Wrap margins are starting to widen for IFAs
A breakdown of Nucleus' average annual charges across both passive and active funds on its wrap shows that 0.74 per cent of the charge now goes towards financial advice while only 0.5 per cent goes towards asset management.
Nucleus takes a 0.35 per cent cut, representing an average total annual charge of 1.59 per cent.
"The role of asset managers and platforms and the margins they command will be under strain from now on."
Novia Financial chief executive Bill Vasilieff believes that "the value chain" is beginning to shift but adds that Nucleus's figures may reflect the trend towards cheaper passive investments.
He says: "There is definitely a trend towards passive investing and the charges passive managers take are far less. Maybe that is what Nucleus is experiencing. There are more IFAs using exchange traded funds and tracker funds.
"I think that this will put pressure on active managers to perform to get the prem- ium that they charge or they will have to bring costs down. but I do think the value chain is starting to move."