What will the investment dinosaurs do?

The UK’s investment dinosaurs are in a mess, they have grown very fat over many years feasting on more victims (clients) but they are now facing a dire future for the following reasons

1. More clients are either bypassing them completely buying low-cost index funds via low-cost investment platforms or using a low-cost intermediary to cut out costs.
2. More clients know how much they are paying and have discovered the basic maths that if you are paying 2% per annum for a return of say 5% per annum, you are losing 40% of your returns in costs.
3. TINA (There Is No Alternative) has gone – when cash gave you no return there was no alternative to investing. You can now get 4% to 5% in cash. Do you really need that slick but expensive fund manager anymore?
4. There is no great extra return by paying more fees to some hotshot as the markets are more efficient than in the past – everyone be they private or institutional gets the same information at the same time making it impossible in most markets to have some long-lasting edge. This is why every day you see the ‘stars’ retiring before they become ‘fallen angels’.