Close Brothers Asset Management’s chief executive Martin Andrew has said the firm will be ‘restricted and proud of it’ post-retail distribution review (RDR), but questions whether the regulator should review the basis of its new definitions.
The national firm said it will not comply with the FSA’s new RDR independent standard as it offers its clients a unitised range. This represents a criteria Andrew views as arbitrary, given that firms that have model portfolio services but no internal funds will be independent even if both firms take a whole of market approach.
Andrew was keen to highlight Close’s whole of market and unbiased approach to underlying fund selection nonetheless. ‘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 Two” 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 asked.
Head of wealth management Andrew Fay added the firm had decided not attempt to avoid the restricted label, viewing it as short-termist and not in the spirit of the rules.
‘What we did not want to do is to find a way just to be independent, which goes against what the FSA is trying to achieve,’ Fay said.
Andrew added: ‘Paradoxically, regardless of what one thinks of the word, what it has done has given the industry the impetus to spend a lot more time communicating the actual substance of its proposition and what it does, rather than being a bit lazy and hiding behind a single word, which while positive, doesn’t actually explain what the proposition is.’