Citywire printed articles sponsored by:
View the article online at http://citywire.co.uk/wealth-manager/article/a636889
Trail removal ‘will hit Brewin Dolphin hardest’ post-RDR
by Emma Dunkley on Nov 26, 2012 at 07:00
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.
News sponsored by:
Today's top headlines
More about this:
Look up the shares
- Brewin Dolphin Holdings PLC (BRW.L)
- Rathbone Brothers PLC (RAT.L)
- Brooks Macdonald Group PLC (BRK.L)
- Jupiter Fund Management PLC (JUP.L)
- Schroders PLC (SDR.L)
- Hargreaves Lansdown PLC (HRGV.L)
Aberdeen Live supplement: Fundamentals point to ongoing flows and solid returns from EMD
After a record year for inflows and market-leading performance in 2012, emerging market debt has taken a large step towards the mainstream. Our recent debate covers the outlook for the asset class this year and where opportunities can be found.