Ever since the Financial Conduct Authority (FCA) moved to ban fund manager rebates for execution-only platform all eyes have been on Hargreaves Lansdown to see how the FTSE 100-listed market leader was going to react.
We didn’t have to wait much more than an hour after the FCA published its paper in April for a typically bullish response from the Bristol-based broker. Chief executive Ian Gorham said the company had seen it all coming and still expected to use its size and distribution power to negotiate deals with fund managers via 2013’s buzzword ‘super clean’ share classes.
Cue further speculation about the size of the discount Hargreaves could secure, from who, and what they would get for it a return. Essentially, what price the Wealth 150, or the core 30?
Well Hargreaves has given some clues, promising that the new charging structure would be revenue neutral, and vowing to get the best ‘super clean’ deals going.
Hargreaves is set to unveil its new pricing structure in the autumn, and brokers at Barclays have helpfully mapped out what it might look like.
Barclays has proposed two models, one (see table one) based on a pure management fee structure with a sliding scale of charges between 75 basis points (bps) and 35bps.
It has also put forward a second model (see table two) which factors in transaction fees which it estimated would lower the direct fees, as described in the previous model, by 7bps.
Barclays has tipped Hargreaves to flourish in the retail distribution review world but the charging structure it has set out looks a little high when compared to adviser platform fees, where clients with up to £100,000 will pay around 40bps at the top end and 12bps at the bottom. Of course there will be advice fees on top of these charges, so perhaps Hargreaves is banking on these having to be sufficiently high to make up the difference.