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FundsNetwork spies adviser demand for platform charging change

by Michelle Abrego on Dec 06, 2012 at 07:46

FundsNetwork spies adviser demand for platform charging change

Fidelity FundsNetwork has said it is in talks with advisers who want to change the way they pay for platforms, with IFAs picking up the bill rather than investors.

Speaking at the Institute of Economic Affairs' The Future of Distribution in Financial Services conference, Fidelity head of business development Ed Dymott (pictured) said the platform had been in talks with advisers over the change.

He said he had been told by some advisers: '" I charge my clients a fee and as part of that fee I will pay for the platform administration services myself." It's not commonplace but possibly over time that will [take off].'

Cofunds sales and marketing director Alastair Conway said that current platform charging structures, which see investors paying directly for wrap services and through fund rebates on fund supermarkets, required platforms to prove their worth to investors.  

'It is incumbent for platforms to think about how their technology is helping the adviser and if the investor can see the value in it,' he said.

6 comments so far. Why not have your say?

Philip Melville

Dec 06, 2012 at 08:45

These guys are so used to playing silly games with charges.

Heaven forbid that unbundling will make them have to learn how to run a business on the basis of adding value.

Who other than the investor or client in basic terms pays anyway when the smoke and mirrors have disappeared.

Still I suppose if you and the providers have been used to concealing your business economics then transaparency will come as a bit of a wake up call.

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You must be joking

Dec 06, 2012 at 08:46

I can see a lot of logic in this, we pay for our reserach software and back office system and, in many cases, the platform is of as much benefit to us in delivering our services as it is to the client.

Having said that, what we mustn't forget is that all our income is derived from client fees so in effect, the clients are paying for these services already.

So, if an IFA pays for the platform usage, but then bills the client for a corresponding amount, not much has changed really.

There are way too many swings and roundabouts in financial services these days!

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sol trader

Dec 06, 2012 at 10:06

For this to work, Fundsnetwork would need to provide an IFA service that could not be accessed by the general public or, at least, have much lower platform costs for clients who go through an IFA than if they hold funds directly.

Otherwise we just turn into the expensive dinosaurs. The trouble is we have just been too good at acting as debt collectors for the Regulator, Treasury, MAS, FSCS, FOS.

I do use Fundsnetwork and, if they are listening, it would be useful if they could provide a Free stockbroking system to access shares, inv trusts etc.

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Bob Donaldson

Dec 06, 2012 at 14:40

They need to get everything else working before taking on any more ideas. Simple tick box to turn income on for example and numerous other bits and pieces.

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Half Baked

Dec 06, 2012 at 16:52

Fidelity FundsNetwork has easily the worst online access, splitting ISA's into contribution years instead of total holdings e.g. Sort out the user interface first

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Jon Lowson

Dec 07, 2012 at 18:47

I've been asking Platforms about this for the last couple of years and think its a great idea. Its a slippery slope for Platforms from here though and its all downhill as far as I can see.

At the moment, Platforms are marketed and sold to clients, like a product. The fact that the client pays means that a comparison has to be done by the adviser and a recommendation made, to identify the most cost effective service for them. Hence the FSAs interest in whether advisers are whole or market/independent with their use of platforms.

By allowing advisers to pay for the platform, a comparison would no longer be required. If the client buys the IFAs advice services, they indirectly buy the platform. Who that platform is, becomes a non-issue for the client and the platform would therefore lose prominence. Platforms would be effectively conceding (the reality), that they are just custody and trading platforms with a few clever tools.

I also believe that IFAs could legitimately use a single platform, this way.

This is a recipe for a platform price war though, as they would have to compete to attract and retain position as an IFAs sole platform provider. I can easily imagine platform charges as low as 0.2% in two or three years time.

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