Industry split on Axa’s decision to cut 115 mirror funds

Industry split on Axa’s decision to cut 115 mirror funds

IFAs have hit out at Axa Wealth for limiting their clients’ choice for their own commercial reasons, in the wake of its decision to close down 115 funds.

The firm said in a statement earlier today that as part of its regular review process it looks at the funds its customers are invested in. “As is normal with this process there are sometimes funds that, for commercial reasons, we need to close; on this occasion we are closing 115 funds.”

Geoff White, director and independent financial adviser at Beechwood Financial Management, said that they key words in the statement were ‘for commercial reasons’.

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“Axa are not the first provider (and I suspect won’t be the last) to remove access to funds that are, let’s be honest, not making them enough money. If they were making them enough money, they’d still be available.”

Mr White said that it came as no surprise that most of the funds are still going to be available via their platform, for which they charge a fee.

“The fact that ‘advisers and their clients are free to move their money into a fund of their choosing’ is very generous of Axa, isn’t it? We as advisers can only provide advice to our clients in respect of the funds that are available in the particular product in question.

“Providers removing access to certain funds is, in my opinion, a thinly disguised attempt to restrict adviser and client choice and push us towards their platforms, where they have more control over the amount of fees they receive.

“I still find it hard to believe that providers get away with this sort of thing, which nearly always results in clients paying higher charges or less choice,” commented Mr White, adding that the Retail Distribution Review was meant to increase clarity and competition between providers and advisers and result in better outcomes for clients.

“I have yet to see any evidence that it has succeeded,” he added.

Danny Cox, a chartered financial planner at Hargreaves Lansdown said: “There are some pretty big name casualties on this list including Jupiter European (Life) and Special Situations (Life). Limiting the fund range will have commercial benefits however advisers will have to decide whether a smaller range works for them and their clients.”

However, Juliet Schooling Latter, research director at Chelsea Financial Services, said that from her understanding these funds are mirror funds, which are quite small and not economic, with Axa Wealth looking to concentrate on its Elevate platform.

“They are all insurance-linked funds, so they are just closing down that space of the business because it is not economic. I suspect it will be reasonably inconsequential, because the same funds will be available on their Elevate platform.

“I suspect it’s a dwindling area of interest and for the majority of advisers it won’t present a huge problem, although there will be one or two who have a larger exposure.”