’ UK retail platform.

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ARTICLE: JB Beckett

WHY FIDUCIARY FUND SELECTION IS GO, IN A F

by JB Beckett | UK Lead, Association of Profession

Following the advent of growing fiduciary regulation, and the rise in the transparency and ESG agenda, I recently reflected on the significance of my professional Institute’s motto. ‘My word is my bond’, what that means has been carefully stipulated into various codes and professional standards to measure one’s self by on a day to day basis (as much anyone can). Fiduciary has also been expanded into society and environmental level through industry initiatives like UN Principles for Responsible Investment (PRI).

BUT can it be digitalised?

Fiduciary certainly goes well beyond selecting the cheapest passive fund and leaving it there for 25 years.

However the very concept of fiduciary could be more transparent, for example does an investor require a human to offer a fiduciary service or indeed to be a fiduciary fund selector?

Legally yes but then the law has long lagged technology and science. That’s not the question for today; rather could computers act in a fiduciary manner?

Before we regress into a pre-programmed negative response, consider that humans litter history with malfeasance; the polar opposite to fiduciary, to act ‘uberrima fides’ (in utmost good faith) the key basis of insurance and banking contracts from hence most of

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the modern fund management industry grew. Madoff, Arch Cru, boiler rooms, LIBORrigging, flash boys and so on.

Alas technology has been an instrument of poor practice and will increasingly be so in future. However that is the consequence of human hands not computers. Computers are not predisposed of wrongdoing only programmed to do so, a thought for the rapid proliferation of RoboAdviser platforms. With the rise of robots, the battle for white collar roles has begun. Robots have already won the blue colour space which requires physical interaction. White collar roles by and large have little physicality to overcome, lots of talking, thinking, writing reports, drinking coffees.

Martin Ford’s book ‘Rise of the Robots’ captures the bleak outlook for white colour

professionals. The second digital age if you will. Visions of ‘WestWorld’ sensationalise the at times quiet and not so quiet digital revolution. The asset management industry (‘the City’) is actually one of the last bastions of human industrial intensity, be it actuaries, fund managers, consultants or professional fund investors and the myriad of pseudo executives and support staff in between. A quick visit to LinkedIn tells the story. “the hurdle machines have to cross to out-perform humans with college degrees isn’t that high.” Martin Ford, Author ‘The Rise of the Robots’.

“The end game scenarios seem kind of severe. From here on in, it’s really, really, really going to change and it’s going to change faster than

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FINTECH WORLD.

nal Fund Investors we can handle.” Matt Beane, MIT, ‘5 White Collar Jobs Robots have Taken’, Forbes Feb 2015.

The truth is that our industry has controlled the capital, funding technology progression, we are somewhat conflicted to see digitalisation usurping our own roles. Questions: • If no conflict exists then why do we have so many humans involved?

• Is our capacity to act legally, in a fiduciary way, replaceable with technology?

• What advantage do we human beings place on being better at performing certain functions?

What does being a

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fiduciary require? Empathy, diligence, determination, trustworthiness, expertise, judgement. Putting the investor before yourself.

These may seem all-toohuman and a realm beyond digitalisation yet when Google’s DeepMind AlphaGo program beat South Korea’s Lee Se- dol 4-1 in the first of a series of games in Seoul in Mar 2016, then the concept of learning and adaptive artificial intelligence (‘AI’) took a huge step forward.

How AI overcame Go? Firstly rewind back to IBM’s 200 million board positions per second Deep Blue computer, which challenged then reigning world chess champion Garry Kasparov in 1996. In a six-game match

played in 1996, Kasparov prevailed but a year later lost dramatically. Over 2500 years old, in terms of rules, Go has considerably simpler rules than chess. Black and White sides each have access to black and white stones on a 19 by 19 grid. Once placed, stones don’t move. The aim of the game is to completely surround and capture opposite stones, which are then removed from the board. Here the complexity and artistry arises—organic battles from the corners to the centre of the board. Given that a typical chess game has a branching factor of about 35 and lasts 80 moves, the

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number of possible moves is vast, about 35 to the power of 80 possible moves, aka the “Shannon number”. Go is much much bigger. With its breadth of 250 possible moves each turn, and 150 likely moves, then there are about 250 to the power of 150 possible moves.

“What is noteworthy is that AlphaGo’s algorithms do not contain any genuinely novel insights or breakthroughs.

The software combines good old-fashioned neural network algorithms and machinelearning techniques with superb software engineering running on powerful but fairly standard hardware.. the heart of the computations are neural networks, distant descendants of neuronal circuits operating in biological brains. Layers of neurons, arranged in overlapping layers, process the input.. and derive increasingly more abstract representations of various aspects of the game using something called convolutional networks.”

Christof Koch, March 19, 2016, Scientific American.

In many ways the computations of a fund selector are far more complex than Go stratagem but the small judgemental biases are similar. Asset allocation, over and under weighting assets against a ‘neutral’, giving rise to tactical positions, have their very root in war strategy and hence Go. Of course fund selection is neither science nor art, it combines fuzzy logic with data inputs into a decision.

Those biases can have both

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intended and unintended consequences, welcome and less welcome outcomes.

The underperformance and survivorship bias among great swathes of fund managers points to the need for some sort of logic but one that perhaps alludes many. Is the human condition the weak link?

Imagine if fund selection can be derived from software: a neural network computing program that can screen thousands of funds and make judgements, shortlist recommendations, assess suitability and compatibility against a mandate or investor needs and monitor the outcome of those decisions, all the while underwriting the capability of a fund manager based on a model, new information and past data, recommending changes while simultaneously weighing the impact to the portfolio and topical metrics like turnover, cost. Performance analysis has already been digitalised, other types of information can be stored and used for learning, algorithms can replicate judgemental nudges and biases based on common material changes like manager experience, tenure, benchmark, fund

changes, moving firm, news flow and so on. In many ways software can far better interpret the signals, their significance needs to lay a good starting baseline and self- learning. In many ways the components already exist as separate Fintech; it simply needs a complex adaptive algorithm to link it all together.

Perhaps a framework like Ontonix for example (see next page). The other challenge is the retention of experience, digital wisdom if you will. Here AlphaGo solved through coupling self-learning with a differentiable neural computer (DNC). Memory requires memory, literally.

“The DNC architecture differs from recent neural memory frameworks, in that the memory can be selectively written to as well as read, allowing iterative modification of memory content.” according to its developers. The DNC then uses three distinct forms of differentiable attention. The first is content lookup, the second records transitions between consecutively written locations and the third allocates memory for writing.

All mind-bending stuff for a mere fund analyst!

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Of course computers can be clever, yes, but have no inherent sense of self, humanity or fiduciary at creation. The first obstacle (or perhaps safeguard) is the absence of consciousness.

The second is no morality.

How then can Roboselectors put the client above all others? If you conclude that either the human experience carries an unassailable premium or that computational algorithms can never encapsulate what it means to be fiduciary then perhaps solutions yet lie in human network platforms, the wisdom of the crowd.

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based on the shared experience of hundreds or even thousands of other fund selectors could be powerful.

Consider that digital does not need to better the human experience; simply delver a comparable outcome that is devoid of illogical biases, consistent, reactive, impervious to influence and marketing to make objective decisions. If on the other hand you believe that the concept of fiduciary lies in a hierarchy of needs, rules and protocols, then these could potentially be digitalised.

”One thing wealth managers and financial advisers may want to bear in mind before enthusiastically advising clients to invest in robotics is that it would be the equivalent of turkeys voting for Christmas if robots are developed which can manage money successfully on a discretionary basis.” Alex Sebastian, Portfolio Adviser, 13 November 2014.

A Fiduciary Algorithm?

Firstly Robots follow 3 guiding laws: the Three Laws of Robotics (‘Asimov’s Laws’) devised by the science fiction author Isaac Asimov.

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However they have come to be fundamental guiding principles for the Robotics industry and do too should they apply to the fiduciary Robo-Adviser and RoboSelector. The rules were introduced in his 1942 short story “Runaround”. The Three Laws, in the “Handbook of Robotics, 56th Edition, 2058 A.D.”, being: 1. A robot may not injure a human being or, through inaction, allow a human being to come to harm.

2. A robot must obey the orders given it by human beings except where such orders would conflict with the First Law. 3. A robot must protect its own existence as long as such protection does not conflict with the First or Second Laws.

The fiduciary duty falls initially to the programmer of the algorithm that instructs the programme to make decisions. Taking these laws it is not unfathomable that computers can be programmed to put the interest of the client first and foremost to; 1. Uphold a fiduciary standard and all conflicts of interest must be disclosed.

A computer has no conflicts unless they are first programmed. Like a driverless car its’ function is to serve the purpose without question.

2. A fiduciary has a “duty to care” and must continually monitor not only a client’s investments, but also their

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changing financial situation.

A computer can monitor 24/7 continuously and is not restricted by fatigue or the adviser/fund selector’s diary.

A sequence can be included if the client does not supply an update within x days or could be linked to the client’s accounts, email, diary and so on.

3. Understand changes to a client’s risk tolerance, perhaps after a painful bear market.

Perhaps there was a family change. Under the suitability standard, the financial planning process could begin and end in a single meeting.

For fiduciaries, that first client meeting marks only the beginning of the legal obligation. We have seen the term ‘orphan clients’, and humans have a great track record of dropping less profitable clients (value pools).

4. Monitor, adapt, assess fund changes. The reality is that many fund investors do not monitor their decisions often enough or with objectivity.

They are susceptible to heuristic biases. Yet a computer can continuously monitor cost, turnover, risk, changes and performance. It can monitor RSS feeds, performance, fund manager commentary, portfolio positions, information supplied by the client, instructions, deal flow, thousands if not millions of data points analysed through neural networks.

From the above the algorithm can include a core hierarchy of neural paths and decision trees: Efficacy of active management versus benchmark/passive based on

a learning empirical algorithm and relative valuation of index momentum, the carbon impact of a portfolio, the environmental, social and governance score of the fund and underlying stocks, Stewardship score, economic value comparison of available universes and fund structures, risks relating to the firm like fines or corporate restructures, rating changes, flow data, people changes, process issues, significant portfolio turnover or positioning changes, risks, performance issues, ongoing costs. From these broad sections the algorithm can create thousands of rules, rankings, logic maps and decision points driving to further questions or a BUY, HOLD or SELL decision. More importantly a self- learning function refines and redefines the algorithm consistently. I have often wondered if I, and other fund selectors, were put in a lab and tested then could our shared experience be digitalised?

“It doesn’t matter what is out there. Judgment, skill and expertise is always going to be necessary and I don’t think you can put all that into an artificial intelligence solution.. you can definitely gain tremendous benefit from artificial intelligence and its development. That will be complementary with active managers. I don’t think one necessary replaces the other.” Kai Sotorp, chief executive of Manulife Asset Management. FT, June 26, 2016, by Attracta Mooney.

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For example the software could observe a sector change, fund renaming or fund merger. It can automatically send an email to a fund manager or obtains an E due diligence questionnaire (E- DDQ) in realtime from the growing number of digital information warehouses. In many ways the steps taken by fund selectors are rules-based but the implementation by Robo can be faster, more efficient and more objective.

Software does not have to sleep, play golf, or spend time with the kids. Currently the Securities and Exchange Commission is increasing its scrutiny of “reverse churning.”

As more advisers and wealth managers move their compensation toward annual

fees, the human incentive has shifted from doing excessive transactions (churn) to generate commissions, towards doing less for a fee.

Go, No-Go? The move towards more fiduciary transparency is an important step towards digitalising it and indeed Robo-selection. The danger is that self-learning AI itself compromises the fiduciary obligation to the investor and it is here where Asimov’s laws need to be hardwired and continuously measured.

The other challenge is storing learning and experience, an issue among humans that Nicholas Taleb flagged in ‘Black Swan’ and perhaps AlphaGo’s DNC can solve.

