Wealth firms seem to be trying to stumble their way to a world of simple(r) fee structures as if it is some kind of revolution.
Banks like fees. In simple terms fees = $. Private banks are no exception, and neither are asset managers. WMS' readers will know this, so what I am writing should not shock anyone. After all, you (the wealthy) are not clueless, despite what some of the media or political classes might portray – that is another topic entirely.
However, I have never understood quite why fees have to complex. Fees could be simpler and I don't really care how complex the financial instrument is to justify a fee. After all one of my friend's Gulfstreams is a complex piece of engineering. On the other hand the pricing is really rather simple. </p>
Management teams at the wealth firms I spend time with seem to be trying to stumble their way to a world of simple(r) fee structures as if it is some kind of revolution. The irony is that many clients are attempting the same journey too; but neither seems to talk to the other about the trek. The problem, as far as both appear concerned, is each other. Regulators also come in for a flaying now and again from one or both sides.
My own very humble view is the uber-complexity is something of a masquerade. Institutions and clients dance and (maybe) lift the mask to see if the faces are as pretty as the feet. The point is that clients don’t really probe the reason for fees; which they could before they get on the dance floor. Banks also over-complicate fee schedules; which they could not. Also many regulators seem to think more paper will make things easier to understand which I don't quite understand. Generally, less paper is a good thing. Information overload is just a bit daft.
So, at least for now, the fee-dance keeps stumbling round in circles. One day a bright spark in a bank will realise they can do a lot more business by explaining things in simple ways. After all banking is meant to be full of bright sparks.