Cofunds’ new fee cut shows shift to advisers

Platform experts have said Cofunds’ move to remove its annual £40 charge for clients who use unbundled share classes puts it back into contention to compete for smaller portfolios.

The platform removed the charge last week and said it was the “first of a number” of benefits clients would see now it has become fully owned by Legal & General.

Holly Mackay, managing director at The Platforum, said the move showed Cofunds had become “more competitive for smaller accounts where previously the fixed fee element made them look uncompetitive”.

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“Possibly more interesting is how we again see platform pricing converging to a point where it is often a differential of 10bps between top and bottom,” Ms Mackay said. “This is interesting when assessed against the sometimes blasé attitude towards clean share classes where this 10bps difference is shrugged off by some.”

She added although the fee was small its removal had made an impact on platforms’ relative pricing.

Mark Polson, principal at The Lang Cat, welcomed the cut in fee but said Cofunds needed to make the rationale for the change clearer.

“I cannot see a clear narrative for the change,” he said.

“The company doesn’t need to do it unless it is going after £20,000 pots.”

Mr Polson said when other platforms had changed their pricing, such as Aviva, it had been accompanied by a clear strategy of which type of clients the business was targeting.

“Aviva set their cap at a particular market segment and have not bothered to build things that don’t fit that segment,” he said.

“There is not as much functionality but they say ‘who cares’ because they don’t need it. If I was seeing that from Cofunds, that clarity of messaging, I would have been unconditionally supportive but I don’t see that client focus.”

He added Cofunds’ rationale for the price cut, being partly because it was now owned by a larger company, did not fully add up.

“The company talked about the muscle of L&G which is interesting to me because the way you get commercial muscle is by being profitable, which Cofunds is.

“It doesn’t take very many £40s to wipe that profit so I don’t know what it is achieving.

“They can’t say they have cut their price because they are owned by someone bigger. That sounds like because they are bigger they can stop making profit.”

Bella Caridade-Ferreira, director at Fundscape, said it showed the platform was potentially refocusing itself.

“Institutional sales now tip the balance for Cofunds and as a result L&G is reminding advisers of its credentials and to a certain extent re-purposing the Cofunds platform for advisers,” she said.

“L&G has owned the platform for six months now and it’s left things alone. It now wants to make its mark on Cofunds and remind advisers that it is an adviser platform and that it is here to stay.