Perhaps the answer is more symbiotic than we might be led to believe. A third way? If you feel the notion of digital fiduciary is still more science fiction than threat then you may be right. We can at least counter the progress of technology at becoming better cyborgs, to use technology, to use the cloud, the crowd, to generate positive fiduciary evidence for the value added by human fund selection.

Robo is Go, your move!

JB Beckett, Author of New Fund Order, UK Lead, Association of Professional Fund Investors.

JBBeckett.simpl.com #newfundorder www.profundinvestors.com

Useful links: https://deepmind.com/research/publications/ https://www.scientificamerican.com/article/how-the-computer-beat-the-go-master/ http://www.rawstory.com/2016/03/a-neuroscientist-explains-why-artificially-intelligent-robots-willnever-have-consciousness-like-humans/ https://www.technologyreview.com/s/531146/what-it-will-take-for-computers-to-be-conscious/ http://www.dolfiduciaryrule.com https://www.fca.org.uk/publications/market-studies/asset-management-market-study https://en.m.wikipedia.org/wiki/Bernard_Madoff https://www.ftadviser.com/2015/01/14/opinion/jeff-prestridge/the-arch-cru-scandal-still- festers-4m5iar3TjMwIMh8Y4KstlN/article.html http://www.debate.org/opinions/are-computers-good-for-society http://www.your-inner-voice.com/Bad-Things-about-Computers.html http://www.investopedia.com/terms/d/doctrineofutmostgoodfaith.asp http://www.sutherland.com/portalresource/DOLFiduciaryRuleAToDoList.pdf Edition #11

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http://www.dolfiduciaryrule.com/Articles http://money.usnews.com/money/blogs/the-smarter-mutual-fund-investor/2015/03/19/is-your- financial-advisor-a-fiduciary https://www.theguardian.com/technology/2016/jun/12/nick-bostrom-artificial-intelligence-machine https://en.m.wikipedia.org/wiki/Three_Laws_of_Robotics http://www.moneywise.co.uk/news/2016-12-20/robo-advisers-do-not-spell-out-charges-clearlyreport-warns http://uk.businessinsider.com/robo-advisors-online-financial-advisors-automated-investing-2017-1? r=US&IR=T http://www.international-adviser.com/news/1033226/chinas-robo-advisers-struggling-gain- momentum https://www.ifundservices.com/wp-content/uploads/2016/08/IgnitesEurope-ifund-Digital-Advisorfund-selector-Aug-2016.pdf http://www.fundselectorasia.com/tag/robo-investing-service https://www.ft.com/content/84bb5c72-37a9-11e6-9a05-82a9b15a8ee7 http://www.portfolio-adviser.com/news/1016139/fear-rise-robots http://www.ontonix.com/examplews/

JB has been a fund selector for over 16 years, is a FTSE100 Professional Fund Investor, UK Lead for the Association of Professional Fund Investors, Author and Senior Reviewer for the Chartered Institute for Securities and Investments (CISI.org) and Author of â&#x20AC;&#x2DC;#NewFundOrderâ&#x20AC;&#x2122;.

He is also an Ambassador of the Transparency Task Force.

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The Transparency Times | www.transparencytaskforce.org | March 2017 | Edition #11

ANOTHER VERY SPECIAL EVENT:

...on 17th May will be focused on a question of fundamental importance:

“What is the true purpose and potential of the Pensions Industry?”

The symposium will be particularly interesting to those that hope and believe that the pension capital markets could, and should, become a ‘force for good’ for our planet and society as a whole; as well as enabling the efficient provision of financial security in old age.

The idea for the event was wholly inspired by a talk given by David PittWatson, Executive Fellow of the London Business School; David delivered a highly impactful and thought-provoking talk that showed so clearly the wisdom of establishing purpose as a bed-rock for thought leadership and policy-making.

This will be a not-to-be-missed event if you are in any way interested in the development of a more progresive approach to pensions policy-making and believe that Socially Responsible Investing and Environmental, Social and Governance factors are important; as well as looking at the ‘bigger picture’.

Richard Harrington MP, Pensions Minister is our Keynote Speaker

As Tracy Blackwell, Chief Executive of Pension Insurance Corporation put it so brilliantly recently: “It’s hard to lose your way as an industry if you focus on the why!” Perhaps it is possible for the pensions industry to formulate an over-arching vision statement articulating its purpose? Would such a vision statement help to guide and steer pensions policy? Maybe it would to create a sense of collective purpose amongst pension professionals? We are hopeful that this event will help to galvanise support for the idea that the pensions industry could, if it chose to, become a key driver for improvements on many fronts that are of such grave concern to so many. This conference will be used to share insights on this most-vital of all topics and if all goes to plan delegates will have the chance help build consensus on how the pensions and investments industries accept their responsibilities moving forward.

There will be fantastic presentations and panel sessions - here’s the line-up of key participants: - Richard Harrington MP, Pensions MInister - David Pitt-Watson, Executive Fellow, The London Business School - Leon Kamhi, Executive Director: Head of Responsibility at Hermes Investment Management - Catherine Howarth, Chief Executive, ShareAction - Nicholas Morris, Visiting Fellow at the Martin School, Oxford; Adjunct Professor, Faculty of Law, New South Wales - Hugh Wheelan, Managing Editor, Responsible Investor Magazine - Steve Conley, Managing Director, Workplace Pensions Direct - Nico Aspinall, Chair, Resource and Environment Board, Institute & Faculty of Actuaries -Tracy Blackwell, Chief Executive, Pension Insurance Corporation - Tony Greenham, Director of Economy, Enterprise & Manufacturing, the RSA. Book yourself a place swiftly; places are limited and demand for them is expected to be very high -

CLICK HERE TO BOOK YOUR PLACE When & where?

Wednesday 17th May, 9:30 to 17:00 Pension Insurance Corporation, 14 Cornhill, London EC3V 3ND Edition #11

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ARTICLE: JB Beckett

FIDUCIARY FLY-TRAP: UK BEING CAUGHT BETW SOFT TRUMP?

by JB Beckett | UK Lead, Association of Profession

Whilst Trump will certainly provide plenty of fuel for my fellow writers and pundits, because he is quite unpredictable, radical and gun-ho, one has to write more hurriedly just to keep ahead of him.

MiFID2 is receiving increasing interest as the timetable draws ever closer. Recently I found myself on a MiFID2 webinar panel as a late standin for Tom Caddick, speaking to a virtual audience of about 800 listeners. The FCA has already said we are locked in as the effective date will occur before the completion of Article 50. The move to greater transparency stands central to a regulatory philosophy that promotes stability, retirement funding and value for money above all else.

How then different markets implement will have a fundamental bearing on the respective competitiveness of each market, which may become increasingly partisan. The UK asset market embarked early in its fiduciary reform through the Retail Distribution Review but looks poised to be a political sacrifice as the FCA finds itself ahead of many other EU countries in terms of local regulation; locked into ESMA by the delay to invoke Article 50 (Brexit).

Step back. It is worth reminding ourselves that in

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2016, by capita, the UK asset management industry was the most concentrated and the most lucrative asset market in the West. It combines the lucrative retail aspects of the US adviser market with the higher fees of Europe and a healthy star manager culture and pro-active disposition.

As bank balance sheets have reduced then the asset management market has accelerated, first post dot.com crash and then again post 2008. The U.K. has become the capital hub between East and West investors and asset managers.

The UK funds industry finds itself in a difficult trajectory pre-Brexit, leaving the common European market; with Paris, Frankfurt and Madrid all keen to steal away vast pools of prop’ desk, private equity, ‘non dom’ and foreign investor capital.

Meanwhile the U.K. funds market itself risks standing alone, gold-plated post Retail Distribution Review, looking into a regulatory abyss of MiFID2, MIFIR and Solvency 3. If anything the progress of activist groups, DWP and FCA will likely overshoot other countries. This is good

news for investors but not necessarily for the long term health of the City. So far increasing regulation has been grudgingly accepted because the whole world was moving to a greater fiduciary regime or so we thought.

What if other countries u-turn or slow progress?

The reality is that in the eve of MiFID2, we are already seeing local variances in Europe, fund buyers are moving to models that will effectively allow continued commission in Switzerland and Italy. The 27 EU member states will likely be allowed their own inducement approach. The Netherlands, Denmark and United Kingdom, for example, have decided to

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WEEN A HARD BREXIT AND A

nal Fund Investors implement a complete ban on inducements.

However the U.K. differs with Denmark and the Netherlands as being a hub for a large proportion of non domestic investors whereas Holland and the Nordics are more domestic and supported by social and libertarian values. As growth UCITS feeder markets, Asia will be watching closely.

In stark contrast Trump’s plan is to shower the financial services industry with deregulation and help out hedge funds with a special tax cut. How it is implemented will be heavily influenced by Republican die-hards who have to wait eight years to effect policy.

Republicans have long been driven by the ethos of small government; BIG free market (just google Republican Paul Ryan’s ‘A Better Way’).

The Department of Labor (DOL) Fiduciary law may see itself quickly delayed or repealed following Trump’s

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presidency. The impact of campaign funding will likely begin to have an effect, to delay the DOL Fiduciary rule, arguing it is too complex and burdensome and will sharply increase the cost of giving and receiving advice.

If cannot be delayed then expect some progressive softening rhetoric coming out of the DOL. The return of commission-driven boom-bust markets (with no bail-outs) look set to return. Let’s take a quick look at Trump’s likely Wall Street administration roster, for example; Department of Labour: Andrew Puzder. CEO of CKE Restaurants Inc., which owns Carl’s Jr. and Hardee’s.

A Trump adviser who has been critical of the Affordable Care Act’s impact on fulltime employment. He’s also opposed steep increases in the minimum wage and has warned about the damaging effects of overregulation.

Attorney General: Jeff Sessions is Trump’s nominee. A four-term Republican senator from Alabama. A hard-liner on immigration, and on government spending but no clear track record on Wall Street.

Securities Exchange Commission: Wall Street lawyer Jay Clayton has emerged as the leading candidate to be chairman of the Securities and Exchange Commission. At Sullivan & Cromwell, Clayton has represented prominent Wall Street firms, including Goldman Sachs. He has also helped multiple corporations raise money through initial public offerings, including Alibaba Group, Ally Financial, Och-Ziff Capital Management, Oaktree Capital Management, Blackhawk Network Holdings, and Moelis & Company.

During the Financial crisis of 2007–2008, Clayton advised Bear Stearns in its fire sale to JPMorgan Chase in 2007 and Barclays Capital in the purchase of Lehman Brothers’ assets following their bankruptcy.

Trump’s speech to the New York Economic club last September provided strong cues; “One of the keys to unlocking growth is scaling back years of disastrous regulations unilaterally imposed by our out-of-control bureaucracy. Regulations

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have grown into a massive, job-killing industry — and the regulation industry is one business I will put an end to.. In 2015 alone, federal agencies issued over 3,300 final rules and regulations, up from 2,400 the prior year.

Every year, overregulation costs our economy $2 trillion a year and reduces household wealth by almost $15,000. I’ve proposed a moratorium on new federal regulations that are not compelled by Congress or public safety, and I will eliminate all needless and job-killing regulations now on the books.” D.J.Trump.

Thus on a pro-Wall Street agenda, the likely result is a lighter fiduciary direction, founded on Republican free market ideology and the basic assumption that if you don’t like the result you sue the other party. The gradual repeal of post-2008 legislation: Dodd-Frank, FACTA, Volker, GlassSteagal and DOL Fiduciary look in the Republican crosshairs. This may put US asset managers and investment banks in a weird regulatory arbitrage on both sides of the Atlantic. Not since post ’Big Bang’ might the various fund markets stand so divergent.

Where exactly that leaves the UK and the EU is anyone’s guess.

DOL: “I would be very surprised if the incoming administration didn’t move to address this as an early priority.. “The first step would be to delay implementation of the rule. That would give the department some time to reconsider it on the merits.”

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Paul Schott Stevens, chief executive of the Investment Company Institute, said in a recent interview.

