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Customers may be hit by cost of unbundling

Advisers are concerned that Cofunds’ unbundled pricing model will result in higher costs for consumers.

Last week, Cofunds revealed the details of its unbundled proposition. Assets up to £100,000 will be charged 0.29 per cent while between £100,001 and £250,000 they will be charged at 0.26 per cent.

Assets between £250,001 and £500,000 will be charged 0.23 per cent, between £500,001 and £1m will cost 0.2 per cent and over £1m the charge is 0.15 per cent.

Cofunds says it is requesting a clean share class from fund managers for the unbundled model, which would equate to 0.75 per cent on manypopular funds, and has removed switching charges. The unbundled proposition is to launch around the middle of next year. Clients can stay with the bundled proposition if they wish.

Thomas and Thomas Financial Services managing director Darren Lloyd Thomas says: “Unbundled pricing is sadly going to come at a cost for the customer.

ransparency is all very well but what people really want are low costs. Because platforms can use the bundled, less transparent model to negotiate better prices from fund managers, it is ultimately the investor who is losing out in an unbundled model. I think initial costs on an unbundled structure will rise.”

But Investment Quorum chief executive Lee Robertson says: “The charges seem cheaper than I would have expected. I think the scale the firm has achieved will enable it to dictate the share class.”

Cofunds says it will not follow Fidelity’s lead in publishing the fund manager payments it receives from its bundled proposition, which will continue to be offered until the FSA changes the rules on rebates.

It says it is expanding its product range and will soon make a junior Isa available via its execution-only service. It is also launching a pilot with stock broking firms to make exchange traded funds, individual securities and investment trusts available via the platform.


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