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Experts sceptical over benefits of preferential share classes

Platform experts remain unconvinced of the benefits of preferential pricing.

Platform experts remain unconvinced as to whether preferential pricing is delivering real benefits to clients following Standard Life’s recent move to agree discounted deals with six fund managers.

Standard Life last month became the first platform to announce it had agreed preferential share terms with six asset management firms. Standard said  at the time the average discount was 9 basis points.

Money Marketing understands one of the firms to have agreed terms is offering just two funds, both of which are non-mainstream funds.

CWC Consulting senior partner Clive Waller says: ”My expectation is nobody will offer cheaper share classes on a high demand fund. When platforms say they have a fund manager on side what it means is they have some of the less popular funds.”

Platform consultancy Quality Platform Solutions director Gillian Hepburn says: “We need to be sure the end customer is benefitting from preferential share pricing. Until we see all the pricing on different platforms it will be hard to say but I am not convinced it will really benefit end users.”

Pilot Financial Planning director Ian Thomas says: “It is difficult to argue against a cheaper share price but I also have concens these kind of deals could be used to influence the position of certain funds. I am not sure it is good for consumers in the long run. 

Standard Life head of investment group relations Graham Dow says: ”We are simply aiming to reflect the preferential client terms we already receive under the rebate system through discounted funds. Why would anyone not support transparent pricing and the maintenance of existing deals.”

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