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Ep 27: Corinne Carr and Luke Hildyard on excessive pay
286 Plays1 year ago
The latest TEBI Podcast, is devoted to the subject of excessive pay among company CEOs. In it I interview two experts on the subject:
— Corinne Carr, founder of the remuneration consultancy PeopleNet; and
— Luke Hildyard, Executive Director of the High Pay Centre, which carries out research and analysis on issues relating to executive pay, corporate governance and business performance.
Among the questions I ask them are these:
Why is excessive pay such a problem? What can be done about it?
Why can’t fund managers exert more of an influence over company boards when it comes to remuneration?
Is part of the problem that fund managers are themselves very well paid and therefore not best placed to lecture company boards on the subject?
And why is pay in the asset management industry so high?
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Transcript
Introduction to Excessive Executive Pay
00:00:04
Speaker
Hello and welcome to the Tebbe podcast. I'm Robin Powell, the editor of the investing and personal finance blog, The Evidence-Based Investor. This podcast is brought to you by Regis Media, a boutique provider of content and social media management for evidence-based financial advice and planning firms.
00:00:26
Speaker
We're going to devote this episode to the issue of excessive executive pay. Why is it such a problem? What can be done about it? Why can't fund managers exert more of an influence over company boards when it comes to remuneration?
00:00:45
Speaker
in the asset management industry itself. Why is it so high? And again, will we see pay come down?
Interview with Corin Carr
00:00:54
Speaker
I've been speaking to two people about this. Later in this episode, we'll hear from Luke Hildiard at the High Pay Center.
00:01:03
Speaker
But first, let's gauge the views of Corin Carr, founder of PeopleNet, a London-based consultancy which specialises in responsible pay or responsible reward, as Corin prefers to call it. I began by asking her how she became interested in this particular subject. I started my career back in the early 90s in-house actually working for a major global bank.
00:01:32
Speaker
in human resources and more specifically in a sub-function which is called compensation and benefits, which is where we look at how and how much people are paid internally. And in 98 actually, so my business is over 20 years old now, I set up independently very much working with banks, asset managers, insurance companies and corporates on designing
00:02:01
Speaker
plans to pay people and more specifically assess how and how much they should be paid.
Shareholder Hesitations on Pay
00:02:08
Speaker
Almost every day it seems Corin we're hearing about AGMs of big companies all around the world really and very often top of that agenda is executive pay. Often shareholders increasingly seem to be reluctant to vote through these sort of very large pay deals and what are your thoughts on that?
00:02:34
Speaker
So you're absolutely right, Robin. Executive pay is a subject that's ongoing. It's been so for a number of years now. And yes, we all get busy every year with a different focus on executive pay and different companies that come up on the radar. I mean, there are usually two main topics that come up. One is that executives are paid too much. And the other one is that we don't really understand how they are paid. And sometimes they don't understand how they are paid.
00:03:05
Speaker
So the whole issue of quantum and complexity is one that keeps coming up year after year. How much people are paid is a very subjective topic. You've got people who are paid a lot of money, sometimes for very little correlation what they're actually doing just by the market forces.
Asset Managers' Role in Pay
00:03:32
Speaker
But there are a number of influential people out there who actually deserve what they are being paid. So it's really being able to differentiate between the ones that were just lucky with the ones that actually worked hard for their money. As to complexity, there's been an ongoing debate for a few years now on whether LTIPs should be based on restricted shares or performance related
00:04:02
Speaker
shares and there are different views amongst investors as to the preferred option. And in fact, what you tend to see is that it very much depends on which firm we're talking about. Very unlikely that if Airtips continue to pay out, a firm is going to suddenly change them to replace them with restricted shares. On the other hand, do you really want to guarantee half of their usual Airtips
00:04:30
Speaker
pay out if there is no relation to performance. So my conclusion is really just be careful about what you're asking for because you might end up with something that doesn't fit your initial objective.
00:04:44
Speaker
Now of course the biggest shareholders at these companies are usually asset managers and this whole responsible pay business is increasingly seen as an important part of the governance that asset managers are responsible for. In your experience, what impact have asset managers had on company boards regarding executive pay?
