MPF fund fees comparison: advisory firm says management fees still have room to fall

This article is a rewrite of a report from February 2012.

Editor’s note: a garbled character in the original (“隨”) has been reconstructed as “隨着” (as/with) from context.

A director at financial advisory firm Convoy said in February 2012 that MPF management fees still had room to fall. A price war among providers that began in mid-2011, growing assets under management and the coming Employee Choice Arrangement were all squeezing charges. Convoy planned to lift its panel of MPF providers from 10 to 13 within the year.

Why would MPF fees keep falling?

The price war among MPF providers started in mid-2011, and with cheaper new products, larger asset pools and the Employee Choice Arrangement sharpening competition, fees were expected to keep sliding through 2012. Management fees then ranged from 0.7% to 3% depending on fund type — a wide gap.

How would the Employee Choice Arrangement push fees down?

By letting employees choose their own provider, the arrangement forces trustees to compete on price and quality for members’ business. To prepare, Convoy planned to expand its provider panel from 10 to 13 during the year, giving workers a more diversified menu of funds to compare.

What is i-Convoy?

i-Convoy was Convoy’s planned online insurance sales platform, expected to launch as early as the second quarter of 2012, focused on simple policy types that would not clash with traditional sales channels. The firm’s chief executive said it also planned to hire more insurance staff that year.

Background on MPF fees is available at the MPF education hub.