Alastair Conway, Sales and marketing director, Cofunds
I sometimes worry about the platform market. I shudder to think what advisers – those at the coalface of financial services – make of the very public provider naval-gazing and mud-slinging that can go on.
Do not get me wrong, a healthy dose of scepticism is a good thing. However, it can sometimes feel that in this industry the default mode is to sneer from the sidelines when someone does something different.
So I would like to propose that every morning, before being allowed to switch on the mobile, boot up the PC or pick up the phone, providers should be compelled to repeat the following mantra: “I work for a business whose business is to act in the best interests of its clients.” And then to ask themselves if a single one of their competitors could not legitimately say the same thing.
Because ultimately, an idea that benefits the end investor, regardless of who brings it to market, is intrinsically a good idea for the industry as a whole, precisely because it benefits end investors.
Content advisers with engaged investors is what we are all working towards, so it would be nice if we occasionally recognised the fact.
Basically, it is difficult to argue with a healthy, innovating platform market because it is good for everyone.
That is why we took the general mutterings about ‘it will never happen’ on the chin when in September last year we announced our intention to champion clean share classes, because we knew it was in the best interests of end investors.
Advisers need look no further than the FSA’s latest consultation paper 12/12 to see that. While the recommendations have their flaws, not least the confusing retention of unit rebates and the exclusion of insured funds from the proposals, the message is clear: life is going to be easiest for those platforms, advisers and fund managers who embrace pricing in its simplest form.
This is an essential step towards enabling people accurately to assess the value of the service they are receiving. Hopefully the result is a shift away from a preoccupation with knowing the price of a service without an appreciation of its value.
For the adviser who has the relationship with the investor, evidencing their value should be relatively simple and help is on hand with an abundance of targeted market information available through platforms.
For platforms it will be a case of looking at the tools and services we can provide to advisers to help them engage with their clients. But if the adviser is confident they can add value, justifying an explicit platform charge will not be a problem.
For fund groups it is a little more complicated. This was evidenced by the fact that the idea of a retail share class that solely covers the cost of fund management seemed radical even a few short months ago.
However, a year on from when we first announced our push for clean share classes, it is fast becoming a reality. For some fund groups the move to a clean share class has simply involved repurposing their institutional share class. Even so, for all it has demonstrated a real support for simple, transparent charging and that has got to be good for end investors.
We have now launched our unbundled pricing with the commitment from 100 per cent of the fund groups on the platform to provide an appropriate share class.
It would be nice to think that in a grown-up platform market – one truly focused on the end investor and the advisers who service them – this achievement could be acknowledged for what it is. If we have paved the way for other platforms, all the better, as it means all the more investors will benefit.