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Disclosing the best deal

Kira Nickerson asks that if an investment bond on Cofunds is compared with the price via Funds Network, Skandia, Nucleus, Ascentric or Standard Life, is it really possible to say which offers the best deal?

It is, in the case of the investment bond, Cofunds offers on platform together with Legal & General (the L&G portfolio bond). This only has a charge for the fund or funds selected, expressed as a single RIY figure. There are no extraneous costs for the platform compared with the fund or activity fees, etc. In about 80 per cent of cases, the total RIY for a fund bought via the bond is less than the RIY of the fund bought directly from the fund manager.

This is straightforward and transparent. We believe that it is in the nature of platforms to move product offerings towards a commoditised and homogenous standard.

Where comparisons are difficult at present is on those platforms where there are fund charges, activity costs for dealing, paying dividends, etc, ad valorem administration fees, clipped interest paid on cash, etc. This is not inherent in the nature of It simply mirrors how some discretionary asset management services charge their clients.

In our discussions with the FSA, we will be exploring how disclosure can be improved. We think as competition continues to increase, platforms will be under pressure to provide a clearer guide for users on the total costs of their services. We also believe clear and effective disclosure will be an important element in building the trust of intermediaries.

Andy Creak
Managing director
Cofunds
London

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