00:05:16
Speaker
So very much depends on which asset manager we're talking about. My overall view is probably not enough. Not enough impact. Yes, we've seen, you know, examples and we know who they are where 110 million was too much, but 70 million was okay to vote through.
00:05:36
Speaker
I think that might actually be quite unacceptable to the man on the street, but for some reason that was accepted by the investment community. So I think that the parameters are sometimes misunderstood between real people whose money it is that we are investing and what's acceptable at the executive level.
00:05:59
Speaker
Interestingly, a very large proportion, I think it's about 95% of remuneration policies are being voted in favor of. So we might not like them when they are being implemented. However, every three years, investors get a chance to vote for or against these remuneration policies. And, overwhelmingly, they are voting in favor of those policies. So it's very difficult to then
00:06:31
Speaker
The asset managers have the most votes, if you like, because they are the biggest shareholders.
Justifying Bonuses and Performance Issues
00:06:39
Speaker
And it's been suggested that part of the problem here with what some would see as the failure to get to grips with soaring executive pay is that asset managers who are supposed to be policing this, if you like, are themselves very highly remunerated
00:06:54
Speaker
just worked against the implementation.
00:07:00
Speaker
What's your view on that? It is indeed a systemic problem because the same asset manager will wear three different hats. They will be, you know, if they are a listed company, they will be in receipt of investments themselves. So they are an investing company. They are an investor as well, investing people's money into investing companies. And they are also an employer.
00:07:29
Speaker
So that's what responsible pay does. It reconciles the three angles of the same organization. So it is very much systemic. There seems to be a bit of an angle, which is do as I say, not do as I do. And the very few, and I can think of some very strict investors, for instance, who will
00:07:55
Speaker
absolutely automatically vote against investing companies if they don't link their ESG strategy to their remuneration strategies and investors should do exactly the same. We can't just sign up and tell clients that ESG matters if we don't apply it ourselves to our own business strategy and remuneration strategy.
00:08:18
Speaker
Now, I realise that you're reluctant to express personal opinions about levels of pay and so on. These are very often, well, they are subjective judgements, if you like. But in general terms, do you think asset manager pay is excessive relative to the value that they actually add?
00:08:48
Speaker
I think we need to be able to explain whatever decisions and quantum we get to the average person. And I think I would say people find it difficult to understand how asset managers or some asset managers keep receiving bonuses when the value of portfolios is static or going down even. So bonuses seem to be, you know,
00:09:17
Speaker
For the average person, they would understand that you get your bonus if you're going to do better than I can do myself at no cost. If there is a cost to managing their money and the performance of the person's portfolio is not increasing, then I think they will struggle to understand why those people
00:09:36
Speaker
should be getting bonuses. Isn't part of the problem here though that in most walks of life you can actually identify skill and you can clearly obviously identify hard work, somebody who's really putting in the hours, really putting in the effort and so on. But with asset management
00:09:59
Speaker
You know, as the academics will say, it's almost impossible to distinguish skill from just simple luck. That has implications for remuneration as well, doesn't it? Well, it does. And people will hopefully look at the valuations they're getting. So, you know, I've got my own pension invested with a
00:10:27
Speaker
one of the top investment firms, you get your quarterly valuation and you kind of, you know, if you're that reminded, look at whether the numbers go up and down. I think asset managers are very conflicted with the fact that they have to report on a quarterly basis when their own remuneration structures are actually aligned to annual cycles or even multi-year cycles. And it's not an easy position to reconcile. So actually, you know, that dilemma
00:10:55
Speaker
is something that really needs to be looked at. It's the difference between reporting and alignment of the remediation strategy time horizon. So whether it's slack or hard work is very difficult to determine from a client's point of view. You just look at the bottom number and you look at whether it's gone up and down and it's basically based on trust. That's what financial services is about, it's trust.
00:11:24
Speaker
So what reforms would you like to see then to asset manager pay? Well, when we look at responsible pay, responsible pay affects all the actors in the investment chain. So that's starting with the asset owners who sometimes most often use the services of investment consultants to select the asset managers.
