Trail removal ‘will hit Brewin Dolphin hardest’ post-RDR

On the fund group side, Jupiter Fund Management will be the most affected by the RDR, according to Duncan, as the firm has the highest percentage of retail clients.

‘Schroders will also be impacted because they have a big retail base,’ said Duncan. ‘But they also have a big institutional business, so the effect is not as pronounced. And they are less reliant on the UK than Jupiter.’

He added Liontrust will be affected, as it has a more retail-focused business, as will Henderson, due to the large legacy business the firm acquired via Gartmore.

Robin Stoakley, head of UK intermediary at Schroders, said the removal of trail commission is actually revenue neutral for the firm.

‘We went to clean-fees for some; others we are paying rebates. As a consequence of the RDR, we are expecting to see pressure on total costs, all of the value chain will be squeezed.’

He said the part of the RDR that is costing a significant amount is the launching of new share classes and fund ranges. ‘You’re talking six figures, annualised,’ he said of the cost.

‘One of the consequences of the RDR is there will be more [money] channelled through discretionary managers, rather than advisers directly,’ said Stoakley.

‘Expect to see, over the next few years, more consolidation in the platforms and asset management industry as a result of costs going up and margins coming down, and increasingly seeing assets channelled to a smaller number of funds,’ he added. 

‘We do expect to see more execution-only investors buying funds under guidance rather than advice – for example, via Hargreaves Lansdown and Chelsea Financial Services – rather than more ‘direct to clients’ business.’

All down to the buyer

Stewart Cazier, head of product at Henderson Global Investors, said trail commission is one of the least important factors of RDR for the firm. ‘There’s no dramatic impact on our revenues or margins from the new share classes,’ he said.