PlatformsAug 1 2018

AFH scraps platform fees for new clients

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by
AFH scraps platform fees for new clients

AFH has scrapped platform fees for its new clients in a move to offer better value for money.

The advice firm has also pledged there will be no increase in adviser charges, no cuts to adviser remuneration and no change to AFH's investment proposition for now.

To allow for a comprehensive review of their current portfolios, existing AFH clients’ platform fees will be removed by 1 November 2018.

The advice firm had previously told FTAdviser it would be taking such action, and confirmed it would be happening by the end of 2018.

Alan Hudson, the chief executive of AFH, said: "Unlike ongoing adviser charges and active fund management, which add direct value to clients, platforms are a dead weight and only subtract from performance.

"The FCA’s recent report on the platform market study suggests price isn’t the primary reason advisers pick a particular platform; the service to the adviser is. That would be fine if the adviser was paying for it, but they aren’t.

"If advisers had to pay for platforms, they wouldn’t be as expensive as they are now."

According to AFH's figures, platforms charge an average of about 0.3 per cent a year, which for a client with a £50,000 pension would add up to more than £12,500 over 25 years, reducing the final pot from almost £175,000 to around £160,000, assuming 5 per cent annual growth.

The FCA has expressed interest in whether clients are getting value for money from the platforms advisers use, particularly in light of the fact the adviser chooses the platform but the client pays for it.

In its interim report on the platform market out on 16 July, the FCA said it had a number of concerns about price transparency and complexity.

The findings included the fact 30 per cent of advised clients either did not think they paid for their platform, or were unable to say whether they did or didn't.

But the regulator said any crackdown on charge transparency on platforms will have to wait until firms have got to grips with Mifid II.

Mr Hudson said: "I think between the FCA and their own clients, advisers are soon going to be facing some tough questions.

"AFH’s removal of platform fees, combined with our institutionally priced segmented mandates, make for a compelling answer to those questions."

AFH, which is listed on the London Stock Exchange, has about £3.2bn in funds under management and its turnover in the half year to 30 March 2018 was £22.7m, up more than 60 per cent on the same period the year before.

damian.fantato@ft.com