00:11:52
Speaker
who in turn invest into corporations. So it affects asset owners, investment consultants, asset managers, and then corporates. But the asset owners definitely have, I mean, they are the ones whose duty it is to manage the beneficiary's monies in a responsible way. So they have to have the power and the understanding that there is a link to investment performance and how people are being paid.
Regulatory Needs for Responsible Pay
00:12:22
Speaker
So that's one thing I'd like to see is more involvement from the asset owners. But as I say, we need to look as well as the alignment between the reporting and the performance monitoring. So we have people, asset managers who have to report on a quarterly basis when their pay is calculated on an annual or multi-year basis. And that dilemma needs to be looked at.
00:12:47
Speaker
Would you like to see the Investment Association, the UK fund industry trade body, taking more of a lead on this? And what about the regulators, the Financial Conduct Authority and politicians, for example? Yeah, absolutely. So I actually wrote a report on responsible reward, how to fulfill your ESG promises through performance and pay.
00:13:17
Speaker
And then that can be downloaded from the www.pipplenet.ltd.uk for free. And that report was sent to DIA, so I can't wait for their thoughts on the report. But they definitely have a role to play. They have issued their remediation principles. And I would say not sure they go far enough, really, when we look at the integration of extra financial factors into pay.
00:13:46
Speaker
I mean, it very much says, you know, you may consider ESG factors in remuneration structures of your investing companies. I think it's not a may, it's a must. It's absolutely paramount that there is that integration of extra financial factors, both from a societal and a commercial business point of view. So, yes, they do have a role to play.
00:14:11
Speaker
After regulators, they already understand they have to play because the DFCA has issued their stance on culture and conduct. I'm working with clients at the moment on the implementation of the SMCR regulation, that's the senior managers and certification regime, which definitely looks at conduct and culture. And of course, we've got the new
00:14:41
Speaker
governance code, which came out and we're waiting for the new stewardship code, which I'm sure will reflect what's in the governance code. So the regulators are already on board with that concept. Now we need to make sure that responsible pay is pushed through at board level and within remediation committees.
Linking Diversity and ESG to Pay
00:15:03
Speaker
I understand, Corinne, that you were recently invited to share your views on the Women in Finance Charter at a Treasury Select Committee session. Tell me about that. Yeah, so politicians is right. They've got a role to play. And we know that because you've got initiatives like the Paris Climate Agreement, for instance, social issues, social initiatives like the Women in Finance Charter.
00:15:34
Speaker
which is about increasing the number of women in senior roles. And it's got about 300 signatories now in the city, and we present thousands of employees across the country. And the reason I was invited to Parliament TV to discuss this initiative
00:16:00
Speaker
was that the Select Committee was looking at the implementation of the Charter, what had been achieved over the last 12 months and what needed to be done further. What I thought was really interesting with my particular focus on remuneration, there is a pledge in the Charter which employers have signed up to, which is about the linkage of diversity targets and executive pay.
00:16:27
Speaker
And I partner with another firm called E-reward, and we analyze remuneration reports. And we can clearly see that the linkage between diversity targets and executive pay is actually pretty low. We could see that a number of firms talk about diversity in their annual reports. Some of them mention it in their remuneration report very few
00:16:56
Speaker
mention it as a clear target with a clear weighting of the bonus or the active attached to it. If we don't make that connection, that issue of diversity at senior levels is unlikely to make fast progress. And that's what the TV reporting was about.
00:17:18
Speaker
You've also been involved, Corin, in the drawing up of the UN Principles for Responsible Investment, the PRI. So can you tell me about those principles and how you've been involved? OK, so I wasn't exactly involved in drawing the principles, but I certainly worked closely with the PRI on a number of various pieces of work.
00:17:47
Speaker
So most members, so the PI has got over 2,000 members now globally and has issued six principles which are well known by investors, I would say, and asset owners. What is less known is that the PI issued a few years ago three executive recommendations to their members.
00:18:12
Speaker
One of them is to identify ESG metrics in their investing companies. The second one is to link them to executive pay. And the third one is to disclose the practices and challenges that these companies are experiencing. When I talk to investors and indeed corporates, they are not asking or not being asked questions about the linkage between ESG and executive pay or not enough and not systematically.
