Skandia boss Peter Mann has hit out at the 'suicidal pricing' of rival platform providers which he branded unsustainable.
Mann, who is UK managing director of Old Mutual Wealth, would not be drawn on which platforms he was criticising and said Skandia did not need to drop prices as it had scale which competitors lacked.
In November 2012 AXA Elevate unveiled a new charging structure cutting prices by almost half for assets under £100,000.
Skandia's rival platforms Cofunds and Fidelity revealed their unbundled charging structures at the start of 2012, both undercutting Skandia. Fidelity unveiled a flat rate charge of 0.25% with Cofunds announcing a tiered structure with an average charge also of around 0.25%.
'There is currently some suicidal pricing taking place in the market which is out of necessity rather than desire. Nobody wishes to price their product suicidally and no-one can sustain suicidal pricing for any period of time,’ said Mann.
‘The reality is this is a scale game. We have scale so we don't need the suicidal price. In order to gain the scale, some people will suicidally price, my view is it is an irrational and unlikely to succeed approach.’
Mann said IFAs should look out for platform providers altering their prices once they had achieved a certain level of assets.
‘The three most important things for an IFA are scalability, sustainability and functionality. If I was an IFA the last thing I'd want to do is pick a platform because it appeared financial attractive on day one, then on day 900 I had to change my platform from A to B. That is not economically efficient. In any market that sort of thing persists for a relatively short period of time, they get scale then they're going to adjust their pricing.'
Mann said Old Mutual Wealth was more than just a platform operator in the way Skandia has been.
'A platform is a vehicle and enabler. We want to move away from being more than just a platform. It's quite difficult to differentiate yourself as a platform or wrap,’ he said.
'If we create innovative fund solutions like the forthcoming Select range, that's much more something that is a noble cause to be known for because it differentiates you.’