What a 46-page pension brochure tells you about this industry
Episode 107: Free Money, Funny Money, and a 46-Page Disgrace
Two things happened in the same episode that tell you everything about where this industry is and where it is going.
First, the good news.
Andy came across the Court Funds Office, a government department that administers compensation payouts for people who lack the capacity to manage their own money: children, those in litigation, those without mental capacity. Their investment menu has two options. Cash. Or an equity index tracker fund managed by Legal and General.
That is it. Two options. A government department, not known for its elegant simplicity, looked at the problem and said: short-term money goes here, long-term money goes there. Done.
There are legitimate questions about the portfolio construction. The equity fund carries a 55% UK weighting against 35% overseas and 10% emerging markets, which is a significant home bias by any measure. But the principle is sound. Strip out manager risk. Keep it simple. Give people who already have enough to deal with a structure they can actually understand.
Carl added that in Ireland, similar cases, known as ward of court arrangements, have become a meaningful part of his firm's work. The old approach was an adviser walking in with a product recommendation. The new approach starts with a cash flow plan, breaks the money into short, medium, and long-term buckets, and builds from there. The solicitor firms who have seen both approaches know which one serves their clients.
Now the bad news.
Nick was trying to help a client navigate her workplace AVC scheme at a private school. A teacher. Brilliant at her job. No reason whatsoever to know anything about pension fund selection. Her HR team sent her a document to help.
Forty-six pages. Fifty-nine lifestyle funds. Fifty-nine bond funds. Eighteen Far East equity funds. Sixty-five global equity funds.
The document opens with a list of product codes: GPP1, GPP Flex, GFRP, GPPP, Repriced Single Charge CIMP, Single Charge GAVC, and several more. That is the first page. The page a teacher opens when she is trying to work out where to put her pension contributions.
The cheapest fund in the entire document: 0.98% per year. The most expensive: 2.73%. These are workplace pension AVCs. The trustees behind this scheme have purchasing power. Institutional rates on a global equity index tracker should be a fraction of that. The margin on the cheapest fund in that document is, as Andy put it, close to 90%.
This is a Consumer Duty issue. It is the paradox of choice turned against the people it is supposed to serve.
Which brings us to the third thread of the episode.
Andy has kept his investment portfolios at Maven Advisors unchanged since 2017. That is a feature. Consistency and conviction are different from inertia. But he is now seriously looking at a switch to ETFs, and the numbers are hard to argue with.
Vanguard recently launched a global equity ETF, the VALL fund, at 0.07%. (Source: Vanguard, 2025.) The equivalent Vanguard unit trust sits at 0.23%. Amundi are offering global equity exposure at 0.05%. (Source: Amundi, 2025.) AI systems, when asked for investment portfolio suggestions, return ETF results almost exclusively, because the cost differential is simply too large to ignore.
Andy's current portfolios run at around 0.30% ongoing. The ETF equivalents would bring that down to roughly 0.08% to 0.09%. That is a material difference in client outcomes, compounded over decades.
There are real considerations: trading costs on small regular contributions, CGT on unwrapped assets during any transition, tracking error, stock lending policies, the operational complexity of running parallel portfolios during a changeover. Alan made the case for simplicity. Andy made the case for the client. Both are right, and the tension between them is worth sitting with.
The direction of travel is clear. Costs are heading towards zero. The question is how to take them seriously and do it properly.
One episode. A government department that kept it to two choices. A pension provider that needed 46 pages and still got it wrong. And a genuine, unresolved conversation about what the investment portfolio of the future actually looks like.
That conversation is worth hearing in full.
Links is below.
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P.S. Andy is actively looking to hear from advisers who have already made the switch to ETF-based portfolios. If that is you, get in touch with him directly.
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