00:18:41
Speaker
So it's very important for PI members to understand that it is an expectation that they should be looking at that. I have spoken at PI conferences in the past on this particular subject. Interestingly, the PI has just commissioned a very extensive piece of work on responsible play, which will be an international project.
00:19:06
Speaker
So they are in the process of identifying which academic institution will support them in that venture. But I've been pushing that issue, I've been asking them to look at their framework, their reporting framework on executive pay. Because when we look at the public data from the PRI, under 20% of members, PRI subscribers,
00:19:32
Speaker
self-report that they are making the linkage between responsible pay, investment performance, and executive pay. That's on a self-reported basis, so the reality is probably even lower than that. If that's not what people are being paid for, what are they being paid for is the question.
00:19:53
Speaker
Just one final question for you, Corin. We sometimes see these reports about the link between high pay and productivity and business success, if you like. What is your assessment of the evidence about whether or not there is a definite and a positive link between high pay and a business being successful?
00:20:24
Speaker
Well, I think it should be the other way around, really, which is if your business is successful, then that should be linking to your, you know, if your incentives have been designed properly, then they should derive from the success of your business. But what is success is the interesting question. And success is not just about measuring how much profit you've made is how you've made the money.
00:20:49
Speaker
And again, that's what responsible pay does. It doesn't look at just how much you're making, but how you're making the money. What is the impact on the environment? What is the impact on the internal and external communities you're working with? Have you been a good corporate citizen?
Interview with Luke Hildiard on Inequality
00:21:06
Speaker
Should we be looking at some of the issues that are happening internally and take that into consideration when determining your variable pay?
00:21:16
Speaker
So that's the question really, what is success and how do you measure it? You're listening to the Tebbe podcast with me Robin Powell, brought to you by Regis Media. That was Corinne Carr from PeopleNet talking about responsible pay.
00:21:34
Speaker
Now, another organisation with a strong interest in this area is the High Pay Centre. Based in London, the centre is a think tank which carries out research and analysis on issues relating to executive pay, corporate governance and business performance. I've been talking to Executive Director Luke Hildiard. I started by asking him about his own background.
00:22:00
Speaker
I came to work at the High Pay Centre where a small think tank doing research on the causes and consequences of economic inequality a few years ago off the back of having done other research jobs in think tanks and local government.
00:22:16
Speaker
I think it's a really important issue. The UK is one of the most unequal countries in Western Europe. The 1%, the top 1%, the top 0.1% take a much bigger slice of total incomes.
00:22:34
Speaker
than they do in other countries, other advanced economies. And it's not as simple as saying that if the 1% had less, the 99% would have more. But equally, I think if you want to raise living standards for people and improve society, you have to look at the way that income and wealth and economic power is distributed.
00:22:58
Speaker
And I think in the UK, we could do a slightly better job of sharing things out a little bit more evenly. Of course, one of the reasons that we are so unequal is that we have a very large financial services sector that captures a big proportion of total pay in the UK. So what exactly in a nutshell does the High Pay Centre do?
00:23:25
Speaker
So we carry out research, we review companies' annual reports, we look at the government statistics on income inequality, on what people at the top earn, what people in the middle are guessing, what people at the bottom are guessing, and see how they compare. We make comparisons with international statistics.
00:23:45
Speaker
And we write reports on our findings, make policy recommendations, arriving from what we find out in the research. And then we also have a programme of events. We do Twitter, media commentary, that
Rising Executive Pay vs. Average Wages
00:24:00
Speaker
sort of thing.
