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In a restricted world is there still value in being independent?
by Danielle Levy on Jan 24, 2013 at 12:27
Nonetheless, Andrew highlights Close’s whole of market and unbiased approach to underlying fund selection. ‘If we did not have funds in our proposition, we might be able to argue we were independent. That seems an odd anomaly, so if there was an "RDR II" it would be interesting to see if that was addressed.
‘I don’t see the difference of having something that is wrapped in a fund or a model portfolio. It has the same risk-return profile and exactly the same securities holdings. What relevance does whether it has a tax wrapper around it have?’ he asks.
Nonetheless, the firm is pleased it did not change its proposition to avoid the restricted label, as this could prove short-termist and not in the spirit of the rules.
Simon Lough, chief executive at Heartwood – which will be restricted post-RDR as it has an internal multi-asset fund range – stands by the decision he made three years ago to not adapt the firm’s model to meet the rules, particularly following the SRA and ICAEW’s decision to allow restricted referrals.
‘This is exactly the view I took when I became CEO three years ago,’ he says. ‘I looked at this and felt it was not going to benefit our clients to be independent.’
While Lough is very positive about the principles underpinning the RDR – not least improved transparency and the removal of trail commission – he believes the FSA’s decision to change the basis of independence could prove a mistake as it is confusing for consumers.
However, he has been encouraged by comments made by Martin Wheatley, chief executive of the incoming Financial Conduct Authority, at a recent conference, telling investment managers they should not fear being restricted as clients would be aware of the services they require.
Regulation has driven consolidation, particularly on the back of increased regulatory costs and scrutiny, and caused some to change their models by moving into new markets or areas.
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