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Defaqto: Platform charges should be ‘one of the last considerations for advisers’


Fund charges should be one of the last considerations for financial advisers when it comes to selecting the right platform, according to Defaqto.

The independent financial research firm says platform and fund charges are only one element which financial advisers need to consider when selcting a platform, adding that arguably it should be one of the last considerations in the process as it is more important to get the right one for the client.

Defaqto asserts that aside from looking at costs, advisers need to exercise rigid quantitative and qualitative analysis, taking into account factors such as financial strength, the investment vehicles and wrappers accepted on the platform and the service they are likely to experience.

The Financial Conduct Authority confirmed at the end of last month that cash rebates will be banned from 6 April 2014 unless they are passed on to the client in full in the form of additional units.

Defaqto insight analyst for funds Fraser Donaldson says: “The cash rebate issue was the key remaining piece in the platform policy jigsaw and the FCA’s recently confirmed position on this will be welcomed by the industry – broadly speaking, it represents a sensible approach to dealing with this difficult issue.

“When it comes to charges, there are a number of areas, in addition to platform charges, that advisers need to consider. The final cost to the client needs to be looked at in terms of value for money, and not just pounds and pence. If a solution is more expensive but is more suitable for the client, a judgement has to be made about whether the extra expense is worth it.”


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There are 3 comments at the moment, we would love to hear your opinion too.

  1. Tell that to the FCA and MP’s who froth at the mouth over the issue of charges.

  2. Bored of all this noise with no substance 3rd May 2013 at 5:19 pm

    “If a solution is more expensive but is more suitable for the client, a judgement has to be made about whether the extra expense is worth it.”

    Er, is there some kind of special award today for stating the most bleeding obvious?

  3. Sometimes stating the bleeding obvious is necessary. The Emperors New Clothes may be a fairy tale, but it is a pity that we saw it in real life with the tech bubble and with the banking collapse. Fraser is doing what needs doing. In 1994 a Suitability report was called a justification letter and that is what we need to do with Wraps, I.e justify to ourselves, the client and the regulator our usage of that WRAP based in factors other than price alone. Phil Melville justifies his sole use of Transact while I justify use of 3 wraps a couple of platforms and individual direct product and providers. I don’t run a fresh Aequois or Synaptic report for every client.

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