Speaking to an audience of independent financial advisers (IFAs), a major asset management head of distribution said the other day that although there are thousands of UK investment funds, just half a dozen attract between half and three quarters of all flows. A competitor agreed: globally the equivalent of over 100% of gross new money flowed into just 0.25% of vehicles.

It is hard to believe that this is healthy, and it certainly raises a lot of questions. The public is daily told to seek financial advice. But if the net result is that everybody is pushed into just a handful of funds, how discerning can that advice be?

We are also told how the global economy is changing more rapidly than at any time in history and the industry is certainly willing to meet this challenge by launching products (albeit after first convincing a sceptical Financial Conduct Authority). But how many of these make an impact? If advisers direct all the money to a handful of funds, how do new ideas get a look in?

In their defence, IFAs say their job is financial planning not investment advice. They make sure their clients’ savings are structured to meet their pension, insurance and inheritance needs. They diversify funds and allocate between growth and income, according to risk appetite. Delivery against these objectives matters more than performance.

But a tranche of money allocated to, say, US equity income will go into what the IFA or platform provider says at that time is “best in class” – which is generally code for the biggest offering from an established house. The key attraction of such funds is that if they do perform poorly the adviser can’t be blamed; hence the concentration into just a handful of funds.

All the manager of a new fund can do with just a small trickle of money coming in is to seek quietly to establish a performance record over three to five years, which the IFA community will then find impossible to ignore. In some cases – though literally just a handful – this works.

But then we have the ultimate irony. The best performance of a fund is almost always in its first few years when the manager feels relatively unconstrained. By the time it is brought to the public’s attention its best performance is behind it. It is hard to believe the system works in the clients’ best interests – or that it does much to encourage more long-term saving.

Anthony Hilton is a City editor of the London Evening Standard