View more on these topics

Don&#39t charge into CoFunds

I recently attended a CoFunds launch presentation in Bristol, keen to see what they plan to offer which will differentiate them from Skandia&#39s multifund products.

As you might imagine, they were evidently keen to avoid being compared with Skandia although I cannot imagine anyone else who attended not having that name very much in the forefront of their minds from the word go.

Some IFAs seem to think the whole CoFunds pitch is brilliant and plan to go for it big time but to my way of thinking they must surely be overlooking one or two very fundamental considerations.

For example, CoFunds&#39 minimum investment per fund is £1,000 whereas Skandia&#39s is £500. Thus, with Skandia, an investment of £5,000 will afford you a choice of up to 10 funds but with CoFunds a choice of only five. For a fund supermarket product, that is a big difference.

Second, the CoFunds wrapper is free of any product charge. This sounds good on the face of things but none of the buying-in charges to any of the funds available via CoFunds are discounted whereas via Skandia they are. In the great majority of cases, the discounts available via Skandia&#39s multi-fund products are of sufficient size that even with their own product charge the net buying-in charge is lower than each particular fund&#39s undiscounted buying-in charge. But, CoFunds will counter, via their product each IFA practice retains whatever discount it already enjoys (if any) with each particular fund manager.

Bigger IFA practices and members of networks enjoy various discounts throughout the market although presumably to varying degrees, depending on what has been negotiated.

This is where the problems start because each fund manager&#39s buying-in charges are going to vary according to the particular IFA practice.

Furthermore, discounts come, change and are withdrawn from time to time, so this particular landscape is an ever changing one. This makes it impossible toproduce a uniform key features document.

However, we know that the PIA are very keen for all charges to be explicitly disclosed, so if they are not in the KFD, then the IFA is going to have to schedule them in his letter of recommendation.

On top of this, the IFA is never going to be sure if the charges he tabulated in his last letter of recommendation are still the same for his latest letter of recommendation. So for every recommendation he writes, each and every IFA is going to have to check out and include in his letter a table of current buying-in charges for each and every fund he plans to recommend.

This, of course, is going to add considerably to the time involved in documenting every recommendation in a compliant manner and is exactly the sort of burden most IFAs can well do without. I wonder if anyone at CoFunds has thought of this because if they have then they are keeping very quiet about it.

Julian Stevens


WDS Independent Financial Advisers,

Kingswood, Bristol


Gordon&#39s and tonic with a twist

If you like driving tractors, swilling whisky, having a gamble and, erm, procreating, this was the Budget for you. In what was perhaps an attempt to atone for some of these unsavoury associations, Chancellor Gordon Brown also promised that repairs to churches would attract a reduced rate of VAT. Then came his pronouncements on the […]

Isa limit extended to 2006

Chancellor Gordon Brown has extended the £7,000 limit on Isa investments to 2006, as announced in November&#39s pre-Budget report. The £3,000 maximum limit for cash will also be retained. Brown said savers will have gained a total of £700m in tax relief from Isas.

Tax on benefit transfers clarified

The Inland Revenue has clarified the tax position for individuals transferring the benefits of a joint life insurance policy. Previously, if two unmarried individuals transferred the benefits of a joint policy between them, the transfer was taxable. With the clarification, the person transferring the ownership is liable for tax but only if they get an […]

Brown abolishes minimum income guarantee

In his budget speech today Chancellor Gordon Brown promised to abolish the minimum funding guarantee, accepting the recommendations of the report of Gartmore Investment Management chairman Paul Myners.The move will allow more adventurous investment by pension fund managers and life offices, while removing the pressure to invest in poorer performing investments such as gilts. Brown […]

Pensions - thumbnail

Preparing for the changes to the pensions market

As more and more providers start to reveal their stance on the charge cap and removal of commission and active member discount pricing, we thought it would be worthwhile to look at what these are, and the steps businesses should be taking to prepare for this.


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm