Transact: Hidden units ‘present chaos’ post RDR
Platform head says he is also waiting for first fund manager to break rank on pricing, reducing cost for certain platforms and advisers
Hidden units will present chaos post-RDR, with there being no way of knowing which fund units are due rebates and legacy commission, Transact’s Ian Taylor has stated.
The managing director of the platform firm told the IFP conference that hidden unit stakes will make “life a nightmare for all”.
Taylor said that currently funds are accessed on platforms using the ISIN number, but this does not reflect whether the unit is entitled to legacy commission or a cash rebate.
While cash rebates will be banned post-RDR, units already entitled to them will continue to be so.
He added that this will particularly present a problem when investors hold a mix of units, including those entitled to rebates, commission and clean classes, and when these investors come to sell some of their holdings.
The issue, he claimed, is that advisers cannot rely on other people to solve these problems, “You cannot just expect the industry to sort it out”.
Taylor also predicted that the platform industry will become homogenous, “All platforms will look the same as providers won’t want to deal with 30/40 different iterations of platforms,” a move he claims is starting to happen already.
Currently platforms are just offering one share class for all advisers and platforms, but the Transact head said it will be interesting to see which fund manager is the first to break rank on pricing.
“At the moment all have said they will have clean share classes and will not give advisers or platforms different deals.” However, he said that once one platform releases additional pricing structures it may spark more advisers to follow suit.