In the bad old days, management charges levied by investment providers would include a sum to provide a commission payment to the platform provider or adviser, bundled into an overall share class figure.
Post RDR, with commission payments outlawed, the industry is having to get its collective act together and present the cost of an investment as a ‘clean’ share class – ie net of any fee payable to advisers or fund platforms.
Some providers will have to be dragged kicking and screaming to do so, but many have already announced plans to offer clean share classes by the end of the year.In reality, this should present no change to the client or the adviser in monetary terms, but should be fairer and more transparent. The adviser will charge a fee for the advice and fund platforms will have to declare any fees they charge.
From an adviser’s viewpoint, the HMRC ruling that any commission rebates should be taxed on the investor, unless in an Isa, has strengthened the argument.
Product providers must simply get their acts together to ensure the investments they offer can be delivered in a clean share format. Some providers will have to be dragged kicking and screaming to do so, but many have already announced plans to offer clean share classes by the end of the year.
Frankly this is another indication of the lack of preparation providers have carried out in the run-up to the implementation of the RDR. My view is that clean share classes should have been put in place from January this year.
Carl Lamb is managing director of Almary Green
