Fidelity International head of UK retail sales Peter Hicks says assuming the FSA’s plans to separate product and adviser charging go ahead under RDR, the group will issue different share classes going forward.
He says: “I do believe that, with the separation of products and adviser charges after RDR, the working assumption is that you will want a share class that has a lower annual management charge and that doesn’t pay trail commission.
“That is probably what we will do.”
But Hicks says Fidelity will not make a final decision until the FSA brings out its implementation paper, expected at the end of Q1 this year.
He adds: “You don’t know exactly what the RDR is going to look like. But assuming what is in their about separating product and adviser charges, then separate share classes is what we would expect.”
Skandia head of proposition marketing Peter Jordan says: “What everybody accepts is that this is going to land in one of two ways. Either all rebates need to be reinvested because they cannot get any commission or you have this separate classes of units.
“If you don’t reinvest the rebates, it is much clearer to the customer and less ambiguous. It is difficult to argue that that is not the right way to go. Personally, that would do the market a huge amount of good because everything will then be clear, and there will be no confusion in terms of reinvestment of commission.”
A survey by CWC Research found of the 100 advisers surveyed not one wanted multiple share classes. Fifty per cent believed the adviser should be paid via a cash fund, 20 per cent said by fund manager rebates leaving 30 per cent without a preference.