Platform-wide conversions of client assets to ‘clean’ versions of its funds are not always in the client’s best interest, according to the managing director of Axa Wealth’s Elevate platform, who confirmed the firm will not be following rivals and bulk switching clients.
David Thompson, managing director of Elevate, said: “There are still cost differences between retail and clean share classes which could result in an increased cost for clients. Some fund groups are also yet to launch a clean share class for certain funds.”
Hi remarks echo findings by FTAdviser that clean share classes could often result in a higher cost of investing for those with less than £100,000.
Last week, Novia became the latest platform after Ascentric and Alliance Trust Savings to set out plans to switch investors in bulk to clean share classes in the coming months. Novia is to begin conversions in October, with the platform aiming to have turned off cash rebates and trail commission payments from the majority of investments by April next year.
Elevate has instead introduced a comprehensive clean share class offer for its 2,500 clean share class funds, allowing advisers to choose the class best suited for their clients, Mr Thompson said.
He added: “Following the publication of the PS13/1 platform paper we did look closely and considered automatically converting assets on Elevate from retail to equivalent clean share classes.
“However, once the FCA clarified its position on the continuation of cash rebates it became clear it was not a regulatory requirement.
“The decision to force conversion appears at odds with the clarification from the regulator that the rebate to clients on legacy assets can continue and it is unclear where the authority for platforms to force this move comes from.”
Earlier this year (2 August), Elevate chief executive officer Mike Kellard predicted three-quarters of new platform business would go into clean share classes.
Elevate is set to release new share class comparison tools to help advisers choose the most appropriate share class.
Last week (13 September), the Financial Conduct authority fined Axa Wealth £1.8m for failing to ensure the advice it gave customers was suitable.
