I recently attended a CoFunds launch presentation in Bristol, keen to see what they plan to offer which will differentiate them from Skandia's 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' minimum investment per fund is £1,000 whereas Skandia's 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's 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's 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's 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Furthermore, discounts come, change and are withdrawn from time to time, so this particular landscape is an ever changing one.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.
WDS Independent Financial Advisers,