Advisers find the terminology relating to fund share classes on platforms ‘challenging’ as the sector moves at different speeds towards a fully unbundled world, according to research from Zurich.
In a poll carried out by the insurer last month among over 230 advisory firms, 85 per cent said they believed more consistency is needed, while 70 per cent said they would welcome funds having a single ‘platform’ share class available on all investment platforms, even if it was not the cheapest option.
The study follows the arrival of new share classes in the market over the past twelve months and the ongoing industry debate that a lack of consistency is causing problems with re-registration.
Clean funds, where the trail commission is removed, were the response to the Retail Distribution Review requirement to abolish rebates. Price competition has led to the rise of ‘super-clean’ share classes, where fund groups offer platforms with bigger buying power bespoke, cheaper rates.
Alistair Wilson, Zurich’s head of retail platform strategy, stated: “These findings show that work still needs to be done to simplify how we refer to share classes and make it consistent for everybody involved – fund managers, providers and advisers.
“What one provider refers to as a clean share class, may represent a bundled one for another, which may result in unexpected tax liability for clients.
He added: “Creating greater clarity and ease of transfer between platforms for advisers and their customers is something we should all be looking to resolve together.”
peter.walker@ft.com
