Cofunds strategy clash pushed Williams out

Difficult to know how well or otherwise Brett did. For my part I was a bit concerned as he actually joined (so I understand) from the Selestia arm of Cofunds. This was the Old Mutual fiefdom and from my perspective anything from Selestia or Old Mutual did nothing but damage to Skandia.

To see Charlie back is like having an old pal back at the helm. I just hope they persist with bundling and fight their corner with the FSA, as this is without any doubt the best outcome for clients. As one of my own largest clients and with my 'client hat on' I am perfectly happy with the bundled proposition and would really not be happy with the alternatives which are being driven by those with a vested interest and whose proposition while cloaked in the false aura of respectability, in fact disadvantage clients significantly.

Their mantra is very much like all fundamentalists. It looks good in theory but when you see the day to day practice it is nothing more than harshness. Great for the advisers and perhaps not so great for those being advised.

I’m sure that the unbundling Ayatollahs will respond with outraged indignations. But consider these points:

1. If the client knows exactly how much is being invested out of his contribution and what the ongoing charges are, why would he care about anything else? Bundling allows him to have the platform subsidised, and often allows better buy in prices than achieved if buying directly. Wee all know what would happen if we unbundled – increased costs.

2. The ‘virtuous’ wraps in the main don’t have tiered charges and charge for every pound on the wrap.

3. The insist on clients having one of their bank accounts, which pay awful rates of interest, which are further reduced by the wrap charge and then the cheeky so and so’s help themselves when it comes to their fees.

4. Advisers shove Investment Trusts othe Bank Accounts and ETFs onto wraps. Bank accounts on wroaps are a disgrace. Interset rates are low enough without taking adviser and wrap bites out of them. Why put a CTF on a Wrap? It defeats the purpose of what is supposed to be a cheap and low charging investment – the same goes for Investment Trusts.

Don’t forget there is invariably double charging on a wrap – the adviser fee and the wrap fee, and as I said there is a very flaky rationale for including some of the items on a wrap.

Whilst agreeing with the thrust of Harry Katz' argument, I believe the criticism and negative veiw of bundled structures could be addressed by disclosure of rebates, and inclusion of funds and managers where no rebate is paid, which is not the case at present, even if this meant that the platform had to levy a charge.

The market would then decide. If you wanted to hold particular funds, but at extra cost, you could do so, knowing the cost implication.

Banning rebates is certainly not the answer, it will only reward inneficiency.

Harry, i can only conclude that you have either not looked at the full compliment of wrap platforms out there or that in general you do not see the full benefit of wraps to the client or the advisor.

Unbuddling means the client knows who they are paying and for what. Confunds etc leave the client still thinking that they are getting something for nothing by way of advice. The client does not sit there and say i except being charged by the provider each time a change is made, in fact most probably have forgotten there is a charge, excluding any charge you may also be making.

What is in important, is that on a 'true' wrap you have the full range of investments available to the client all under one roof and any product that it can be used in, including ETFs, Structured Products, IT, offshore funds etc and the client knows what the platform is charging for and what the adviser is charging, without having to refer to the KFD to find out, as they can go on line and see for themselves.

The bank accounts are only there to have some cash from which the fees can be paid or if the client doesn't want to be invested either in part or in full. Yet again, if the charges are the problem this is no different to Cofunds, as all providers have to collect costs from some where.

The charges of the adviser are between the client and the adviser, so they can opt to take nothing if they wish.

For goodness sake !

We have glass in our windows so that we can see what is outside ?

Every other aspect of our lives is striving to bring the light of transaprency to bear to make sure that we get the value we deserve.

What is it you want - to make the tide go out when it should be coming in ?

And you all denigrate regulation !

Cofunds has been a business in crisis ever since it was launched since the basic business model does not work. It does not earn enough for what it does. Just look at the accounts! Yes it is 'successful' in attracting clients and money - but it doesn't earn enough so the result has been a huge degree of subsidy by the ever suffering shareholders. How long does that go on for?

Alarmed as I am at the goings on, I can see from the reports that, if I were Charlie Eppinger and only made £2.3m profit from £25bn under admin - AND - my CEO was advocating unbundling, I'd have wanted to change something.

Once again Providers (whether product or service) are clearly forgetting that they only have 2 sources of money: clients' and shareholders'. They get voted on or off Boards and sacked ("mutually" or otherwise) by shareholders based on what the shareholders know and see. Hiding a major true source of revenue from clients, where that revenue is - WITHOUT MUCH DOUBT - the clients' own money (even if recycled back from Jupiter etc) is just plain wrong in 2010.

As Advisers we've had hard disclosure since 1996-ish. It's long overdue that the Investment community had the same. Then, with the knowledge, the power is back where it belongs: with the clients and their Professional Advisers.