00:24:00
Speaker
Now, I have the impression from what you have written and what others interested in this subject have written that this issue of excessive executive pay seems to be growing. Is that right? And if so, why do you think it's happening? Whether or not it's right depends on whose figures you look at and over what time period. Certainly,
00:24:30
Speaker
if you compare executive pay levels today to 20 years ago, they're very, very high compared to what the average worker used to make. There was big growth in the 2000s, the noughties as it were, and in the past decade, that growth has levelled off a little bit so that you had pay for a 40 to 100% executive going from being about
00:25:00
Speaker
50 or so times the average UK worker in the 1990s to more like 100, 150 times today. But the growth has sort of slowed a little bit. I think, and why has pay got to such huge levels? I think there are, well, there are a number of reasons, there's sort of benign reasons, I suppose, that companies are increasingly
00:25:25
Speaker
global in scale and increasingly an argument that if you don't pay the top pay awards to the top people they'll go and work for somebody else and your business will lose out the argument that it's a sort of better market for CEO services. The idea of course that these are multi-billion pound corporations in some cases and the decisions that the CEOs will be taking will have
00:25:52
Speaker
billion pound effects in terms of their impact on company value and thus paying a fee of a few billion is actually quite small beer in that context.
00:26:05
Speaker
Then the argument as to why it's problematic, I think, relates to the governance of pay and how it's set. You've got remuneration committees, which are stuffed with people who are the leading executives, people who are or have been doing similar roles, who of course are completely sympathetic to the idea that these people are all absolute geniuses and that companies would fall apart without them.
00:26:34
Speaker
And so they're naturally inclined to ratchet up the pay for them. You then have the investors signing off on the pay. Again, these are the very highly paid people in the city.
00:26:49
Speaker
it very much suits their interest to believe this argument that the managerial elite are so much more brilliant than everybody else and that they deserve these huge sums of money and that companies would suffer without them and I think there's maybe not enough
00:27:08
Speaker
skepticism or criticism about just how important these people are to a company and to what extent the person at the top of a company matters in comparison to the contribution of the wider workforce, the wider economic context, that sort of thing.
00:27:24
Speaker
As you say, investors do have some power through their voting rights to have an impact on pay policies and so on. And we are starting to see a little bit more shareholder activism in this area, aren't we? Well, again, it's a very mixed picture. Our research found that in the past five years,
00:27:52
Speaker
levels of dissent in shareholder votes on CEO pay are actually, you know, they're still very low. You're looking at maybe typically around 10% of
00:28:06
Speaker
shareholders will typically vote against or voice their approval for a CEO pay package. So they are generally being waved through with full shareholder approval despite the occasional high profile instance. There's been cases of raw mail and
00:28:25
Speaker
in recent years where they do get voted down. So, as you say, the biggest shareholders tend to be the big investors, the big asset management firms. And of course, as you rightly point out, they are themselves in a sense conflicted in that they are very highly remunerated. So,
00:28:51
Speaker
That said, there must be some asset managers who take their governance responsibilities more seriously than others in this regard. Is that fair to say? Yeah, I think that certainly is the case. I think the debate about
00:29:13
Speaker
pay and fairness and inequality and that sort of thing and the concern about the impact it's having on your politics on absolute income levels because so much is going to those at the top is something that people are perhaps a little more alive to in Europe and the UK
00:29:38
Speaker
than in the US. So I think the UK pension funds, the UK asset managers do tend to be a bit more engaged than their US counterparts.
Fair Compensation in Asset Management
00:29:51
Speaker
I mean, I wouldn't want to venerate any particular individual firms as pay raise because I think it's not a great idea to give them too much credit and allow them to get the place. But for example,
00:30:06
Speaker
You may recall the case of the persimmon CEO, Jeff Fairburn, who got that extraordinary bonus as a result of the share price. Thanks to the government's help to buy scheme and Standard Life gave a very good speech at the AGM about how his pay went so far beyond acceptable, they couldn't back it. Herbies have
00:30:31
Speaker
done a lot of intellectual work on their pay policy and how they're approaching pay. So I think it is a hugely mixed picture. I think some of the mainstream institutional investors in the UK are
00:30:50
Speaker
are taking it quite seriously. I think other people who are invested in UK companies, you know, are just not that bothered. If we could look specifically, Luke, now at asset manager pay, as I've written about on the blog many times, I know this is a subject that interests you as well. All the academic evidence shows that it's almost impossible to distinguish between skill and luck when it comes to
00:31:20
Speaker
you know, picking stocks, market timing and so on. So what's your own view on pay in the asset management sector, particularly given that, you know, it's difficult to say that a particular manager has been more skillful than another? I mean, I think that's completely right. I think it's
00:31:48
Speaker
It's a legacy of, of course, there's lots and lots of money sloshing around in the fund management sector. They're investing billions and billions of pounds on behalf of very often ordinary people with a savings plan or a pension fund investment.
