Earlier this week the FCA published its terms of reference for its platforms market study, which will look at whether platforms aid good investor decisions and whether they offer value for money.
The FCA says it wants to understand if platforms are “able and willing” to negotiate competitive pricing on investment charges.
Money Marketing spoke to seven major adviser platforms to understand their approach to negotiating discounts with fund groups.
We negotiate improved terms wherever possible, and pass on all discounts to customers in full. The discounts secured reflect Aviva’s brand strength, our distribution reach with advisers, and our position as one of the fastest growing platforms by net asset growth.
We will always discuss getting discounts on charges with fund providers, but they are generally dependent on the volume of assets under administration a platform has in the fund. In line with our long-standing approach to discounts and rebates, we would always pass the whole discount on to the customer.
We do not negotiate any specific deals with fund managers. Discounts are often very small and we believe it is more beneficial for advisers and consumers to be able to clearly understand the total cost of ownership, with a simple charging structure. We will, however, add share classes on request from advisers who may have negotiated their own deals.
At the moment, platform customers are deemed as individuals by fund providers. We would be in favour of platforms’ scale being reflected in fund manager pricing in the same way scale is reflected in the wholesale fund market.
We predominantly offer clean share classes in our investment centre but for share classes where fund managers continue to pay rebates we pass on those rebates in full to the customer in the form of units.
We are moving into a world where platforms will end up working with a more limited number of fund groups on a deeper basis, utilising the rich data set that platforms have to look at how they can construct better value for money propositions for clients.
While unit rebates are still allowed these are generally too small and complicated to have any real impact for investors and the move to clean pricing has all but removed any ongoing negotiation between platforms and fund managers. Allowing cash rebates, as long as they are paid in full to the customer, would enable platforms to more easily negotiate discounts for investors, increase competitiveness in the market and enable the industry to simplify the share class mess left behind by the RDR.