Since embarking on my journey of writing and investing, I’ve observed significant improvements within the investment sector. Fees have substantially decreased, outdated sales practices have nearly vanished, and the emergence of DIY investing platforms has broadened access for the general public.

However, there is still substantial room for advancement. I hope to see additional changes — some of which may be straightforward requests, while others might seem more ambitious. Here are five items on my wish list.

I find it puzzling that funds do not reduce their fees as their asset bases expand. Some fund management firms excel in passing along cost savings to their investors by lowering fees or introducing tiered pricing based on fund size, but many others do not keep pace.

When a fund is initiated, it typically requires a minimum investment to become profitable for the managing firm. However, beyond a certain asset threshold, the cost of managing the fund doesn’t increase. In fact, it tends to decrease as efficiency improves with scale.

These savings should be passed on to investors. Charging a fee of 1 percent on a fund managing £10 billion in assets feels more like a display of greed than a justified expense.

Increased Transparency

Sometimes fund managers overlook the fact that they are investing our money. While I don’t expect notifications for every transaction, I believe investors deserve timely and clear updates on where their funds are being allocated. This information is crucial for making informed choices about investments and ensuring there is not excessive overlap within their portfolios.

Currently, funds are mandated to disclose their complete list of holdings only once a year, often resulting in outdated information. I propose that funds should be required to provide quarterly updates, with lists not older than 30 days.

Simplified ISAs

If the government aims to encourage broader investment participation, reducing confusion is essential — starting with ISAs. The existence of multiple ISA types complicates matters; it would be far more straightforward to allow individuals to open a single ISA each year and choose between cash savings or investments. Ideally, a centralized online portal would enable users to manage their ISAs while accessing various savings and investment options from multiple providers.

Additionally, the Innovative Finance ISA should be eliminated. This type of account, which is only opened by a limited number of individuals annually, allows for investments in crowdfunding and peer-to-peer loans — both of which involve risks that most investors do not require.

Eliminate Underperforming Funds

Over the past decade, only about one-third of actively managed funds have outperformed their passive counterparts (which track market indices through algorithms). Research from wealth management firm AJ Bell indicates that merely 17 percent of active global funds have outperformed passive options over the same timeframe.

These figures raise serious concerns regarding fees and the overwhelming influence of certain U.S. tech stocks buoying markets. They underscore just how few actively managed funds manage to deliver on their promises of performance.

The fundamental issue is that there are simply too many funds, and a large portion of them underperform. Fund management firms must be bold enough to close funds that do not meet performance standards and merge those that do not offer unique value. Companies should focus on their specific areas of expertise instead of launching new funds to capitalize on fleeting investment trends. Reducing the number of funds may yield more positive comparisons between active and passive management performance.

Additional Support

Investment platforms serve as gateways for most investors to access funds and shares. While these platforms have successfully made investing more affordable and accessible, there is still untapped potential for further improvements.

Many platforms offer a ‘managed service’ where users pay a premium for portfolio assistance, which can be appealing to those seeking guidance. However, it would be beneficial if platforms proactively informed users about cheaper share classes available for existing funds or alerted them to overlapping holdings within their portfolios. Simple automated notifications could effectively flag potential issues without straying into comprehensive financial advice.

This concludes my wish list for the investment sector. Some of these points may seem far-fetched, while others should have been implemented long ago.

If the investment sector and the government truly want to motivate more individuals to invest, they must continue to evolve and prioritize the interests of their clients. Reducing jargon, clarifying processes, and enhancing fairness and transparency should not be reliant on a Christmas miracle.