If at the same time Europe becomes increasingly competitive with the U.K., the result is that the UK may find itself an island, literally, outside of the EU, with a higher (more costly) regulated industry than its neighbours, with a tougher tax regime while facing falling revenues and a vast outflow of foreign investors, and devoid of any emerging support from the US. The UK cannot exit MiFID2 lest risk losing the EU-passport (which it may lose anyway) and politically cannot unwind the Retail Distribution Review or the drive to price transparency.

The UK could potentially offer a safe haven tax regime but would find itself designated outside of the EU passport.

Expect the EU to use EMIR as a pseudo FACTA to repatriate assets in the UK back to the EU. Caught in this fiduciary fly-trap between US and EU, there are few scenarios where I see the size of the current UK fund industry remaining intact, it will continue but will likely revert to the domestic insurance, wealth manager, stockbroker and adviser market of old.

This presents a very immediate risk to professional fund investors in the U.K. and a quandary for buyers more globally given the likely differences in future regulation. More buyers may simply become tied agents to access commission; itself contra EU aims of better

competition.

Better Fiduciary and Transparency combine to make our industry fairer and more democratic, technology is an enabler. However the political will on both sides of the Atlantic is volatile and therefore the trajectory in the U.K. may get caught between two different ideologies and thus create two unexpected and unwelcome outcomes.

Firstly the use of rebates to large insurers and distributors look set to be outlawed

by MIFID2 on a policy of ‘inducements’ even though to my knowledge they are all passed through (certainly by insurance and pension companies) to end investors, as additional units instead of the optical price. Secondly, if market forces continue to drive flows towards passive in the US then it’s likely US brokerages will continue to jump in their rubber dinghies to make shore in the EU, wealthy economic refugees keen to preserve their ‘alpha’ performance fees. However they will prove far less keen to drop anchor in the goldpated UK. Perhaps 2016 marked a peak in the U.K. asset market; the future of fund management is Dublin, Luxembourg, Paris, Frankfurt and Madrid..

JB Beckett, Author of New Fund Order, Association of Professional Fund Investors.

JBBeckett.simpl.com #newfundorder www.profundinvestors.com

The Transparency Times | www.transparencytaskforce.org | March 2017 | Edition #11

Useful links: MiFID2 Webinar: https://knect365.com/fundforum/article/e3c3b017-83ca-4cb1- abcb-99f1b8b81c5d/whats-thebest-response-to-mifid-ii http://www.investmentnews.com/article/20170120/FREE/170129996/financial-industry-expectsquick-action-from-trump-to-delay-dol https://www.bloomberg.com/professional/mifid-ii/? utm_medium=Adwords&utm_campaign=Reg_ exp&utm_source=pdsrch&utm_content=mifid_page &bbgsum=DG-WS-CORE-mifid-gp&gclid=CIf2mZD50tECFesW0wodPn4FIw http://ec.europa.eu/finance/securities/isd/mifid2/index_en.htm https://www.fca.org.uk/publication/market-studies/ms15-2-2-interim-report.pdf https://www.fca.org.uk/news/press-releases/fca-publishes-proposals-transactions-cost-disclosure http://www.eversheds.com/documents/global/switzerland/Publications/MiFID_2_CH.pdf http://www.tradersmagazine.com/news/regulation/mifid-ii-trading-obligations-loom-115826-1.html http://www.risk.net/risk/advertisement/2479885/industry-at-the-crossroads-facing-up-to-disruption- and-digitisation http://abetterway.speaker.gov/_assets/pdf/ABetterWay-Economy-PolicyPaper.pdf https://www.washingtonpost.com/world/national-security/trumps-pick-for-attorney-general-isshadowed-by-race-and-history/2016/12/24/1432cffa-b650-11e6-959c-172c82123976_story.html? utm_term=.19b0efcfc9f6 https://en.m.wikipedia.org/wiki/Jay_Clayton_(attorney) http://www.foxnews.com/politics/2016/12/08/fast-food-exec- puzder-is-trumps-pick-for-labor- secretary-sources-say.html Edition #11

| March 2017 | www.transparencytaskforce.org | The Transparency Times

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ARTICLE: JB Beckett

AN EMPIRICAL EPOCH? THE ORWELLIAN STRUG ACTIVE-PASSIVE EMPIRE

by JB Beckett | UK Lead, Association of Profession

The Association of Professional Fund Investors (www.profundinvestors. com) recently responded to the latest UK regulator consultation on the efficacy, cost and selection of active funds. The nigh 10 page response by the APFI (on behalf of UK Professional Fund Investors) sent a clear message that while the purpose of transparency was correct; the FCA was in danger of approaching the subject in a myopic and biased manner. Why? The active-passive debate is being played out in a statistical arms race between academics, active managers, consultants, passives, index providers and various faction media on both sides.

Simply put active fund supporters are losing the war.

The APFI noted: “The total number of firms quoted appear to be 1840, so an alternate interpretation would be the opposite: 0.5% of the firms control more than half the assets. You [FCA] do mention these very challenges, asset concentration and the cost disadvantages that smaller firms are facing, but it is a striking feature of the report that the oligopolistic nature of the market is not fully addressed, how it relates to asset management business models, marketing and thus potentially skew the wider active-passive debate being considered.”

By 2024 Moody’s predict that passive funds will overtake active funds in the US, in terms of assets under management. This will surprise some but not

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all. Passive providers (like ‘Jack’ Bogle’s Vanguard and IShares) carefully weaved a narrative in the early years that the outright assets under management of passives was diminutive in comparison to active. However the growth of passive AUM has been both exponential in terms of investor behaviour and linear in terms of the redemption out of active. For every pound/dollar redeemed from active; another pound/dollar is invested in passive. Add to this the slow demise of fixed income markets post bond bubble, changing AM business, explosion of ETF and index based providers, large investor reserves in cash and the conditions for a ‘Passive Spring’ were well seeded. In short a very large proportion of the asset management industry has already decided to back

passive on commercial (if not investor) grounds irrespective of the statistical outcome.

That charge is led by some heavy weight academic studies, most centre on the US mutual fund market (the world’s biggest) and easy target supertanker funds like the creaking hull that is Fidelity’s Magellan fund (the world’s first supertanker). Then you have the clandestine players like Standard & Poor’s that weigh in with their pro-passive studies like ‘SPIVA’. Between S&P and Russell, active US managers have literally been penned into style-cap buckets for the best part of 20 years. Deviation is bad; do not deviate, do not ‘drift’.

The CFA and US adviser associations like the CFP have literally brainwashed a generation into a post

The Transparency Times | www.transparencytaskforce.org | March 2017 | Edition #11

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nal Fund Investors Sharpe/Fama//Kaplan doctrine that active managers must stick to a bias above all else. This has been fortified

by SEC and other regulators.

Now the industry says active funds do not deliver within those confines. Exhibit A. https://us.spindices.com/ documents/spiva/spiva-usmid-year-2016.pdf Let us not forget that the greatest asset concentration and thus supertanker today is the S&P500 index itself and all replicants therein.

The SPIVA report therefore becomes self-fuelling: index product momentum drives up the index, SPIVA then reports that active managers cannot outperform that momentum, active managers either diverge to find better capitalisation/valuation, which gets slammed by compliance teams as tracking error and

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attribution reports point to copious off-benchmark risk being added; or staying in the index and becoming accused of being ‘quasi-trackers’ maligned by popular media and Active Share. Then more money goes into the index via index products and around we go again. It is self-fulfilling and almost inimitable (until the herd decides to sell). It is arguably efficient in terms of price but not in terms of valuation. I am not a fan of massive free float indices, as you may have already guessed.

What then empirical evidence exists that challenges the might of SPIVA? Little.

I googled ‘active versus passive fund study’. For many the Google search is the de facto source of all fact and opinion. Let’s ignore how search hits are themselves manipulated and agree that

few tend to look beyond the first few pages of a related search. My search returned; 15 pages of hits; within the first 3 pages (about 25 hits) there was only one pro active study (Defaqto) from 2015, which while thought provoking is lacking in statistical firepower. Other studies do exist but very few post 2011.

The sheer weight of propassive statistical studies is thus overwhelming. Whilst few point towards any sort of smoking gun other than cost or EMH; logically, if being empirical, one has to be led by the weight of evidence.

One caveat is the problem with republishing. This occurs when a study is published and then cited/republished by a number of other sources.

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According to Google some of the academic studies are cited again between 300-1000 times. That’s a lot of positive reinforcement for essentially one piece of analysis and amplifies the empirical gap between pro and con studies.

The other issue is the dearth of practioner-based research or studies. Most fund buyers have formed the great silence in the active-passive debate. http://defaqto.com/advisers/ zones/multi-asset-fundszone/features/active-versuspassive-fund-solutions/ Where the ‘resistance’ has begun is through a new generation of empirical platforms.

For example Fundscape has launched a year-long experiment to compare the performance of both advised and non-advised active and passive investment solutions.

The ‘Great British Wealth Off’ will run until 1 February 2018 and could continue for another year if there is sufficient demand. Five investments were selected for the competition: one robo adviser (Moneyfarm), one active fund of funds (Architas MA Active Progressive), two active multiasset funds (MI Hawksmoor Vanbrugh and Royal London Sustainable World), and one passive fund of funds (Vanguard LifeStrategy 80% equity). Professional Adviser reported that “£300 has been invested in each fund, with only funds with the same Morningstar SRRI rating of four out of seven selected.

The Moneyfarm profile chosen was ‘pioneering investor’

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with a medium risk level.” It is a narrow study and therefore unlikely to persuade many but it does challenge the previous convention that aggregate studies explain how the world works. That is only true if the median is relevant.

SharingAlpha.com is now well known to the industry and is designed to allow fund raters demonstrate an ability to pick funds that outperform an investable ETF benchmark; plus their analytical accuracy in terms of assessing people, price and portfolio (the ‘hit rate’). In time SA may become the world’s leading MI engine with regards to active fund selection. It’s strength is its global breadth, community, real world decisions and investable benchmarks.

We should remind ourselves that the key aspect here is the fiduciary obligation and the investor experience. Both passive and active asset managers are driven (outside of a mutual model) to generate profit. Where that firm becomes big and accountable to shareholders before investors then the same dysfunctions, that have blighted active management, will commute to passive.

This is not clear in the stats because the passive industry is embarked one huge loss-leading offensive to grab investor assets. We should be careful when the new leaders eventually take power.

Active management (or at least research) is essential to price discovery, which does not work in a free float mechanism like the S&P500. Any

order driven system needs at least one buyer (or seller) to trade based on valuation of future cash flow. The move to high frequency trading and program exchanges do little to help. Transparency of cost and value are essential for all funds but we should not automatically confuse low cost and race to the bottom as ‘people champion’ and we should be more questioning of broad studies that do not make any reference to underlying causality. Nonetheless, the active industry is losing the war because it (and active fund selectors) fail to produce convincing and counter-point empirical evidence. ”We are not interested in the good of others; we are interested solely in power, pure power. What pure power means you will understand presently. We are different from the oligarchies of the past in that we know what we are doing. All the others, even those who resembled ourselves, were cowards and hypocrites.” George Orwell, 1984.

As an empiricist one has to wonder: where are the heroes? Perhaps it’s you, me and the hundreds of other SharingAlpha fund raters.

JB Beckett, Advisory Board Member, Sharing Alpha Fund Selector, Consultant and Author, #NewFundOrder

The Transparency Times | www.transparencytaskforce.org | March 2017 | Edition #11

JB has been a fund selector for over 16 years, is a FTSE100 Professional Fund Investor, UK Lead for the Association of Professional Fund Investors, Author and Senior Reviewer for the Chartered Institute for Securities and Investments (CISI.org) and Author of â&#x20AC;&#x2DC;#NewFundOrderâ&#x20AC;&#x2122;.

He is also an Ambassador of the Transparency Task Force.

