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Openwork ties advisers to DIFs post RDR

by Jun Merrett on Dec 06, 2012 at 10:32

Openwork ties advisers to DIFs post RDR

Multi-tied network Openwork will make it compulsory for the majority of advisers to use its distributor influenced funds (DIF) Omnis Investments from next year.

From the second quarter of 2013, the network will move from allowing its advisers to use its current investment panel of 35 fund groups instead making it compulsory for the majority to use it’s the Omnis Investments range.

Openwork will select a small number of advisers who will be able to use a wider range of investment, who will still use Omnis as their core investment offering.

Omnis Investments currently offers a range of fund of funds run by Octopus, and single manager funds run by Threadneedle.

Philip Martin (pictured), propositions and marketing director at Openwork, said the firm was looking to expand its offering and have ten fund groups on the Omnis panel.

'From next year we will expand the Omnis offering and a small number of advisers will have a wider remit beyond Omnis, but it will remain their core investment offering,’ he said.

'We've decided to mandate the rest of the advisers to Omnis because we want simplicity in the process and deliver high quality investment management and quality choices to the advisers.'

8 comments so far. Why not have your say?

Adam Grant

Dec 06, 2012 at 11:54

Why the hell are they doing this? 2.3% AMC plus 0.5% platform charge, plus 1% ongoing adviser charge! Who the hell is going to pay 3.8% charges p.a. and how this TCF?

Good luck Openwork,...!

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Jonathan Kirby

Dec 06, 2012 at 12:14

Yet another unintended consequence of RDR providing still more consumer detriment.

Why would the deaFSA not listen to those of us at the coalface who know?

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Dec 06, 2012 at 12:43

Costs are very scarey - I have looked at the Omnis Funds - TER 2.07% is what is stated on the site, so wouldn't the adviser charge of 0.5% be historically included within this - if they post RDR have a clean charge then the TER will reduce to compensate for adviser charge - so could be 1.57% + 0.5% platform and then the adviser charge between 0.5% to 1%, so just close to 2.5% rather than 3.8%. Still expensive I agree. The MultiManger is only 0.5% behind this charge.

But what can a restricted adviser do ? limited ongoing advice solution - more of a ongoing sales call

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Mad Eyes

Dec 06, 2012 at 14:44

RDR - TFC = ?? (answers on a postcard)

The FSA are just watching and waiting and patiently sharpening their collective pencils ready for an absolute goldrush over the next year or so. Get your cheque books at the ready boys!

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Jonathan Kirby

Dec 06, 2012 at 14:56

@ Mad Eyes

I make that 16,355. Is that the cost of the levy next year per adviser?

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Dec 06, 2012 at 15:51

I was curious and just had a look at this. the "clean" shareclass was 1.32% ter. As there are only three multimanager funds, presumably a client would be risk assessed and then chucked into whichever mixture of the funda met their risk profile (although 63% equities and 37% bonds doesn't seem that "Balanced" to me).

I can't see why you would use a platform, all the same custodian, so I would have thought rebalancing would be easy and presumably openworks back office system can do all of the admin? Therefore a 0.68% pa adviser charge per annum (to monitor your two/three funds!) would bring you in at about 2% which is I suppose is sort of acceptable.

Scary proposition though, because if the fund performance is rubbish your going to have a few difficult client conversations about not being able to switch to anything else!

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Steve Young (Sense Network)

Dec 06, 2012 at 18:10

Is this advice? There may be many shades of restricted advice but we used to call this tied. The funds are expensive when compared with the whole of market and are priced to enable Openwork to skim off their share.

Just as a wider point: if an adviser is restricted to Omnis only, how can they justify 0.5% ongoing advice for reviewing which fund of three a client should be in?

Independent advice delivers the best outcome for consumers and the competition it generates keeps prices down and encourages innovation. Vive la diference!

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Dec 09, 2012 at 18:17

Interesting insight from the above when OW haven't even launched the funds or declared what the charges are going to be!

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