Vertical fund businesses – a broken model?

In this commentary we look at implications of the vertical model.  Does capturing revenue at every step of the value chain mean there is excessive “ticket clipping”?  What about conflicts of interest between the manager and investors?  Can investors end up owning product that is second best?

Vertical integration – it’s on the FMA’s radar

In its annual “Investigations and Enforcement – Key Themes” paper, the FMA highlights “conflicted conduct” as a core risk for markets and investors. 

They rightly identify that conflicts of interest can be deeply embedded in business models. According to the FMA: “Although we do not oppose vertically integrated business structures, robust processes must be used to ensure customers’ interests are protected and put ahead of the profit-making interests of the providers involved.”