Art by Dadu ShinThose with experience of university student halls or
houses remember how the rules went.
When it’s time for dinner, you picked the least dirty-looking plate from the pile in the sink, and just ran it under the tap. Dirty bathroom? A little mould never hurt anybody. What do you mean the bath used to be white?
Once a year, when the landlord came calling, you’d spend a day furiously scrubbing algae from the sink and trying to remember where the vacuum cleaner was. (And hope that you’d be allowed your deposit back.)
The analogy fits well with financial services. Selling scandals and trading misdemeanours have come and gone, bad products and poor practices piling up in the industry’s sink.
Individuals, companies, trade bodies, and regulators have tried, but at best they have only managed to scrape away the top layer of grime.
Wannabe disruptors such as Bedlam Asset Management and Vinculum Fund Management tried—and failed—to shake up the one-size-fits-all fee structure by charging only when they outperformed. Bedlam even went as far as to hire people to picket outside larger fund management houses, warning investors that they were being ripped off.
Today, neither firm exists. The performance and the money just weren’t there to let these would-be cleaners make any impact.
SCM Private is a more successful story. Founders Alan and Gina Miller have built a successful low-cost wealth management boutique and have used their profiles to launch an aggressive campaign for transparency of fund costs and portfolio holdings.
Despite traction with UK and European politicians for some of its proposals, the True & Fair Campaign’s relentless rhetoric against the Investment Association—the UK’s asset management trade body—has led to many fund managers declining to engage with this particular industry cleaning lady.
But one man believes he can change all this: Andy Agathangelou, the founder of the Transparency Task Force (TTF).
“If you’ve started aggressively then people will defend themselves; it’s human nature,” he tells CIO. “If you sweet talk people, you can change their mindsets. Enthusiasm is positive and contagious. There’s a huge difference between one individual thumping the table and civilised, intelligent people working together.”
In a nutshell, that is what Agathangelou is striving to create. In fact, he may have already created it: Over the summer, Agathangelou rallied dozens of individuals and organised them into teams to tackle areas as diverse as data sharing, fee transparency, decision-making reporting, and stewardship.
It is Agathangelou who comes up with the analogy of a student house and cleaning staff. Essentially, the TTF wants to give the pensions industry a deep clean. More than that, however, it also wants to introduce new practices, standards, and technology to ensure it never gets this dirty again.
“I genuinely believe there is an inevitability behind this,” Agathangelou says, citing technology as a key catalyst. He has previously founded action groups to automate and standardise practices in the pensions and payroll sector, and sees no reason why this approach can’t be rolled out in investments as well.
While he emphasises that the group is “not setting out to embarrass”, Agathangelou claims “there will come a time when people will be embarrassed to think about what they used to do.”
The National Association of Pension Funds, the Investment Association, the Department for Work and Pensions, the Pensions Regulator, and even the Trades Union Congress have all taken a serious interest in the TTF’s work.
“I seem to have the knack for getting people to want to help,” Agathangelou admits, grudgingly, when CIO presses him on his impressive list of co-operators. “All that matters is they behave in the right way and work together. The TTF is going to be a force of positive change in the market place.”
This is not a UK-only project, either. Agathangelou states confidently that the TTF will soon be operating in other parts of the world, as well as other sectors of financial services. As an example of the project’s overseas appeal, he explains that Tomas Wijffels, policy advisor at the Federation of Dutch Pension Funds, will be speaking at the “world’s first transparency symposium” on October 7 in London (email Agathangelou for details).
The project won’t be plain sailing. Vested interests are likely to prove challenging, and persuading diametrically opposed groups and companies to pull in the same direction is akin to persuading hungover students to clean the toilet.
Those who have given feedback on the TTF’s plans
have praised the concept and its timeliness, but have also given words of
warning about stretching too far. Indeed, the initial plan set out at a public
meeting on
July 1 listed 18 potential areas of focus.
“There’s a danger of the initiative trying to solve the world and thereby solving nothing,” said one response. Others spoke of the risk that the TTF “will be nothing more than a talking shop.” Another argued that “it’s hard to see any traction if the large consultants are not represented.”
But Agathangelou is no fool. Six weeks after showing these concerns to the room full of transparency advocates, the TTF had narrowed its focus to five dedicated working groups made up of people who share the founder’s appetite for action and outcomes.
“It’s like the grit in an oyster,” he says. “All the market needs is a bit of grit, and that’s what we are, around which a pearl is forming.”