A 15-minute watch.

Dan Brocklebank is director at Orbis Investment Management, and in the penultimate episode of our Next Wealth Live series, talks us through the problems of the current fee structure within Asset Management – an issue the regulator has been pointing to – and offers a potential solution that brings together client and product provider interests under one incentive structure.

Brocklebank’s key belief is that the incentives for asset managers are misaligned with the interests of their end-clients: gathering assets versus net investment returns.

In the process of raising AUM “current incentives force the industry to become large and diversified, rather than what the client wants, which is small and nimble”, making the point that offering lots of funds that closely track indices so as to not lose clients is much more in-line with passive offerings; focused, high conviction strategies are surely what clients are after in active managers.

Brocklebank remarks that the global mega-trend of the rise of passives is creating fee pressures, and “drives bad behaviour”.

Using current research, he then offers a solution that aims to “kill two birds with one stone” and link client interests to asset managers by transferring the fee risk from the former to the latter.

For more from Next Wealth Live, we have Simon Clare on tech and the deomocratisation of investments, Nick Blake on the actual value of robos, and four platform CEOs debating the future of their business models.