Nearly half of adviser-clients’ platform investments are now in commission-free assets, in a sign the RDR project is nearing an advanced stage, a major review of unbundling progress by Investment Adviser can reveal.
The research, which comes 15 months after the regulator’s RDR rules came into force, suggests investment advisers are successfully converting clients to paying by fees rather than commission and the industry is on track for full conversion.
However, there is a wide disparity in UK platforms’ levels of conversion, with Skandia reporting that just 9 per cent of its assets have been switched to the new ‘clean-fee’ share classes that facilitate commission-free sales.
At the opposite end of the scale, Standard Life and Axa Elevate have switched all assets to clean-fee share classes.
The research is based on a survey of 11 of the biggest UK fund platforms’ adviser-based assets. Fidelity’s FundsNetwork and James Hay were the only major platforms to decline to provide data.
According to the platforms that provided data, more than £70bn has been shifted into clean-fee share classes, which do not levy platform rebates, equating to 45.5 per cent of the total.
From next month, platforms will be banned from retaining payments from funds bought after the implementation of the RDR. In April 2016, this ban will be extended to funds bought before December 31 2012.
Mike Barrett, platform marketing manager at Skandia, explained its low level of conversion, saying it gives advisers “optimal flexibility” to choose which share classes to use, adding that unbundled share classes can “often be more expensive”.
Cofunds, the biggest platform, currently has 30 per cent of its assets in clean-fee shares, in spite of being the first to publicly voice support for the concept of unbundled shares in 2011. Head of marketing Stephen Wynne-Jones said it has a significant amount of legacy business in bundled shares, but is working on the conversion to clean fee.
Roughly 75 per cent of assets on the remaining nine platforms surveyed are in clean-fee shares.
Several platforms have introduced the ability to pay unit rebates, meaning that any elements of a fund’s annual charge previously payable to an adviser or platform are now paid back to the client in the form of fund units, which are taxable if not held within an Isa or a Sipp.
Meanwhile, other platforms are in the process of switching all bundled share classes to clean fee as part of a ‘bulk switching’ push. These include Novia – which aims to have 90 per cent of its assets in clean-fee shares by April – Aviva and Ascentric.
| Platform | Assets | Clean assets | Clean value |
| Cofunds | £64.1bn | 30% | £19.2bn |
| Skandia | £27.3bn | 9% | £2.5bn |
| Standard Life | £16bn | 100% | £16bn |
| Transact | £15.1bn | 50% | £7.5bn |
| Axa Elevate | £7.5bn | 100% | £7.5bn |
| Ascentric | £6.2bn | 75% | £4.7bn |
| Nucleus | £6.6bn | 40% | £2.4bn |
| Alliance Trust Savings | £5.4bn | 99% | £5.4bn |
| Raymond James | £3.7bn | 88% | £3.3bn |
| Aviva | £3bn | 48% | £1.4bn |
| Novia | £2bn | 75% | £1.5bn |
| Total | £156.9bn | 46% | £71.3bn |
Source: Platform estimates
