Saker Nusseibeh, CEO of Hermes Investment Management, has said true fund manager skill is rare and warned there is not enough for every client.
Speaking as part of a panel debate in front of an audience of advisers and fund buyers at the Morningstar Investment Conference 2016, Nusseibeh (pictured) said asset management is a "simple business but not an easy business".
He added: "The industry has a conundrum; there is skill but true skill is very rare. The industry tries to pretend there is a huge amount of skill going to everybody but there is not enough to go around for all clients.
"It is constantly searching for the next person with skill - the next Woodford - either by hiring expensive people or creating more complex problems so they can be sold as the new best thing."
In this environment, Nusseibeh said one of the ways to enhance returns to the final investor is to reduce costs and gain their trust by being clear about them.
He said: "The investor is not just paying for the return, but also the service, the right platform, the stewardship etc. As long as it is clear what the manager is doing and how much it will be, then they can gain the investor's trust."
Also speaking as part of the panel debate, entitled Fee Transparency, was Daniel Godfrey, former chief executive at the Investment Association, who said since the financial crisis the industry has been constantly told it needs gain consumers' trust, but now needs to focus on how that can be developed.
He said: "Doing the right thing needs to be the objective and then from that, people can decide for themselves if they wish to trust us.
"Trust is a consequence, not an objective in itself. I think we should stop talking about trust and talk about the actions that will enable people to trust us."
He added the industry has a "huge way to go" with regards to transparency, and if it is seen as "opaque" and having "huge margins" then future generations will be unlikely to engage.