Wealth Manager - the site for professional investment managers

Register to get unlimited access to all of Citywire’s Fund Manager database. Registration is free and only takes a minute.

What does platform price war mean for wealth managers?

What does platform price war mean for wealth managers?

Fears that platforms would negotiate vastly superior pricing deals with fund groups have proven unfounded, with wealth managers still able to maintain a competitive edge.

Hargreaves Lansdown, Skandia, FundsNetwork and Bestinvest have all revealed the average annual management charges (AMC) they have agreed ahead of their new pricing structures coming into force next month. These range from 0.52% to 0.64%.

While discussions on pricing between a number of national wealth managers and fund groups are ongoing, some discretionaries say the terms negotiated by the platforms merely close the gap on their existing pricing.

Jaime Arguello (pictured), head of multi-manager at Barclays Wealth and Investment Management, confirmed the bank’s wealth arm generally receives better rates than its platform, Barclays Stockbrokers.

‘We get very competitive prices for mandates,’ he said. ‘It is probably cheaper than super-clean shares. It is not so much cheaper now, but it is still more favourable,’ he added, in reference to platforms, owing to the fact the firm is allocating ‘several hundred millions’ to funds.

Similarly, Nick Sketch, senior investment director at Investec Wealth & Investment, said the terms negotiated by platforms are ‘consistent with what we would have expected’, adding that they have narrowed the gap.

‘Because of our size, we get access to very cheap units,’ he said. ‘But are they much cheaper than the headline rates announced so far? No, not at all.’

Société Générale Private Banking Hambros CIO Eric Verleyen said he believes the pricing issue is more of an issue for ‘smaller wealth managers’ as his bank is able to benefit from its scale.

Wealth managers across the board insist pricing is not the overriding concern when selecting a fund. Brewin Dolphin head of portfolio strategy Guy Foster added: ‘Our approach has always been to find the best ways of implementing our investment strategy for clients and cost is just one of the factors we look at when making that decision.’

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play Volatility spike: How ETFs can soften the blow

Volatility spike: How ETFs can soften the blow

ETFGI’s Deborah Fuhr discusses the role of ETFs in client portfolios during volatile market conditions

Play Winter market warmers, the post QE world and timing the Fed

Winter market warmers, the post QE world and timing the Fed

This week’s episode of Investment Pulse looks at the winding down of quantitative easing, whether to try and time a US Federal Reserve rate rise and if strong seasonal performers can reverse recent market slumps

Play JPM’s Negyal: Back divis to temper EM volatility

JPM’s Negyal: Back divis to temper EM volatility

Omar Negyal, co-manager of the JPMorgan Global Emerging Markets Income trust, says a dividend approach to emerging markets reduces the volatility of investing in the asset class.

Wealth Manager on Twitter