The most vocally debated topics continue to be the move to ‘superclean’ shares, implicitly endorsed by the FCA.
Of course, these bespoke share classes are but a concept. Fund groups afraid of upsetting smaller wraps might actually be reluctant to show in the cold light of day the preferential deals they give to larger rivals. Fidelity has already stated it is not planning to launch any new share classes currently.
And whether or not these shares will be cheaper than ‘clean’ shares with rebates (so, ‘sort of clean’ shares?) such as those being proffered by Skandia remains to be seen.
Other well traversed subjects have included the business model pressure for larger platforms as a result of the ‘sunset clause’ removing legacy rebates by 2016, which some state could sound the death knell for adviser legacy trail.
But perhaps the most important potential consequences highlighted in the last week relate to the one group the Financial Conduct Authority is tasked with protecting first and foremost: the end consumers, especially those with more modest investment pots.
The cost paid collectively to the platform and fund manager is of course cheaper; adviser charging under RDR could seem an optional extra
FTAdviser published a report this week based on a comparison of unbundled versus bundled costs for a representative Cofunds portfolio held by an advised investor with less than £100,000 invested.
In the case of 18 out of the 19 funds listed the total cost of investing increased after the platform’s move to unbundled charging last year. In some cases the rise was marginal; in others it was much more significant, with increases of as much as 0.54 per cent and 0.3 per cent.
A key driver of this was the platform charge, which for a sub-£100,000 investor is 0.29 per cent. In the pre-RDR world, the platform charge bundled into the fund cost would typically have been 0.25 per cent. To get below this level an investor would need a pot of at least £250,000, at which point the charge drops to 0.23 per cent.
The charge tapers down as one gravitates up the value chain, so that for a £1m+ investor it is 0.15 per cent. Nonetheless, the net result is that without the cross-subsidisation inherent in a flat bundled charge, lower-value investors stand to lose out while those at the top will likely cash in.