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ARTICLE: Lee Robertson

SHINING A LIGHT ON FEES

by Lee Robertson | CEO, BA FCSI | Chartered Wealt

The subject of fees, particularly those that are not readily identifiable in fund charging structures, is one that continually appears in industry discussions. There has long been a debate about what the effect of these charges are and how they impact upon an investors expectations of returns.

Explicit fees are obviously those that are readily identifiable and those that are not are termed implicit fees.

As an adviser dealing primarily with private clients this is a subject which has to be covered in great detail. However, by their very nature these implicit fees are hard to discuss in any great detail or with any great accuracy but it is imperative and entirely right that investors have a good grasp of the types of charges that are being applied to their capital and when, how and why they are levied.

It must surely be right that the fund groups which wish us to purchase their funds on behalf of our clients should

help us ascertain the true cost of their purchase.

Active funds beyond their explicit fees have many different fees that impact on the potential returns available to investors. Transaction fees, in, out and dealing, hedging costs, custody, spreads, taxes, research costs, swaps costs, foreign exchange costs and a host of other ‘frictional’ costs can make a rather large dent in returns, particularly on those funds with high portfolio turnover rates (PTRs).

High PTRs are particularly prevalent in highly liquid equity funds with large spreads and with a requirement for a great deal of research, something that investors are usually paying for even if they don’t realise it.

Star Manager, Neil Woodford,

has recently made headlines by announcing that he will no longer pass on his research costs to his investors but to be fair his funds tend to have a low PTR as he is more of a buy and hold type of manager.

Those supposedly active funds which tend to track their benchmarks are a prime example of much of what is wrong with the current system. These are really just ‘closet trackers’ but unfortunately for the investors in these funds they continue to charge both explicit and implicit fees whilst not making any real or measurable effort to actively seek to add alpha. There are many who believe that there has been a marked upturn in these closet trackers and this is not at all good for the investor.

It is not all bad news however, Europe has been pushing hard on full fee disclosure with new rules

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The Transparency Times | www.transparencytaskforce.org | March 2017 | Edition #11

th Manager by 2018 and Norway has recently cracked down hard on closet trackers with a requirement that those fund managers who have diverged away from what their investors were led to expect by index tracking whilst continuing to charge active fees refund fees and inform their investors of the decision of their regulator.

Perhaps unsurprisingly, this has not proven as popular with the fund groups as the investors.

Here in the UK many fund groups are now acknowledging that the direction of travel for full fee disclosure, despite the difficulties in achieving this, is towards much more transparency.

Martin Gilbert, the big boss at Aberdeen Asset Management, is one of the

heavyweights now being very vocal about the need to have a single, all-inclusive fund charge making it easier for investors and their advisers to really get to the bottom of the types of charges being levied on an annual basis.

So as an adviser, Brexit and Investment Association foot dragging notwithstanding, I am keen to see the new rules and disclosure impetus coming in by 2018. I want to be able to have a full, frank and fair discussion with my clients on those costs which allow them to ascertain their true returns and plan for their financial futures with a much greater degree of certainty than is currently the case.

Lee founded Investment Quorum in 2000 and is a Chartered Wealth Manager and Chartered FCSI. Amongst his other awards he is proud to have been recognised in the definitive Spearâ&#x20AC;&#x2122;s Wealth Management Index as one of the top ten wealth managers working in the UK and was named their High Net Worth Wealth Manager of the year in 2016. He has also just won UK Wealth Management CEO of the Year in the Le Fonti International Business Innovation Awards receiving his award at a gala dinner in Hong Kong.

An advocate of financial planning led wealth management hs personalised advice style has led to great demand for expert comment on wealth and investment matters in the press and is now also regularly on TV.

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ARTICLE: Dan Mikulskis

IT’S NOT JUST ABOUT THE COST – MAXIMISING INVESTMENT DEPENDS JUST AS MUCH ON RISK

by Dan Mikulskis | Head of DB Pensions | Redingto

Clear transparency is vital when it comes to ensuring value for money for customers. However, the industry needs to keep in mind that enhanced transparency won’t lead to better member outcomes if this means overbearing trustees. There needs to be a balance of providing enough information to allow trustees to make informed and sensible decisions without drowning them in data.

When it comes to transparency within your investments this is all about having complete clarity over what your portfolio consists of and where your money is going.

Transparency over fees and transaction costs is part of the story - and an important one given the impact this can have on an investor’s end outcomes. But that’s not the only advantage good transparency can bring. Transparency also enables investors to more easily understand what a particular asset or investment strategy does and how it complements those that they already own.

Demystifying investment strategies through greater transparency enables investors to better choose between them, enabling them to build a portfolio that meets their objectives in terms of risk, return, liquidity and cost considerations. More complex investments are by their very nature hard to evaluate and

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paradoxically could lead to allocations that are too small as well as too large as investors are rightly reluctant to allocate large amounts to strategies whose risk and return drivers are unclear.

I think it’s also important to move away from the notion that clarity is means a race towards the cheapest strategy. Instead we should see it as a way of shedding light on how and why costs have been undertaken and enabling investors to clearly see how these are of a meaningful benefit to their portfolios.

Some high cost strategies can be replicated at much lower cost; some provide exposures that already exist in the portfolio at lower costs and some may be worth paying for to help investors achieve

their desired outcome.

Setting clear objectives and risk budgets enables investors to benefit from transparency at the portfolio level, providing clear rationales for investment decisions. Where market views are taken, full transparency allows these to be clearly identified, and taken in a way and a size that helps support those objectives with clear lines of responsibility in place.

To achieve a diversified portfolio, an investor needs exposure to a range of different risk factors to provide returns. Good transparency allows the risk factors associated with particular investments to be clearly identified and aggregated at the portfolio level. Some of these risk factors will be cheaper to

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on access than others. To access some risk factors will require trading of underlying assets which will incur transactions costs. Limiting a portfolio to the lowest cost risk factors only will limit the diversification that can be achieved and thus limit the amount of return that can be generated for a given level of risk.

Transparency allows investors to clearly identify both the costs, and underlying exposures, of particular investments which allows them to be properly assessed in the portfolio context to give the best net returns to the investor.

So what is the solution? This is clearly a complex area and no single answer is going to work for all investors.

However, we welcome the FCA paper and hope it focuses on putting together a solution that has members’ best interests at heart.

Ultimately, transparency is not just about costs; building

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a portfolio using transparent objectives, strategies and market views enables investors to gain a better understanding of the risk and returns of their investments.

• Dan heads Redington’s DB Pensions business, having joined the firm in 2012. In this role Dan is responsible for overseeing and steering a business that provides investment advice to DB schemes, on both a retained and project basis, with over £350bn in total assets and pay the pensions of nearly a million underlying members. Dan’s focus is growing Redington’s market share in this area, with the end goal of helping more members reach financial security in retirement.

• As a member of Redington’s investment committee Dan also has joint oversight for the investment strategy process, from investment modelling assumptions to fund manager recommendations.

• Dan is also the editor of Redington’s recently-formed research institute: The Redington Ampersand Institute • Previously Dan held derivatives-trading focused roles at Deutsche Bank in Sydney, Macquarie bank and a macro hedge fund • Dan began his career in the Investment Consulting business within Mercer in London, where he qualified as a Fellow of the Institute of Actuaries in 2007, and where he became a member of the Financial Strategy Group.

• Dan holds a BA(Hons) in Mathematics from the University of Cambridge.

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SOME PICS FROM OUR FEBRUARY TRANSPARENCY SYMP

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POSIUM:

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AND SOME MORE PICS FROM OUR FEBRUARY TRANSPARENC

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CY SYMPOSIUM:

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AND EVEN MORE PICS FROM OUR FEBRUARY TRANSPARENC

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CY SYMPOSIUM!

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T E A M S Rapid progress has been made since our first meeting on 6th May 2015. It is perfectly clear that there are many motivated and highly capable people who are dissatisfied with the status quo and, very importantly, are willing and able to work together to make a difference.

These individuals are organised into 6 teams, with each team having a particular area of focus.

All Teams seek to utilise the power of transparency to help bring about the change that is needed. All Teams â&#x20AC;&#x2DC;meetâ&#x20AC;&#x2122; by way of a conference call, always on the first Tuesday of the month.

The six Teams are below, with the times of their calls (UK times): - Market Integrity Team; 9:00 - Foreign Exchange Team; 10:30 - Banking Team; 12:00 - Costs & Charges; 13:30 - Stewardship & Decision-Making; 15:00 - International Best Practice; 19:00 We are always seeking new Team members - please enquire through andy.agathangelou@transparencytaskforce.org The following tables show the make-up of the teams; those in bold are Team Leaders:

MARKET INTEGRITY TEAM First Name

Last Name

Job Title

Organisation

Country

David Gill

Stripp Cardy

Founder Insight Consultant (Wealth Management)

David Stripp Consulting Defaqto

UK UK

JB

Beckett

UK Lead

Association of Professsional Fund Investors

UK

Lesley

James

Director & Lead Financial Adviser

Simplified Money Ltd

UK

Stephen

Conley

Managing Director

Workplace Pensions Direct

UK

First Name Peter Xavier Andrew

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FOREIGN EXCHANGE TEAM Last Name Egglestone Porterfield Woolmer

Job Title Director Head of Research CEO

Organisation BestX New Change FX New Change FX

Country UK France UK

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First Name Steve

Last Name Conley

Markus

BANKING TEAM Job Title Managing Director

Organisation Workplace Pensions Direct

Country UK

Krebsz

Interim Chief Risk Officer

UNECE GRM

UK

Alex

Letts

Founder

U

UK

Samuel

Ghann

CEO

Greater London Mutual

UK

Heather

Buchanan

Director of Policy & Strategy

APPG on Fair Business Banking

UK

COSTS & CHARGES TEAM

First Name Adam

Last Name French

Job Title Co-founder & Managing Director

Alan Andrew Andy

Browne CEO Evans Chief Executive Officer Agathangelou Founding Chair

Andy

Tarrant

Head of Policy & Government Relations

Angie

Kirkwood

Anna

Organisation Country Scalable Capital Limited UK MyFutureNow Smart Pension Transparency Task Force B&CE The People's Pension

Ireland UK UK

Senior Manager - Industry Development

Scottish Widows

UK

Tilba

Lecturer in Strategy & Corporate Governance

Newcastle University Business School

UK

Brendan Callum Chris

Mulkern Mayor Barrow

Consultant Consultant Head of Business Development

Pen Partnership Pen Partnership Scorpeo UK Ltd.