00:32:10
Speaker
And if you've got billions and billions of fans sloshing around, it's pretty easy to help yourself to a small slice of that without people necessarily noticing or getting outraged. It is the important issue though. I recorded the
00:32:28
Speaker
FCA asset management market study, they talked about a saving pot losing about 40% of its value over a lifetime as a result of fund manager fees and charges, most of which are taken up by the fund manager's staff cost paying their highly paid staff. So it is something that costs
00:32:53
Speaker
ordinary people and the real economy a great deal. I think that the problem is a lot of the things that were highlighted in the FCA asset management market study about the governance of pension funds
00:33:12
Speaker
You know, people who aren't necessarily equipped to hold the asset managers to account and sort of say you know why are we being charged these huge fees, why can't you get somebody to
00:33:25
Speaker
make our investments for much lower costs or get a computer to do it or something like that. And then again, you've got the conflicts of interest from, say, very well-paid investment consultants. There's a lot of, you know, they're part of the same financial services industry where pay is very high. Is it really in their interest to say to pension funds, oh, you should be pushing a bit harder on
00:33:53
Speaker
fees and charges, you should see what these guys are paying their staff, they don't need to do it, that kind of thing. So to summarise my point, I think the very high pay in the asset management sector is not necessarily the result of a functioning market. Is that the subconscious biases, conflicts of interest, poor governance, does play a part in enabling them to make such large amounts of money?
00:34:21
Speaker
So here in the UK we've got a manager called Richard Wolner who works for M&G and he has been paid somewhere around 17 to 18 million pounds a year for the last few years and yet we've got hedge fund managers who are actually paid considerably more than that
00:34:45
Speaker
And also, what would you say to the argument, well, in the United States, salaries for asset managers and hedge fund managers are, you know, several notches higher than here? Well, I thought the question is, I mean,
00:35:09
Speaker
Firstly, are the top UK managers going to go to the States or elsewhere if they're not paid these kinds of sums of money? And would it actually matter if they did? Certainly in the market for corporate CEOs more broadly,
00:35:28
Speaker
there's very little demand from the US for UK managers. It will be a big cultural change. You're going to an entirely different market. And the transferability of people based in the UK to the US is not always, you know, it is not always apparent. And then, you know, then this argument, you know, these people are so uniquely skilled,
00:35:55
Speaker
that they have to be paid this kind of money because the organisations would suffer, their current employers would suffer without them, and by association their clients would suffer. Again, I think, as you say, the evidence on whether investment success is attributable to skill or luck is mixed.
00:36:18
Speaker
I think it reflects a rather dim view of humanity that there's this tiny pool of people at the top with the top talent to do these types of roles in investment and in other industries and the rest of us have to sit there and be grateful for what few crumbs they throw at us. I think my take would be that if you're so reliant
00:36:42
Speaker
on this tiny number of individuals that says a great deal about how your organization is run. It's succession planning, it's training and development processes that's not especially positive.
Public Discontent and Governance Issues
00:36:59
Speaker
I don't think there are many jobs that there aren't a good number of people capable of being trained up to do them.
00:37:10
Speaker
Of course, the big story, Luke, as you know, in the UK in the last few weeks has been this whole Neil Woodford business. I'm not talking about Boris Johnson and politics here. I'm talking about the asset management industry. It's been massive. And depending on whose figures you believe this equity income fund, his flagship fund was gated at the beginning of June. And yet he's still
00:37:40
Speaker
been taking in substantial fees of up to £100,000 per day. What's your view on that? Well, I think sort of morally and in terms of public perception, I think any right-minded person without common sense would
00:38:06
Speaker
feel pretty uneasy about someone who's losing money for people, for other people.
