Speaking at International Adviser’s Future Advisory Forum Europe in London on Wednesday, Bryson highlighted steps taken by the US Department of Labor and the California state pension scheme to bring in greater transparency on fees and advice.
“The US is actually quite an opaque market when it comes to fees and transparency,” he said.
But last year, the California state pension scheme, the largest in the US, took steps to improve how its members perceived the fairness and transparency of how the scheme is operated.
According to Bryson, it was decided that there were too many fund managers “in the mix”, so the pension scheme took steps to “half that number, drive through real cost reductions, and make it very transparent to scheme members”.
In April, the US Department of Labor took similar measures to increase transparency in the country’s key retirement vehicle, the 401k.
“For me, that’s RDR through the backdoor,” said Bryson. “I also think you’ll find pressure on other parts of the market to follow suit.”
Fiduciary rule
The US Department of Labor’s fiduciary rule on providing investment advice for retirement planning, currently being pushed through congress, which is considered the equivalent of the retail distribution review (RDR).
The rule aims to put an end to hidden fees and conflicts of interest in the investment world, requiring brokers or advisers to pick products that are in their clients’ best interests when recommending investments for retirement accounts.
Global commission ban
JP Morgan Asset Management’s head of UK funds, Jasper Berens, expects things to move a step further with a global implementation of an RDR-like regime within five years.
Speaking at IA’s Fund Links Forum in London on 14 September, Berens said: “For those who don’t believe this, they are undoubtedly sticking their heads in the sand because all you have to do is look at the changes in the US Department of Labor to see the pace of change.”
