Independent advisers should not be concerned over the threat posed by the clean share class wars that some say are likely to be a boon to ‘restricted’ advice as clients simply do not place importance on investment costs relative to service and meeting objectives, an IFA has argued.
In an interview with FTAdviser, Peter Adcock of Nottingham-based Adcock Financial said the debate over ‘dirty’, ‘clean’ and ‘superclean’ share class prices was largely being used by platforms to promote themselves over their competitors.
He said in contrast clients did not seem to care, citing the evidence of an email sent to his clients highlighting the varying costs of clean and so-called ‘superclean’ share classes that received no response whatsoever.
Mr Adcock said: “I did an email to all my portfolio management clients warning about this and I didn’t get one call about it. I think superclean and clean is an issue which exercises the minds of the industry far more than the outside world.
“Clients are more bothered about servicing, performance and, far more importantly, meeting their objectives.”
Last month (27 November) it emerged that fund groups could offer better rates to restricted advisers in return for distribution, sparking worries that this could give restricted advisers a competitive edge and pose another challenge to IFAs in the wake of the Retail Distribution Review.
One of the authors of the research that prompted the debates, Clive Waller of CMC Research, stated during a lively Twitter debate that the market was “moving towards commoditisation” and “a lookalike high street” as the wider industry moved away from independence.
Another IFA, Mark Wooldridge, argued that fund groups giving better rates to restricted firms which were unavailable to customers going direct could be in breach of the FCA’s Conduct of Business rules.
However, if clients prioritise service and objective-meeting over cost of investing, this could mean worries that IFAs may lose their competitive appeal are unfounded.
Mr Adcock added: “Cost of investment was generally third or fourth out of five in terms of importance [to clients].
“[The share class pricing debate] is almost used between the platforms as a ‘yah-boo use us not them’ and in the real world clients don’t care much.”
The full interview will be published later today.