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.”