The Value of the Value Assessment

08 May 2019

The value assessment is a valuable exercise: asset managers that have embraced this challenge are seeking to enhance transparency, communications and outcomes for investors, and better manage their own fund range. But in order to realise these benefits, firms must allocate sufficient resources to designing a robust and repeatable approach that harnesses the data and analytics required to perform the assessment.

A big deal (and a sizeable challenge)

The value assessment is the Financial Conduct Authority’s (FCA) key remedy to the core issues identified in its 2017 study of the asset management market. The new rules covering the value assessment may be short, but the implications for firms are extensive. The FCA’s intention to start publishing statistics on underperforming active funds, announced in its 2019/20 business plan, shows the regulator is taking these issues seriously, and closely monitoring specific funds where it has concerns. Make no mistake, the FCA is expecting the value assessment to precipitate significant changes across the industry.

Interpreting the rules is the first challenge firms face.  For most firms the FCA’s seven prescribed criteria are likely to represent an adequate framework, with the difficulty coming from specifying the analysis and sourcing the data required to assess each criteria.

Firms must also identify and report on remedial action being taken where the assessment has identified ‘value’ shortcomings. Clearly the FCA anticipates there is a sizeable volume of work to be done here across the industry.

The need to perform the assessment annually at a share class level, and then publicly report findings, multiplies the volume of analysis and workload many times.

Getting the three Rs right

The scale, complexity and importance of the value assessment means it is paramount for firms to spend adequate time designing their approach.  We have seen firms developing a variety of methodologies for determining value, ranging from the more qualitative through to calculating a value ‘scorecard’ for each fund.  There is no right answer, but we believe any approach should be:

  • Reflective; of a firm’s own view of value, understanding of its investors and product range
  • Robust; providing a sufficient level of scrutiny and challenge that can effect real change
  • Repeatable; efficient and able to be applied consistently across the fund range each year, ideally linking with existing product review and governance processes.

The need to harness data and analytics

Whatever a firm’s methodology, it will need to draw on a vast array of quantitative and qualitative data from external and internal sources. Much data will be specific to each share class, but some will be relevant at a fund or even a firm level.  The timeliness of this data also varies considerably, with some being updated daily, some maybe only annually.

We believe successful firms will seek to use a data analytics tool to collate, analyse and present this data on a single platform.  The tool will be tailored to a firm’s own internal processes, and will be auditable, scalable and adaptable to support future changes to a firm’s approach.  Functionality will be bespoke for different users, with fund analysts able to drill into the finest level of granularity, while board-level executives are presented with insightful summary dashboards.  Relevant analysis will also be automatically populated into templates to support the firm’s public reporting requirements.

To derive real value from the value assessment, firms should spend time drawing insights from the analysis and deciding on subsequent actions, and not sourcing and processing the underlying data.

Benefits for investors... and for fund managers

We think firms should see the value assessment as an opportunity to enhance their existing product governance approach, and use it as an opportunity to showcase their value proposition to investors.  Where we have seen firms adopt this mindset, their aim has not been to simply comply with the new regulations, but use it to improve their investors’ experience and their own operations.

At one large fund manager, the value assessment has provided the catalyst for an existing programme of share class rationalisation.  This will see certain investors benefit from a lower fee for access to the same fund, and allow the firm to close a small share class that was costly to service.  At another firm, their planned reporting is intended to give investors and advisors greater insight to the firm’s pricing across its fund range, and its competitive position in the market.

How PwC can help

We can help clients design a repeatable assessment methodology that best uses existing processes, and identify the data to feed this.  Our proprietary PwC Value Assessment Data Analytics Tool is a bespoke solution for collating and analysing all quantitative and qualitative data on a single platform. We can work with firms to agree suitable peer groups for their funds and provide tailored performance and cost benchmarks.

And we can ensure firms design public reports that are not only compliant with the regulations, but are automatically populated with the necessary data and present clear and compelling messages to investors.  If firms have already developed an approach, we can conduct a 'health check' to ensure the approach meets the requirements of the rules and benefits fund investors and the fund manager.


Nick  Hawker

Nick Hawker | Senior Manager
Profile | Email | +44 (0)7483 417005

Natalie Bakhir

Natalie Bakhir | Senior Associate
Profile | Email | 44 (0)7483 416606



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