Adviser Rant: Share class reform has been hijacked

Carl Lamb

January 2013 was supposed to bring us a brave new world of transparency, with no fees hidden behind commissions and absolute clarity for the client.

One year on, the advice sector has indeed stepped up to the plate and made substantial changes to its business model. However, the picture among platforms and fund providers is rather different: we are knee-deep in a quagmire of confusing fees and charges.

The concept of clean share classes is a good one. In theory, all the associated charges – other than the fund management fee –would be shown separately; the client would know exactly who was getting what.

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The sad truth, however, is that the concept has been hijacked; different platforms are negotiating different “clean” share deals with fund managers, and their availability isn’t consistent across fund providers.

Add to that the emergence of “super-clean” classes offering special deals on some platforms, and it is no wonder that both clients and advisers are confused.

In many cases, the client ends up paying more for a “clean” investment than they would have for old “dirty” share classes.

It’s time for platforms and fund providers to put a clear, consistent share class framework in place. If they can’t do so, maybe the regulator should step in.

Carl Lamb is managing director at Almary Green Investments