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Fund firms are urged to offer fair share of charges

Winterthur Life and Selestia have hit out at fund management charges and say investment groups are taking too big a share of cake, with distributors, advisers and investors deserving more.

They say fund firms should reduce their margin as they have been relieved of much of the responsibility for marketing.

Speaking at PIMS, Selestia Investment Solutions head of sales Nick Godfrey said 75 basis points for manufacture was too expensive and “there is a lot of fat in there that can be distributed elsewhere”.

Winterthur Life managing director David Thompson said third-party distribution accounts for between 60 to 70 per cent of investment firms’ retail distribution and it is product providers’ responsibility to try to regain some of the pricing margin.

He said: “There is most definitely some fat in the value chain. The investment industry has been very good at protecting those margins and at the same time being able to diversify their distribution through product providers.”

But Investec Asset Management head of strategic alliances Mark James hit back, suggesting that too much focus purely on pricing could lead to many more clients going down the commoditised fund route when it is not in their interests. He said: “What concerns me is that if you go tot-ally down the price route you move into more commoditised fund choices. I am a great believer in the idea that if the client is getting something good they are willing to pay for it.”

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