UK UK UK

Christopher Con Craig

Squirrel Keating Rimmer

Founder and CEO Head of Research Policy and Technical Specialist

Sciurus Analytics BrightonRock Group Pensions Advisory Service

UK UK UK

Daniel

Godfrey

Non-Executive Director

Big Issue Invest Fund Management

UK

Edward Elizabeth

Bushnell Campbell-Warner

Compliance Director Managing Director

Cavendish Medical Gabriel Research & Management

UK UK

Gayle Gerry

Schumacher Wright

Retired Partner

Former MD, Coutts Smith & Williamson Investment Management LLP

UK UK

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UK

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Graham Henrik

Cook Pedersen

Portfolio Solutions Managing Partner, Co-Founder

Macquarie Securities Clerus LLP

UK UK

Henry Iain

Tapper Cowell

Founder Head of Investment Solutions, UK & Ireland

Pension PlayPen Allianz Global Investors

UK UK

Imran

Razvi

Public Policy Advisor

The Investment Association

UK

James

Monk

Aon Employee Benefits

UK

James John John Julius

Singer Simmonds Serocold Pursaill

Head of DC Investments Senior Associate Principal Principal Independent Pension and Investment Governance Consultant

P-Solve CEM Benchmarking Inc Studio Serocold

UK UK UK UK

Lucy Malcolm

Forgie Small

Policy Adviser Managing Director

ABI Lynecombe Consultancy Ltd

UK UK

Margaret

Snowdon

Chairman

Pensions Administration Standards Association

UK

Mark Markus

Proffitt Krebsz

Scorpeo UK Ltd UNECE GRM

UK UK

Martin

Palmer

Head of Sales Interim Chief Risk Officer Head of Corporate Funds Proposition

Zurich Financial Services

UK

Michelle

Baddeley

Professor of Economics and Finance

University College London

UK

Mike Natalie

Webb Winterfrost

Consultant Chair/Client Director

City Noble CFA Society, UK/Aberdeen Asset Management

UK UK

Niall Nick

Ferguson Fleming

Principal Consultant Market Development Manager

Engaging Reward British Standards Institute

UK UK

Peter Philip Richard Robin

Eggleston Miller Metcalfe Powell

Founder

Editor

BestX Pensions Focus

The Evidence-Based Investor

UK UK UK UK

Ronnie

Morgan

Strategic Insight Manager

Royal London

UK

Sam Saul

Lusty Djanogly

CEO CEO

UK UK

Shaul

David

Fin Tech Sector Specialist

Byhiras Best Interest Consultants UKTI Financial Services Organisation

Shyam

Moorjani

Partner, Financial Services Consulting

RSM Tenon

UK

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UK

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Stephen

Bowles

Head of Institutional Defined Contributions

Schroders

UK

Stephen Terence Tim

Budge Prideaux Sharp

Principal  Economic and Social Affairs Department

Mercer  TUC

UK UK UK

Tim

Walton

Manager, Data Research and Analysis

Morningstar

UK

Tim

Brown

Head of Consultant Relations

Dimensional Fund Advisors

UK

William

Jenkins

Director, Co-Head Operational Due Diligence

Amundi

UK

Chris

Connelly

Lead Business Solutions Architect

Equiniti

UK

David

Rich

CEO

UK

Iain

Clacher

Jon

Parker

Associate Professor in Accounting & Finance Director

Accurate Data WServices Leeds University Business School Jonathan Parker Consulting Ltd

UK

Ralph Stewart

Frank Bevan

CEO DC (UK) Product Manager Benchmarking

Cardano KAS BANK

UK UK

Sunil JB

Chadda Beckett

Managing Director Consulting Chief Investment Officer and Author

Cairn Consulting Ltd New Fund Order Consulting

UK UK

UK

STEWARDSHIP & DECISION-MAKING TEAM

First Name Adrian

Last Name Jackson

Andy

Job Title Director of Business Development Agathangelou Founding Chair

Anna

Tilba

Lecturer in Strategy & Corporate Governance

Anna

Walton

Principal Consultant

Energised Environments Limited

UK

Con Henry Iain

Keating Tapper Clacher

Head of Research Founder Associate Professor in Accounting & Finance

BrightonRock Group Pension PlayPen Leeds University Business School

UK UK UK

Iuliia

Shpak

PhD Researcher in Finance/ Systematic Strategies

University of East London/Sarasin & Partners

UK

Edition #11

Organisation Pzena Investment Management Ltd Transparency Task Force Newcastle University Business School

Country UK

UK UK

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Jackie

Beard

Director of Manager Re- Morningstar Europe Ltd search Services EMEA

UK

James

Meenan

CEO

JNM Investment Governance

Ireland

John Joshua Judith Julia

Belgrove Card Donnelly Dreblow

Senior Partner Chief Executive Officer Partner Founder

Aon Hewitt Kukua Squire Patton Boggs sriServices and Fund EcoMarket

UK UK UK UK

Luke

Hildyard

Policy Lead - Stewardship and Corporate Governance

PLSA

UK

Markus

Krebsz

UNECE GRM

UK

Megan Michael

Clay Kemp

Interim Chief Risk Officer Pensions Lawyer Senior Pensions Technician

ClientEarth Pinsent Masons LLP

UK UK

Neil Nick

Latham Fleming

Consultant Market Development Manager

Independent British Standards Institute

UK UK

Paul

Lee

Head of Corporate Governance

Aberdeen Asset Management

UK

Paul Philip Rob

Marsland Brown Lake

Deputy Director Head of Policy Responsible Investment Advisor

High Pay Centre LV Rob Lake Advisors

UK UK UK

Sarah Saul

Hutchinson Djanogly

Consultant CEO

UK UK

Sebastian Steve Terry Tessa Tim

Reger Cave Ritchie Page Middleton

Partner Associate Director Development Director FIA, Principal Technical Consultant

SJ Hutchinson Ltd Best Interest Consultants Sackers Smith & Williamson Trustee Solutions Ltd Mercer Pensions Management Institute

Valborg Alan Barry David

Lie Salamon Mack Weeks

Director Managing Director Client Director Co-Chair

Borg Consulting Corpias Muse Advisory Association of Member Nominated Trustees (AMNT)

UK UK UK UK

Emma Henrik

Craig Pedersen

Marketing Specialist Managing Partner, Co-Founder

KAS BANK N.V. Clerus LLP

UK UK

Janice Mark

Lambert Miller

Pensions Consultant Employee Benefit Consultant

Independent Barclays Corporate & Employer Solutions

UK UK

Olivia

Seddon -Daines

Senior Research Analyst

ET Index

UK

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UK UK UK UK UK

The Transparency Times | www.transparencytaskforce.org | March 2017 | Edition #11

Paul

Hewitt

Senior Development Manager

Vigeo Eiris

UK

Rachel Sarah

Haworth Wilson

Policy Officer Chief Executive

ShareAction Manifest

UK UK

INTERNATIONAL BEST PRACTICE TEAM

First Name Aaron Alan Alex Andy

Last Name Bernstein Browne Mazer Agathangelou

Job Title Editor CEO Founding Partner Founding Chair

Organisation Global Proxywatch MyFutureNow Common Wealth Transparency Task Force

Country USA Ireland Canada UK

Anna

Tilba

Lecturer in Strategy & Corporate Governance

Newcastle University Business School

UK

Chris

Tobe

Investment Consultant

USA

Con Dana

Keating Muir

Head of Research Professor

David Drago Elias

Knox Indjic Westerdahl

Senior Partner

Sustainable Business Analyst

Stable Value Consultants BrightonRock Group University of Michigan's Ross School of Business Mercer

The Centre for Synchronous Leadership

Eric Eric Erik Francisco

Plunkett Veldpaus Conley Gomes

Owner Strategy Director Founder Professor of Finance

Frits

Meerdink

Manager Fund Management

Graham

Wrightson

Partner

Stephenson Harwood LLP

UK

Heinz-Dietrich

Steinmeyer

Professor of Law, Director of the Institute for Labour Law, Social Law and Business Law

University of Muenster

Germany

Henk Henrik

Lindner Wolff-Petersen

Policy Advisor Director and Co-Founder

Pensioen Federatie PandaConnect

Holland Denmark

James

Meenan

CEO

JNM Investment Governance

Ireland

Janice Jerry

Lambert Moriarty

Pensions Consultant CEO

Independent Irish Association of Pension Funds

UK Ireland

Johan John Jon

Hellman Belgrove Lukomnik

Chief Operating Officer Senior Partner Executive Director

ETFmatic Aon Hewitt IRCC Institute

UK UK USA

Edition #11

Redbrucke Novarca Group ZenInvestor London Business School PGGM Investments

UK USA Australia

UK UK Holland USA UK Holland

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Jonathan

Hall

Head of Financial Services

Aquila

UK

Juan

Zuluaga

USA/Columbia

Kara

Tan Bhala

President and Founder

Seven Pillars Institute for Global Finance and Ethics

USA

Karen

Volpato

Senior Policy Advisor

Australia

Marcus Mikael Natalie Nicholas

Orione Nyman Smith Morris

Editor in Chief Pensions Lawyer Visiting Fellow

Australian Institute of Superannuation Trustees

Exakt Media ClientEarth The Martin School, Oxford

Nicolas

Firzli

Director-General

Nikki

Food and Health Research Manager

Oren Pablo

Gwilliam-Beeharee Kaplan Arellano Ortiz

Preston

World Pensions Council Vigeo

Brazil Sweden UK Australia France France

Co-Founder & CEO Profesor de Derecho del Trabajo y Seguridad Socia

SharingAlpha Pontificia Universidad Católica de Valparaí so

Israel Chile

McSwain

Managing Partner & Founder

Fiduciary Wealth Partners

USA

Richard

Field

Director

Institute for Financial Transparency

USA

Roland

Meerdter

Board Member

Association of Professional Fund Investors

USA

Rosalie

Degabriele

Academic Finance Superannuation & Banking

University of Technology

Australia

Sam Stefanie Stephen

Instone zu Dohna Davis

Chief Executive Officer Client Support Officer Associate Director and Senior Fellow

AES International Dubai ETFmatic UK USA Harvard Law School Programs on Corporate Governance and Institutional Investors

Steve

Kenzie

Executive Director

UN Global Compact Network UK

UK

Steve Suzanne SV Tomas

Cronin Shatto Rangan Wijffels

Founder Retail Investor Senior Executive Policy Advisor

Wise

AIG Federation of Dutch Pension Schemes

Dubai USA UK Holland

Will

Price

Senior Finance Sector Specialist, Finance & Markets Global Practice

The World Bank

USA

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Ian Paul

Fryer Secunda

Head of Research Professor of Law and Director, Labor and Employment Law Program

Chant West Marquette University Law School

Australia USA

CALL TO ACTION PLEASE! We are seeking new members in all of our teams.

To learn more about each teamâ&#x20AC;&#x2122;s focus and to express interest in getting involved please email andy.agathangelou@transparencytaskforce.org

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A M B A S S A D O RS Some of our campaigning community are Ambassadors; individuals that are particularly aligned to what we are doing and why we are doing it; and as such are a profoundly impactful force for the positive change we are all collectively striving to achieve.

Our Ambassadors are listed below: First Name

Last Name

Job Title

Organisation Country

Ambassador?

Anna

Tilba

Lecturer in Strategy & Corporate Governance

Newcastle University Business School

UK

Yes

Catherine Con

Howarth Keating

UK UK

Yes Yes

Daniel

Godfrey

UK

Yes

David

Pitt-Watson

Chief Executive ShareAction Head of BrightonRock Research Group Non-Executive Big Issue Director Invest Fund Management

Consultant

UK

Yes

Jackie

Beard

Director of Manager Research Services EMEA

UK

Yes

JB

Beckett

Consulting Chief Investment Officer and Author

UK

Yes

Ralph Robin

Frank Powell

CEO DC (UK) Cardano UK Editor The Evidence- UK Based Investor

Yes Yes

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London Business School Morningstar Europe Ltd

New Fund Order Consulting

The Transparency Times | www.transparencytaskforce.org | March 2017 | Edition #11

ABOUT TRANSPARENCY STATEMENTS Transparency Statements are a great way to show your support for our international campaign and to align your organisation with our intention to encourage greater transparency in financial services, right around the world.

We believe that higher levels of transparency are a pre-requisite for fairer, safer and more efficient markets that deliver better value for money and better outcomes for consumers.

Furthermore, because of the correlation between transparency and trustworthiness we believe our work will also have a positive impact on the reputation of the financial services market as a whole.

“I believe there ought to be higher levels of transparency in financial services because..........................................................”

That’s good news for all market participants and all governments, because the world needs a financial services sector that is trustworthy.

and email it to

To provide your transparency statement please complete the sentence:

Thank you very much indeed

andy.agathangelou@ transparencytaskforce.org

Here Is a great example...

Tom Tugendhat | “I believe there ought to be higher levels of transparency in finanMember of Parliament for cial services because it is the only way that markets can function Tonbridge and Malling without distortion to the benefit of the true customer, the individual.”

CALL TO ACTION! PLEASE BE SURE TO PROVIDE YOUR TRANSPARENCY STATEMENT AS SOON AS POSSIBLE. WEBSITE COMING SOON!

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Helena Morrissey Chair | The Investment Association

“I believe there ought to be higher levels of transparency in financial services because it’s the very starting point for establishing trust.’

