IDEAL ADVICE

In addition, in the US the so-called “12b-1” distribution fee is publicly disclosed, but this information is kept confidential in Europe. According to the PwC/UCL Investor survey 2009, many investors are not aware of the total amount of fees the fund is charging (34% of participants), the types of fees (31%), and who benefits from the fees (23%) (see figure 8). A research by UFC-Que Choisir comparing fees charged by 12 major banks in France between 2004 and 2009 found that the fees were so complicated that consumers were unable to make any accurate comparisons. Already in March 2010, Christine Lagarde, French Finance Minister, announced that an investigation would be launched into the fees charged by banks. The PwC/UCL Investor survey 2009 showed that some 73% of respondents saw a high level of transparency as an important feature when investing, meaning a critical factor in deciding whether to invest (see figure 9). Furthermore, according to the PwC/CACEIS Financial Advisor/Distributor survey, a lack of information available

to clients is one of the key barriers to delivering high-quality advice (see figure 13).

Greater levels of transparency can assist financial intermediaries to strengthen their credibility with both investors and national regula- tors, but the value of transparency reaches well beyond its impact on public trust; it affects the bottom line.

%

%

2.32

2.32

2.05

1.98

2%

2.05

1.98

1.89

2%

1.89

1.28

1.25

1.18

1.28

1.25

1.06

1.18

1.03

4 IOSCO - Principles on point of sale disclosure - November 2008

0.99

0.94

1.06

1.03

0.92

1%

0.99

0.82

0.94

0.75

0.92

1%

0.82

5 EFAMA’s annual conference, Brussels - October 2009

21

0.75

6 Commission of The European Communities - Commission staff working document on the follow up in retail financial services to the markets scoreboards - September 2009

1980

1990

2000

2002

2004

2006

2008

1980

1990

2000

2002

2004

2006

2008

Stock funds Bond funds

Stock funds Bond funds

Figure 7

103%

102%

101%

Least costly stock funds in the US attracted most of the net new cash (1999-2008)

103%

102%

101%

Index funds -3%

-2%

Actively managed funds -3% Actively managed funds -3%

Index funds -3%

-2%

All funds

All funds

% of Net Flows to Funds with above (Simple) Average Expense Ratio % of Net Flows to Funds with below (Simple) Average Expense Ratio % of Net Flows to Funds with above (Simple) Average Expense Ratio % of Net Flows to Funds with below (Simple) Average Expense Ratio

Source: ICI Fact Book 2009