00:38:13
Speaker
making large sums of money for themselves. I think it's understood that the value of your investment will go up or down, and there's a risk in telling you you'll be making a payment as well as an investment, regardless of the outcome. As I say, I think the kinds of sums of money we're talking about are going to make people seem uneasy. And again, I think it comes down to questions around the governance. Obviously,
00:38:42
Speaker
The role of Hargreaves Lansdowne has been really controversial. Their platform has been channeling savers money into the Woodford funds. Were they not bothered that the terms could lead to a situation like this? They clearly didn't foresee that happening. Similarly, Kent County Council, for example, is invested in that. Did their advisors or their governments for these
00:39:12
Speaker
not foresee the possibility of an arrangement like this, whereby Woodford was not succeeding in an investment sense, but was continuing to take huge amounts of money in fees. Clearly, you know, sums of money that go beyond what he needs to, you know, to put food on his table, as it were. I think that's the issue that's highlighted here. And, you know, it goes back to what I was talking to about the fund management industry more generally, that there
00:39:41
Speaker
paying themselves such huge amounts of money because they're doing extremely complicated technical works so the scrutiny from the customers that isn't there in a way it would be if say you went to Tesco tomorrow and suddenly said that all right we can afford to
00:40:03
Speaker
sell you a box of Weezer bits for two quid but it's actually 90 quid today. Yeah, yeah. Luke, one final question. Do you think all this publicity surrounding Neil Woodford and Hargreaves Lansdowne and so on
00:40:20
Speaker
Do you think this is going to prove a watershed moment and that people will really start to question, A, how much they're paying for asset management, but also to question, are these people who are put on a pedestal, largely by the financial media, it must be said, are they really worth that money?
00:40:50
Speaker
Really good question. I think on the one hand you point to things like the FCA asset management market study, the pensions and lifetime savings association where I used to work doing a lot of work on fees and charges and also on the governance of pension funds to make them
00:41:09
Speaker
you know tougher better more effective negotiators and you'd say the you know the method to disclosures rules on bundling charges are also I think kind of a related piece you would say there's a there does appear to be a recognition that
00:41:25
Speaker
value for money offered by the fund management sector isn't as great as it could be and the vast pay packages in the sector are a reason for that and that people are starting to take action. So I guess that's grounds for optimism. On your point about putting people on a pedestal, I do sometimes think we never seem to learn. I mean, there's been so many people
Conclusion and Reflections
00:41:53
Speaker
Whether it's in banking, health and safety issues at the oil companies, some of the big retailers have had some pretty spectacular disasters in recent years and then of course, Woodford in the asset management
00:42:15
Speaker
sector. All these people who've been lionized, rewarded with such enormous sums of money, only to be exposed to fallible, mortal humans like the rest of us who were doing well previously, but maybe not entirely down to their own brilliance, perhaps because the rubbers are green, as it were.
00:42:43
Speaker
And I think everybody's like that, even these people at the top, we're all fallible, we're all at the mercy of wider circumstance, so some of us get away with it, some of us don't, but clearly lavishing tens of millions
00:43:02
Speaker
of pounds on these for venerating them as wealth creators, putting them on this pedestal and saying, you know, they're so much better than everybody else and deserve so much more money is a false endeavor. And yet we do seem to seem to keep doing it with, you know, a spectacular fall from grace. Alan Neil Woodford never never tends to prompt to rethink about the sort of hero worship of the people at the top.
00:43:30
Speaker
Well, that's about it for this episode of the Tebbe podcast. You've been listening to me, Robin Powell, talking to Luke Hildiard from the High Pay Centre. As always, this programme has been brought to you by Regis Media. You can find out more about Regis Media and the work it does with financial advice firms around the world by visiting the website regismedia.com. That's regismedia.com.
00:43:59
Speaker
If you've not discovered our blog yet, you'll find it at evidenceinvestor.com. That's evidenceinvestor.com. Tebi is also on Twitter, Facebook, Instagram, LinkedIn, and of course on YouTube.
00:44:15
Speaker
Many thanks to Corinne Carr from PeopleNet and to Luke Hildiard from the High Pay Centre. Thank you as well to our producer James Creswell, but most of all, thanks to you for listening. And one more thing. If you've enjoyed this podcast, please subscribe to it. We're on both SoundCloud and iTunes. Even better, leave a review. It really would be appreciated. Until next time, goodbye.