Dr. Kara Tan Bhala | President and Founder, Seven Pillars Institute for Global Finance and Ethics

“I believe there ought to be higher levels of transparency in financial services because transparency is a pro-ethical condition that enables us to fulfill our fiduciary duty and to achieve justice and the common good. Assiduous transparency yields continuous trust.”

Arno Kitts Founder & Chief Investment Officer | Perspective Investments

“I believe there ought to be higher levels of transparency in financial services because transparency supports trust, and trust is essential”.

Angela Rayner | Former Shadow Pensions Minister, now Shadow Secretary of State for Education and Shadow Minister for Women and Equalities Frank Whiffen Head of Strategic Business Development | Ferrier Pearce

“I believe there ought to be higher levels of transparency in financial services because pension funds should be run with a constant eye on efficiency – every penny should be accounted for therefore costs must be transparent and easy to understand – they must be explainable without jargon. The duty is to pay pensions and ensure that the sponsoring employers enjoy the benefits of reduced costs, we must avoid funds entering the Pension Protection Fund, it should be the last option”.

“I believe there ought to be higher levels of transparency in financial services because this will enable better decision making. In turn, this should be communicated in an engaging way so that sensible and informal decisions can be made.”

Phil Ninness Business Development Manager | Accurate Data Services

“I believe there ought to be higher levels of transparency in financial services because consumers are obtaining different views and news and there is a trust issue. People need honesty in plain english.”

Iain Cowell Head of Investment Solutions, UK & Ireland | Allianz Global Investors

“I believe there ought to be higher levels of transparency in financial services because sharing clear and understandable disclosures will drive positive innovation and can empower the customers of the industry to improve their long-term outcomes.

Martin Campbell Director | Beacon Strategic

Steve Conley Business Development Director | Workplace Pensions Direct

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“I believe there ought to be higher levels of transparency in financial services because for decades the industry has systematically ripped off the customer, while hiding behind deliberate and unnecessary opacity, to become wealthy at the customer’s direct expense.”

“I believe there ought to be higher levels of transparency in financial services because Transparency is a means to an end, where the end game is greater accountability, good decision-making and trustworthiness … which leads to better commercial outcomes for members, sponsors, markets through investment, and in the long-run - via improved reputation, public engagement and a reduced savings deficit - for the asset managers themselves and the financial services industry as an whole”.

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JB Beckett Author #NewFundOrder | New Fund Order, Assoc. of Professional Fund Investors Dan Norman CEO | TCF Investment

"I believe there ought to be higher levels of transparency in financial services because optimum economic value has become remote and distorted and by virtue active fund management and professional fund buyers fragile to digitalisation. Unless we put the City in order, technology will obsolete us, like Godzilla looming over us.”

“I believe there ought to be higher levels of transparency in financial services because the money belongs to the consumer and they need to be given the best chance of making their money work harder so they don’t have to.”

Pauline Skypala Journalist | Freelance

“I believe there ought to be higher levels of transparency in financial services because it is impossible to make competent investment decisions and fund manager choices without being in full possesion of all the relevant information. Costs are foremost in this as future investment performance is unknown.”

Julia Dreblow Founding Director | SRI Services

“I believe there ought to be higher levels of transparency in financial services because it is the best way to make sure that people get what they want through enhancing trust; an aspect that is desperately low in our industry.”

Judith Donnelly Partner | Squire Patton Boggs

“I believe there ought to be higher levels of transparency in financial services because pension funds and other institutional investors can only comply with their legal obligations to make informed decisions if they are able to access all relevant information”.

David Clark Director and Chairman Executive Committee | The Institute for Global Financial Integrity

“I believe there ought to be higher levels of transparency in financial services because without transparency investors lack the confidence to invest and markets fail to fulfil their true function of allocating capital efficiently”.

Angie Kirkwood Senior Manager Industry Development | Scottish Widows Chris Connelly Principal Consultant | Aquila Heywood

“I believe there ought to be higher levels of transparency in financial services because that is the only way we are going to gain the trust of our customers and allow us to simplify the way we talk to and engage those customers in making the decisions which will give them the best outcomes in their financial planning” “I believe there ought to be higher levels of transparency in financial services because we look after other people’s money and therefore their futures. It’s as simple as that”.

Robin Powell Editor | The Evidence-Based Investor

“I believe there ought to be higher levels of transparency in financial services because without it investors are unable to work out how much they’re paying and how much (or more to the point how little) value fund managers are adding to the investment process”.

Terence Prideaux Managing Director | Morley Hall

“I believe there ought to be higher levels of transparency in financial services because the aspirations of savers and their advisors will not be met if managers take more than headline fees and trust in the financial system will not be won”.

Richard Metcalfe | Principal, Richard Metcalfe Consulting

“I believe there ought to be higher levels of transparency in financial services, and particularly in pensions, because we cannot afford for people not to save for retirement”

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Helena Morrissey Chair | The Investment Association David Norman | CEO | TCF Investment

“I believe there ought to be higher levels of transparency in financial services because the money belongs to the customer and they need to be given the best chance of making their money work harder so they don’t have to.”

Julia Dreblow | Founding Dirctor | sri Services

“I believe there ought to be higher levels of transparency in financial services because it is the best way to make sure people get what they want.

It also enhances trust which is desperately low in our industry to the detriment of end users i.e. individual investors.”

Steve Conley | Managing Director | Workplace Pensions Direct

“I believe there ought to be higher levels of transparency in financial services because if we can trust the integrity of the industry, the financial health of market participants can actually be improved whilst at the same time the lives of the end consumer of our products and services are significantly enhanced.”

“I believe there ought to be higher levels of transparency in financial services because consumers deserve to know what they are getting for their money.”

kay Ingram | Director | LEBC

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“I believe there ought to be higher levels of transparency in financial services because it’s the very starting point for establishing trust.’

Bernard Casey | Principal Research Fellow | London School of Economics Nigel Sycamore | Director | Clear Workplace

“I believe there ought to be higher levels of transparency in financial services because investing is really only for sophisticated people and most people aren’t.”

Richard Hulbert | Insight Analyst | Defaqto

“I believe there ought to be higher levels of transparency in financial services because it empowers better financial decisions.”

Patrick Norwood | Insight Analyst | Defaqto

“I believe there ought to be higher levels of transparency in financial services because it empowers better financial decisions.”

“I believe there ought to be higher levels of transparency in financial services because our clients deserve it. It’s as simple as that.”

The Transparency Times | www.transparencytaskforce.org | March 2017 | Edition #11

Noel Whiteside | Professor Emeritus (retired) | University of Warwick

“I believe there ought to be higher levels of transparency in financial services because otherwise the personal responsibility for pension saving is impossible.”

Simeon Willis | Director | KPMG

“I believe there ought to be higher levels of transparency in financial services because it improves investor outcomes.”

David Norman | CEO | TCF Investment

“I believe there ought to be higher levels of transparency in financial services because its our money, you need to tell us what you are doing with it, clearly, honestly and openly.”

Sarah Young | MD | GSAV Limited

“I believe there ought to be higher levels of transparency in financial services because the retail consumer deserves better protection and the industry should know better!”

Campbell Edgar | Head of Financial Planning | CISI

“I believe there ought to be higher levels of transparency in financial services because they improve trust.”

Larry McLaughlin | CEO | GSAV Ltd

“I believe there ought to be higher levels of transparency in financial services because retail consumers are entitled to know what they are paying for, and to have greater transparency to protect their long-term interests and financial future against diminishing returns. Transparency in all aspects of the financial industry is integral to achieving consumer confidence and trust”.

“I believe there ought to be higher levels of transparency in financial services because life is complicated enough and members deserve better”

Darren Jefferson | Director | Alius Richard Ellis | Institutional Relationship Manager | Sarasin & Partners Your details here...

“I believe there ought to be higher levels of transparency in financial services because we believe there ought to be higher levels of transparency in financial services because savers / pensioners need to be properly informed about the products they invest in; they achieve the outcomes they expect; and to help build trust in the investment industry that is lacking at present.

“I believe there ought to be higher levels of transparency in financial services because.... Would you like your Transparency Statement to be included here?

Your details here...

“I believe there ought to be higher levels of transparency in financial services because.... Would you like your Transparency Statement to be included here?

Your details here...

“I believe there ought to be higher levels of transparency in financial services because.... Would you like your Transparency Statement to be included here?

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Elizabeth Campbell-Warner Co-Founding Director, Gabriel Research & Management John Greenwood Editor | Corporate Adviser

“I believe there ought to be higher levels of transparency in financial services because transparency is a prerequisite to building trust and trust is essential to the development of a healthy, sustainable financial services industry and the consumers it serves” “I believe there ought to be higher levels of transparency in financial services because opacity is to journalists what a red rag is to a bull. As long as things are hidden, trust in the industry will remain low.”

Martin Palmer Head of Corporate Funds Proposition | Zurich

“I believe there ought to be higher levels of transparency in financial services because it will help to provide a level playing field as well as helping to restore trust and confidence amongst consumers that they are receiving value for money. This is particularly important at a time when increasing consumer engagement and understanding is so critical”.

Bryan Beeston “I believe there ought to be higher levels of transparency in Director | financial services because transparency builds trust, and all ITM Limited consumers and market participants will benefit from improved clarity and thereby increased levels of understanding enjoyed by the end customer”.

Olivia Seddon-Daines “I believe there ought to be higher levels of transparency in finanSenior Research Analyst | cial services because I am concerned that the everyday pension ET Index saver is embroiled in a system which charges fees at every turn, which invests in volatile markets that do not price in carbon risk, and, most importantly, that has proven itself unable/unwilling to accept ownership of endemic risks to the system, and the knockon effects to the real economy”.

Jon Parker “I believe there ought to be higher levels of transparency in CEO | financial services because without it, customers will simply Jonathan Parker continue to mistrust the industry and lose out financially. However, Consulting we would be wise to remember that more information and data can itself be a hindrance to improving outcomes”.

Nicholas Morris “I believe there ought to be higher levels of transparency in finanAcademic Visitor | cial services because financial services are key to our economy St Anthony’s College, and society, and transparency is necessary to encourage trustworOxford thy behaviour by financial services professionals. It is important that we define their obligations and responsibilities clearly, and then hold the industry and those who work within it to account.”

Shyam Moorjani “I believe there ought to be higher levels of transparency in Partner | financial services because pension scheme members are entitled RSM to know the full cost, including all transactions, for the administration and investment of their money. Transparency will also allow benchmarking and informed comparisons to allow investors to make informed and better investing decisions and to enable them to improve outcomes to reach their financial goals.”

Sophia Morrell | “I believe there ought to be higher levels of transparency in Independent Media financial services because I’m passionately committed to a fair Consultant and functioning City which benefits everyone. We have a worldclass financial services industry in London and by working together, we can ensure it serves equal purpose and value to its participants and users.”

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Matthijs Verweij BD Mgr, Pensions | KAS BANK N.V.

“I believe there ought to be higher levels of transparency in financial services because more transparency leads to better governance and in control management of pension schemes in all aspects”.

Ralph Frank CEO - DC (UK) | Cardano

“I believe there ought to be higher levels of transparency in financial services because users of our services should be able to understand what is being done for them and the corresponding charges being levied”.

Sunil Chadda Managing Director | Cairn Consulting Ltd William Goodhart Chief Executive | CFA Society of the UK

Stewart Bevan UK Product Manager | KAS BANK N.V. Iuliia Shpak PhD Candidate Financial Economics/ Asset Pricing | University of East London Colin Meech National Officer | UNISON - Capital Stewardship Programme Anita Skipper Senior Analyst Corporate Governance | Aviva Investors

“I believe there ought to be higher levels of transparency in financial services because every customer has the right to know exactly how much goods and services cost at the point of purchase” “I believe there ought to be higher levels of transparency in financial services because it contributes to the establishment of trust which can improve consumer outcomes. To date, the focus has been on costs and performance, but the investment profession and its stakeholders would also benefit from an improved understanding of the purpose of investment and from the processes employed on their behalf.”

