As a result of the Retail Distribution Review, investors are paying a fifth less in annual fund fees and investing more in passive products, according to online investment platform Rplan.
Analysis from Rplan, published following trail commission being discontinued on all retail funds in the UK on 6 April, showed the average annual fee for the top 100 funds purchased on platform has fallen from 1.32 per cent around the time that RDR was introduced to 1.03 per cent now.
This represented a reduction in fund fees of 22 per cent.
Additionally, the average fee of the top 50 has fallen from 1.24 per cent to 1.03 per cent (17 per cent) and that of the top 10 has fallen from 1.18 per cent to 1.1 per cent (7 per cent), analysis on fund fees on the platform in the 12 months to 10 March 2013 versus the 12 months to 10 March 2016 showed.
Changing investment patterns has also been a factor, across the first quarter of 2013.
Just 10 per cent of the top 100 investments on the platform were in passive funds around the time of the Retail Distibution Review requirements coming into force but that has risen to 26 per cent in 2016.
Nick Curry, director at Rplan, said: “The greater transparency brought about by the RDR has certainly been a factor in fees being more competitive.”
The greater transparency brought about by the RDR has certainly been a factor in fees being more competitive.Rplan discontinued trail commission charged on its customers funds seven months ahead of the FCA’s sunset clause deadline.
At that time, around half - 48 per cent - of Rplan’s clients were affected by the switch and 83 per cent of these – or 40 per cent of all the platform’s investors - are now better off as a result of the change, with an average saving of £27.64 per year.
According to the firm, the largest amount saved by a client is £265.78 a year.
However 52 per cent of Rplan’s clients were unaffected by the changes because they were invested in share classes introduced from March 2014 that already met the new requirements.
ruth.gillbe@ft.com
