PlatformsSep 2 2014

Dealing with ‘super clean’ share classes is a tad messy

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The introduction of ‘super clean’ share classes has added little economic benefit to clients, while adding hugely to the costs and time taken to switch between platforms.

Admittedly these issues only arise when a decision is being made to move from one platform to another, but we live in a competitive environment so if you are happy with your proposition, why impose barriers to exit?

The re-registration of assets simply requires a stock transfer from one platform nominee name to the other, the benefit being that no stock is bought or sold, it is simply a change of ownership.

These additional implications have caused significant delays in the re-registration of client assets

But should the receiving platform not have access to the ceding platform’s ‘super clean’ share class, they have to switch to a share class that the receiving platform does have access to.

This requires a switch from one fund to another, giving rise to potential capital gains tax, trading costs, bid-offer spreads and equalisation issues.

These additional implications have caused significant delays in the re-registration of client assets, and I very much doubt the client is put in the same financial position as they were prior to the move.

When will platforms realise that service is the only real differentiator, not price. It only takes one bad experience and that client (financial adviser) will be gone for good, so forget scratching around to secure meaningless deals and invest in your service.

Nathan Fryer is director at PlanWorks