“I believe there ought to be higher levels of transparency in financial services because stakeholders deserve to have access to the right information, to inform the best levels of decision-making and improve outcomes”.

“I believe there ought to be higher levels of transparency in financial services because Transparency is critical for investor confidence and trust in financial markets” “I believe there ought to be higher levels of transparency in financial services because Pension scheme members should know how much it costs to be a member of their scheme. The full cost, including all transactions, for the administration and investment of their money”.

“I believe there ought to be higher levels of transparency in financial services because it is only through transparency that we can gain the trust required to succeed.”

Rachel Haworth Policy Officer | ShareAction

“I believe there ought to be higher levels of transparency in financial services because ensuring institutional investors are directly accountable to the people whose money they look after is the only way to transform the system into one that serves savers, society and the environment”.

Henrik Wolff-Petersen “I believe there ought to be higher levels of transparency in finanDirector and Co-Founder | cial services because for being able to take rational decisions we Panda Connect need to have control of our data; independantly, timely and complete.”

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Stephanie Baxter News Editor | Professional Pensions

“I believe there ought to be higher levels of transparency in financial services because we need to tackle unnecessarily high charges and ensure investors get value for money. This is integral to giving people the best possible retirement outcomes.”

Nils Johnson “I believe there ought to be higher levels of transparency in Co-Founder and Director | financial services because it is good for business. Confidence, Spence Johnson Ltd efficiency, growth and profitability are all enhanced – over the long term – by greater transparency”.

Andy Agathangelou “I believe there ought to be higher levels of transparency in finanFounding Chair | cial services because it holds the key to regaining the trust of the Transparency Task Force consumer, delivering value-for-money and operating a competitive market”.

Jonny Paul “I believe there ought to be higher levels of transparency in Freelance Journalist financial services because financial advice is still generally seen as the preserve of the wealthy and post-crisis there is still much distrust. So I believe that a campaign from within that homes in on greater transparency, focusing more on consumer outcomes, that does not stem from the regulators is a powerful way to show intent”.

Henrik Pedersen “I believe there ought to be higher levels of transparency in finanManaging Partner, cial services because it will be good for everyone. Consumers will Co-Founder | be able to compare and demand better value for money and the CLERUS LLP financial services industry itself will benefit from becoming more competitive, lean and effective”.

John Belgrove “I believe there ought to be higher levels of transparency in finanSenior Partner | cial services because consumers and clients need to trust the Aon Hewitt industry through having access to clear, open, honest, jargon-free information in order to make informed choices to meet their financial objectives.”

Alexander Adamou “I believe there ought to be higher levels of transparency in finanFellow | cial services because financial markets are social constructs and London financial services are a public good” Mathematical Laboratory Anthony Filbin “I believe there ought to be higher levels of transparency in finanChairman | cial services because it will have such a beneficial impact upon Capital Cranfield Trustees incomes in retirement”.

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Adrian Holliday Reporter | Freelance

“I believe there ought to be higher levels of transparency in financial services because millions of consumers are reliant on it for their longterm savings future.”

David Weeks Co-Chair | AMNT

“I believe there ought to be higher levels of transparency in financial services because in times ahead, we must encourage people to save more in their working lives. We want them to be able to fund themselves for increasing numbers of retirement years. To do this, we must deliver, and be seen to deliver, prudent and open costs and charges”.

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Juan Zuluaga | Writer, InversionesSinllusiones. com

“I believe there ought to be higher levels of transparency in financial services because it will help us to see what can be done better” “I believe there ought to be higher levels of transparency in

Erik Conley | Founder, Zen Investor

Henry Taper | Director, First Actuarial & Founder, Pension PlayPen

financial services because, as Vanguard founder John Bogle says: ‘the tyranny of compounding costs takes about two-thirds of the gains clients make. The client puts up 100% of the capital, and takes 100% of the risk, but only gets one-third of the return.’

Something is very wrong with our financial system. Investors deserve to know exactly what they’re buying and how much it will cost, today and over time.”

“I believe there ought to be higher levels of transparency in financial services because people want to know what they’re buying. We cannot be trusted. Our system depends on trust and and fiduciaries managing our money. Until people consider themselves investing in a trustworthy way - we will remain untrusted. Transparency is the only way to break this vicious circle.

Clara Durodié | “I believe there ought to be higher levels of transparency Founding Partner, in financial services because trust is the birthplace of asset Cognitive Finance Group management” Richard Ellis | Institutional Relationship Manager, Sarasin & Partners

“I believe there ought to be higher levels of transparency in financial services because savers / pensioners need to be properly informed about the products they invest in; they achieve the outcomes they expect; and to help build trust in the investment industry that is lacking at present” Margaret Snowdon OBE “I believe there ought to be higher levels of transparency in Chairman, Pensions financial services because it is the best way we can restore public Administration Standards trust in pensions” Association Lesley James Director | Simplified Money

"I believe there ought to be higher levels of transparency in financial services because none of this is our money! How can we expect clients to have trust in our services if they cannot even be sure of the price?”

Robin O’Grady Head of Business Development | Hawksmoor Investment Management Mike Stafford CFP Director | Stafford Wealth Management

“I believe there ought to be higher levels of transparency in financial services because consumers & their advisers need to regain trust in a hugely competitive market and be certain of all the facts before being able to make informed choices.”

Edition #11

“I believe there ought to be higher levels of transparency in financial services because the more informed the client is the better decisions he/she can make. So for our part we are happy to display our charges on our website for both lifestyle financial planning and for regulated investment services.”

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RECOMMENDED READING This section is for academics and authors to advertise (without cost) their relevant books, white papers, academic articles, research findings and so on, so that all our members can know about the thought-leadership, considered opinion and analysis that is available through their work. If you would like to submit a piece of your own work, or the work of another that you would recommend to our members, please get in touch through: andy.agathangelou@transparencytaskforce.org

“What They Do With Your Money; How the Financial System Fails Us and How to Fix It”

Each year we pay billions in fees to those who run our financial system. The money comes from our bank accounts, our pensions, our borrowing, and often we aren’t told that the money has been taken. These billions may be justified if the finance industry does a good job, but as this book shows, it too often fails us. Financial institutions regularly place their business interests first, charging for advice that does nothing to improve performance, employing short-term buying strategies that are corrosive to building long-term value, and sometimes even concealing both their practices and their investment strategies from investors. In their previous prizewinning book, The New Capitalists, the authors demonstrated how ordinary people are working together to demand accountability from even the most powerful corporations. Here they explain how a tyranny of errant expertise, naive regulation, and a misreading of economics combine to impose a huge stealth tax on our savings and our economies.

By David Pitt-Watson, Stephen Davis and Jon Lukomnik.

To find out more, visit: http://yalebooks.co.uk/display.asp?K=9780300194418

“Swimming with Sharks: My Journey into the World of the Bankers” Joris Luyendijk, an investigative journalist, knew as much about banking as the average person: almost nothing. Bankers, he thought, were ruthless, competitive, bonus-obsessed sharks, irrelevant to his life. And then he was assigned to investigate the financial sector.

Joris immersed himself in the City for a few years, speaking to over 200 people - from the competitive investment bankers and elite hedge-fund managers to downtrodden back-office staff, reviled HR managers and those made redundant in the regular ‘culls’. Breaking the strictly imposed code of secrecy and silence, these insiders talked to Joris about what they actually do all day, how they see themselves and what makes them tick. They opened up about the toxic hiring and firing culture. They confessed to being overwhelmed by technological and mathematical opacity. They admitted that when Lehman Brothers went down in 2008 they hoarded food, put their money in gold and prepared to evacuate their children to the countryside. They agreed that nothing has changed since the crash.

Joris had a chilling realisation. What if the bankers themselves aren’t the real enemy? What if the truth about global finance is more sinister than that?

By Joris Luyendijk. To find out more, visit: https://www.amazon.co.uk/Swimming-Sharks-Journey-World-Bankers/dp/1783350644?ie=UTF8&*Version*=1&*entries*=0

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“Capital Failure: Rebuilding Trust in Financial Services” Adam Smith’s ‘invisible hand’ relied on the self-interest of individuals to produce good outcomes. Economists’ belief in efficient markets took this idea further by assuming that all individuals are selfish.

This belief underpinned financial deregulation, and the theories on incentives and performance which supported it. However, although Adam Smith argued that although individuals may be self-interested, he argued that they also have otherregarding motivations, including a desire for the approbation of others.

This book argues that the trust-intensive nature of financial services makes it essential to cultivate such other-regarding motivations, and it provides proposals on how this might be done.

By Nicholas Morris and David Vines.To find out more, visit: https://www.amazon.co.uk/Capital-Failure-Rebuilding-Financial-Services/dp/0198712227

“#New Fund Order - A Digital Death For Fund Selection?”

Safe within its bubble, the City’s asset management industry has existed largely unchanged for over 20 years but no longer. A new digital threat lurks in the shadows.

Target assigned, Jon Beckett (‘JB’) hunts down the value chain between fund buyers and fund managers and tackles the difficult issues head-on. Get inside the head of one of the UK’s most controversial investment gatekeepers.

Think differently about buying funds, multi-manager and the way the industry works. A digital survival guide (of sorts) for anyone working in the fund and wealth industry. Wet work, it’s a dirty business!

By JB Beckett. To find out more, visit: http://www.amazon.com/NEW-FUND-ORDER-JB-Beckett/dp/1320639259

“Towards a New Pension Settlement” This volume presents the recent experiences of pension reform in seven countries: Australia, Canada, Germany, Netherlands, Poland, Sweden and the United Kingdom.

Faced with common problems of ageing societies and constraints on taxation levels, all are increasingly passing responsibility for saving for retirement to citizens.

However, there is enormous variety between countries in the degree to which the state intervenes to mitigate the risks which the individual can face in saving for a pension.

By Gregg McClymont and Andy Tarrant. To find out more, visit:

https://www.amazon.co.uk/Towards-New-Pensions-Settlement-International-ebook/dp/B01EYRKJCS/ref=sr_1_1?ie=UTF8&qid=1462913044&sr=8-1&keywords=gregg+mcclymont Edition #11

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RECOMMENDED READING CONTINUED Transparency Games: How bankers rig the world of finance This is the story of how bankers with help from the members of Wall Street’s Opacity Protection Team (this includes politicians, economists, think-tanks, rating firms, investment charter constrained asset managers and the financial regulators) undermined the global financial system by reintroducing opacity. The result of reintroducing opacity was the worse financial crisis since the Great Depression and the slowest economic recovery. Transparency Games is about the bankers of Wall Street and the City of London creating and maintaining a veil of opacity to hide behind as they rig the global financial markets for their benefit. Their bad behavior isn’t constrained to simply misrepresenting financial products like toxic subprime mortgage-backed securities, but includes rigging the global interest rate, foreign exchange, commodity and equity markets so the bankers’ bets pay off.

By Richard G. Field. To find out more, visit:

https://www.amazon.com/Transparency-Games-bankers-world-finance/dp/0990396819

International Investment Management: Theory, ethics and practice International Investment Management: Theory, Practice, and Ethics synthesizes investment principles, Asian financial practice, and ethics reflecting the realities of modern international finance. These topics are studied within the Asian context, first through the medium of case studies and then via the particular conditions common in those markets including issues of religion and philosophy.

This book has a three part structure beginning with the core principles behind the business of investments including securities analysis, asset allocation and a comprehensive analysis of modern finance theory. This book is an essential text for business and law school students who wish to have a thorough understanding of investment management.

By Dr. Kara Tan Bhala. To find out more, visit: https://www.amazon.co.uk/International-Investment-Management-Theory-practice-ebook/dp/ B01EAI17WW/ref=dp_kinw_strp_1

Kentucky Fried Pensions: Worse Than Detroit Edition

Kentucky Fried Pensions follows my journey as the first public SEC whistleblower as I attempt to use the new Dodd-Frank law to clean up the culture of coverup and corruption in Kentucky Pensions. It explores the national links between corruption in investments via placement agents and corruption in underfunding that plague states like Illinois and Kentucky. It explores the Kentucky Employee Retirement System (KERS) for State Workers the worst funded state plan in the country (worse than any single IL plan) and how others can learn from its current death spiral. It also discusses the need for a Federal Bailout which is currently being discussed for Detroit and Chicago. It looks into the lack of transparency as evidenced by no disclosure of holdings in SAC Capital buried in a Blackstone fund for nearly a year after the scandal broke.

