CMA: Investment consultants fail to add value in product recommendations

Ongoing investigation

Investment consultants are failing to recommend products that outperform net of fees, the Competition and Markets Authority (CMA) has said as its investigation into the market continues.

Actively-managed products assessed as ‘buy-rated' by investment consultants outperformed neither their respective benchmarks nor ‘unrated' products "to a statistically significant extent on average" net of asset management fees. While they did outperform in these areas when shown on a gross of asset management fees, this way of presenting data, often used by investment consultants, does not provide as good an "approximation of the return on investment" a client could expect as the net of fees approach does, the CMA said. The only exception to this rule was in hedge fund products where...