By Christopher Tobe. To find out more, visit: https://www.amazon.co.uk/Kentucky-Fried-Pensions-Worse-Detroit-ebook/dp/B00GCTHPFG/ref=sr_1_1?s=digital-text&ie=UTF8&qid=1474870687&sr=1-1&keywords=kentucky+fried+pensions

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Evolutions in Corporate Governance In a world where the implications and consequences of corporate actions and decisions are potentially far-reaching and lasting, ethical standards - their observance and their breach - must be part of the language of business conduct, whether in the context of corporate transgressions, regulatory effectiveness, terms of engagement between business and their stakeholders, or the metrics used by investors in assessing performance and risk and understanding long-term value.

This critically important book proposes a new paradigm for understanding, developing and maintaining standards of corporate governance. Meaningful change in behaviour will only come when there is a corporate governance framework that explicitly encompasses both law and ethics.

By Alison L. Dempsey. To find out more, visit: https://www.amazon.co.uk/Evolutions-Corporate-Governance-Framework-Business-x/dp/1906093865/ref=sr_1_1?ie=UTF8&qid=1490861955&sr=8-1&keywords=evolutions+in+corporate+governance

Index Funds: The 12-Step Recovery Program for Active Investors This book reveals the potential land mines and pitfalls of active investing and educates readers on the benefits of passive investing with index funds. Hebnerâ&#x20AC;&#x2122;s book details the possible perils associated with stock picking, mutual fund manager picking, market timing, and other wealth depleting behaviors. This 12Step Program teaches the differences between active and passive investing, explains the emotional triggers that impact investment decisions, and offers an enlightening education on science-based investing that may forever change the way an investor perceives the stock market. Hebner sets forth a sound strategy that involves risk-appropriate investing that may empower investors to lead a more profitable and relaxed life.

T. Hebner. (Author), Harry M. Markowitz (Foreword)

By Mark To find out more, visit: https://www.amazon.co.uk/Index-Funds-12-Step-Recovery-Investors-ebook/dp/B00DG8UJAY/ref=sr_1_1?ie=UTF8&qid=1490862572&sr=8-1&keywords=index+funds%3A+the+12+step

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THE DIRECTORY OF PRO-TRANSPARENCY ORGANISATIONS If you lead a pro-transparency organisation speak out and advertise in The Directory of Pro-Transparency Organisations because the market needs to know that there are many organisations that see transparency as a commercial virtue, and do not fear it as a threat. We are happy to consider different classifications to those shown. All enquiries about advertising in the Directory to: andy.agathangelou@transparencytaskforce.org

FIDUCIARY MANAGERS:

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Ralph Frank, CEO DC (UK) | Cardano E-mail: info@cardano.com Website: www.cardano.com Telephone: +44 (0)20 3170 5910

Cardano was founded in 2000 and now has over 150 staff with backgrounds in the areas of risk management, investment management, research, actuarial and investment advisory. Cardano studies the causes and impact of risk and costs in order to significantly improve financial performance and resilience. We currently provide Investment Advisory or Fiduciary Management services to over 1.3m pension fund beneficiaries with assets totalling over ÂŁ120bn.

AUTO ENROLMENT

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Steve Conley | Managing Director | Workplace Pensions Direct E-mail: Steve.conley@wpd.email Website: www.workplacepensionsdirect.co.uk Telephone: 0113 457 4563 Mobile: 07850 102070

Since 2015, Workplace Pensions Direct has made auto-enrolment simpler for small businesses, enabling employers to focus on running their companies without having to worry about pension law, and the cost of poor pension decisions. Workplace Pensions Direct offers an affordable, end-to-end, auto-enrolment solution that guarantees compliance with the law. With professional expertise, a century of payroll and pensions experience, and professional indemnity insurance - Workplace Pensions Direct has removed the worry and risk of autoenrolment for thousands of small businesses and their advisers.

SALES & MARKETING

INVESTMENT GOVERNANCE CONSULTANTS:

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Henrik Pedersen, Managing Partner & Co-Founder | Clerus LLP E-mail: henrik.pedersen@clerus.co.uk Website: http://www.clerus.co.uk/ Telephone: +44 20 3356 2845 Mobile: +44 7767 656234

We partner with pension schemes and other asset owners to review and improve investment decisions, governance and value-for-money, through independent and informed investment analysis. As a result, investment outcomes can be improved without the need to change service providers or taking on more investment risk. We offer a free initial assessment, so why not try us out?

James N Meenan, Principal | JNM Investment Governance E-mail: james@jnmresearch.com Website: www.jnmresearch.com Telephone: +353 (0)1 687 1027 Mobile: +353 (0)86 257 2646

JNM Investment Governance gives trustees independent coaching and support to develop strategies and techniques to stem the overwhelming resource handicap they face in discussions with investment professionals.

JNMâ&#x20AC;&#x2122;s objective is to facilitate a constructive two way dialogue with attendant benefits for all parties.

The Transparency Times | www.transparencytaskforce.org | March 2017 | Edition #11

INVESTMENT MANAGEMENT:

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Robin Oâ&#x20AC;&#x2122;Grady | Head of Business Development | Hawksmoor Investment Management E-mail: robin.ogrady@hawksmoorim.co.uk Website: www.hawksmoorim.co.uk Telephone: 01392 410180 Mobile: 07468 697900

Hawksmoor specialises in providing high quality discretionary investment management services for private clients including trusts, pension schemes and charities. We are a privately owned business with no ties to a bank or any other financial institution. Our experienced and well qualified team of investment professionals is focused solely on providing clients with the best service and consistently good performance.

NOT FOR PROFIT: Dr. Kara Tan Bhala | President & founder | Seven Pillars Institute for Global Finance and Ethics E-mail: kara@sevenpillarsinstitute.org Website: sevenpillarsinstitute.org Telephone: +1(785)865-8824 (mobile)

WEALTH MANAGEMENT:

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Seven Pillars Institute (SPI) for Global Finance and Ethics is an independent, nonprofit 501(c)(3), nonpartisan, organization whose mission is to highlight and analyze issues of moral philosophy in global financial markets with a view to enhancing ethical practice and policy.

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Arno Kitts | Founder & Chief Investment Officer | Perspective Investments E-mail: Arno.Kitts@PerspectiveInvestments.com Website: www.PerspectiveInvestments.com Telephone: +44 20 3290 6486

Perspective Investments is a multi-asset multi-strategy investment manager. We invest on behalf of our clients, including our founder family. Our commitment to our clients is to help them achieve their financial objectives. We do this by aiming to deliver higher returns with lower volatility and better capital preservation than conventional equity portfolios. Of course, while our investment performance track record is consistent with this aim, past investment performance is not necessarily predictive of future results.

Mike Stafford CFP | Director | Stafford Wealth Management E-mail: mas@staffordwealth.co.uk Website: www.staffordwealth.co.uk Telephone: 01992 501601

Stafford Wealth Management was formed in 1986 to provide bespoke lifestyle financial planning and investment services to private clients.

It is one of a small number of elite firms in the UK that is accredited by the Chartered Institute for Securities and Investment..

Stafford Wealth Management is authorised and regulated by the Financial Conduct Authority for investment business.

DATA SERVICES

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Larry McLaughlin, CEO | GSAV Ltd Email: larry.mclaughlin@gsav.io Website: www.gsav.io Phone: +44 203 655 2182 M: + 44 7771 978 118 US M: +1 646 946 5272

GSAV Ltd is Reg Tech/Fin Tech company exclusively serving the BuySide and delivering pricing solutions in the Collateral Lending Market to benefit Beneficial Owners and enable Managers to meetâ&#x20AC;&#x2039;their Fiduciary and Regulatory obligations. GSAVr is a specialist pricing, tracking and regulatory tool and provides an independent price for collateral lending transactions that defines rate and use in a manner that the Regulators feels meets the test of both price and use. GSAVr is the only solution available today that addresses the current challenges of any form of collateralized lending, full price discovery and full price transparency.

David Rich MIod, CEO | Accurate Data Services E-mail: david.rich@accuratedata.co.uk Website: http://www.accuratedata.co.uk/ Telephone: 01603 813366w Mobile: 07919918623

David is Chief Executive of Accurate Data Services, a specialist data quality and positive people tracing business that is focused on unclaimed assets in the financial service sectors. ADS traces lost members, clients and policy holders for a variety of organisations including Life and Pensions funds, Banks and Asset Managers. The goal is to help businesses reunite their customers / members with their assets and deliver positive consumer outcomes. David is an active campaigner for transparency and action around the large unclaimed assets issues present in the UK.

Edition #11

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PENSION ADMINISTRATION:

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Margaret Snowdon OBE, Chairman | Pensions Administration Standards Association

The Pensions Administration Standards Association (PASA) is a not-for-profit organisation which acts as a focal point to engage with industry and government on pensions administration matters. It was created to provide an independent infrastructure to set, develop, and provide guidance on pensions administration standards. It is an independent accreditation body, assessing the achievement of good pension administration standards by schemes and providers.

E-mail: info@pasa-uk.com Website: http://www.pasa-uk.com/ Mobile: 07983 565955

ACADEMIC INSTITUTIONS:

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Prof. Dr. Heinz-Dietrich Steinmeyer University of Muenster / Germany School of Law Universitätsstrasse 14-16D-48143 Muenster Phone 49-251-8329744 Mobile 49-171-8384816 Mail: steinmeyer@uni-muenster.de

FINANCIAL PLANNING: Mike Stafford CFP | Director | Stafford Wealth Management E-mail: mas@staffordwealth.co.uk Website: www.staffordwealth.co.uk Telephone: 01992 501601

I am a professor for Social Security Law, Labour Law and Civil Law at the University of Muenster Law School. My special field is pensions – occupational/ supplementary pensions as well as public pensions. I am doing consulting work nationally and internationally including international organizations (EU etc.). I am the Chairman of the European Network for Research on Supplementary Pensions.

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Stafford Wealth Management was formed in 1986 to provide bespoke lifestyle financial planning and investment services to private clients.

It is one of a small number of elite firms in the UK that is accredited by the Chartered Institute for Securities and Investment..

Stafford Wealth Management is authorised and regulated by the Financial Conduct Authority for investment business.

ANALYTICS ORGANISATIONS:

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PR FIRMS:

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EMPLOYEE BENEFIT CONSULTANTS:

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BENCHMARKING CONSULTANTS:

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INDEX PROVIDERS:

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HEDGE FUNDS:

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PRIVATE EQUITY:

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PUBLISHERS AND PUBLICATIONS:

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INDEPENDENT TRUSTEES:

EMPLOYER COVENANT CONSULTANTS: 84

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The Transparency Times | www.transparencytaskforce.org | March 2017 | Edition #11

BUILDING SOCIETIES:

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COMMUNICATION CONSULTANCIES:

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CUSTODIANS:

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LAWYERS:

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GOVERNANCE CONSULTANTS:

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INVESTMENT CONSULTANTS:

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POLITICAL PARTIES:

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DATA SERVICES:

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ACTUARIES:

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PENSION SCHEME PROVIDERS:

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PENSION SCHEME SELECTION EXPERTS:

ASSET MANAGERS:

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PENSION SCHEME CONSULTANTS

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RESEARCH ORGANISATIONS:

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INSURANCE COMPANIES:

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BANKS:

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REGULATORS AND GOVERNMENT DEPARTMENTS:

TRADE UNIONS:

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TRADE BODIES:

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CAMPAIGN GROUPS:

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PENSION SCHEME COST REDUCTION CONULTANTS

CONSULTING ACTUARIES: Edition #11

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