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Clean share classes: Which platforms have added the most this year?

A Money Marketing study (see table below) shows platforms have added significant numbers of clean share classes since January.

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Axa Elevate, Ascentric and FundsNetwork have more than tripled the number of clean share classes on offer over the last six months, a Money Marketing study has revealed.

In January, research by Money Marketing showed a vast difference in the number of clean share classes offered by different platforms. While there is still a difference in numbers available from platform-to-platform, almost all firms have significantly increased the number of clean share classes available.

AXA Elevate has almost quadrupled its clean share class count, increasing from 690 in January to 2,508 by the end of the first half of the year.

Acentric increased its offering by 376 per cent, with the number of clean share classes rising from 500 in January to 2,380 now.

FundsNetwork increased its clean funds by 372 per cent from 347 to 1,638.

Elevate managing director David Thompson says: “With a clean share class alternative for over 90 per cent of funds on Elevate, the main question for an adviser is when and how to migrate money between funds. To save time when moving clients into different share classes we offer a bulk switching facility, which allows an adviser to move their entire client book.”

This trend has been driven in the main by HM Revenue & Customs’ announcement in March that platform rebates from unwrapped investments wil be liable to a 20 per cent tax charge.

advisers

The transfer of assets into clean share classes was eased by HMRC’s later announcement that conversions from bundled share classes into the commission-free version of the same fund will not be a tax event, excluding a minority of cases involving hedged share classes.

The move to clean share classes was accelerated further by the Financial Conduct Authority’s April platform policy statement which banned all legacy payments between fund managers and platforms from April 2016 and banned cash rebates over £1 from April 2014.

Other platforms that have increased their clean share class offering include Transact, which has increased from 1,095 to 2,700.

Firms with less than 1,000 clean share classes available are now in the minority in the platform market. This group is made up of Aviva, James Hay, Parmenion, Skandia, Standard Life and Zurich.

All six platforms have committing to reaching at least 1,000 clean share classes by the end of the year.

AJ Bell says it has an open architecture approach to funds so it can offer access to all clean share classes through its platform.

Marketing director Billy Mackay says advisers currently have an issue with what to do with existing client investments. 

He says: “We expect new investments to continue to be heavily dominated by clean funds. What is more of an unknown is the pace at which advisers deal with conversions on existing holdings.

“This will influence the size of the challenge fund managers face in satisfying the demand for conversions in a way that does not adversely affect their service levels. There may well be capacity issues in dealing with switches and conversions as we get closer to April 2016. I think advisers are likely to be very mindful of this.”

Seven Investment Management takes the same open architecture approach but is unable to estimate how many funds it has available in total.

Standard Life has confirmed it is seeking preferential share class deals with fund managers, and recently announced it has agreed terms with 15 fund groups claiming the deals are 9bps cheaper than average market share classes.

There are currently 800 clean share classes available on the Standard Life Wrap but the provider says this will increase significantly to 2,500 by the end of July.

Standard head of adviser platforms David Tiller says: “In April, we announced our intent to move to a rebate-free platform. We are already well advanced in our rolling programme to introduce clean share classes to our wrap platform.”

Although it is adding clean share class prices to its platform, Skandia has elected to pass back rebates to clients saying this represents a good deal for investors and in the majority of cases a tax charge is not incurred because most of its investments are held in pensions or Isa wrappers.

The Platforum head of adviser platforms Freddie Findlater says: “The move platforms are making to add clean share class funds is positive and I believe in line with adviser expectations. For many platforms, it has become a prerequisite for managers listing new funds to have ‘clean’ versions available.”

Platform Clean shares in Jan Clean share classes % change Total funds
Aegon 782 1,900 143 4,500
AJ Bell n/a 2,700 n/a 7,700
Alliance Trust Savings 1,200 1,700 42 1,700
Ascentric 500 2,380 376 4,650
Avalon 2,000 2,500 25 6,000
Aviva 500 920 84 2,600
Axa Elevate 690 2,508 263 5,040
Cofunds 2,173 2,700 24 4,900
Fundsnetwork 347 1,638 372 3,766
James Brearley 1,800 1,884 5 4,500
James Hay 396 500 26 2,048
Novia 795 2,000 152 2,500
Nucleus 1,400 2,200 57 6,500
Parmenion 300 311 4 345
Praemium 1,065 1,500 41 6,600
Raymond James 2,700 3,600 33 6,000
7IM n/a n/a n/a n/a
Skandia None 750 n/a 1,950
Standard Life None 800 n/a 1,200
Transact 1,095 2,700 147 8,500
Wealthtime 700 1,410 101 2,821
Zurich 200 500 150 2,000

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. I am interested to hear that providers like Axa are offering more and more clean share classes for clients to benefit from and will facilitate a bulk switching facility to allow an adviser to move an entire client book.

    This does not help me and my colleagues with my dealings with Axa however. As someone who has come from a Bank and who has been made redundant recently I am being actively and legally discouraged from even contacting clients to help them with the future management of their investments. More and more clients are being made orphans and just wont be able to make properly informed decisions in the future about their investments.

    This is the issue that really needs addressing by the large investment companies at the moment. Protecting their “Property Rights” only does their clients a major disservice removing them from the ability to benefit from what is clearly the right way to go within our industry.

  2. In selecting your business partners you have to take an in depth look at where they are going to ensure that they and you have the same game plan, I am pleased to say that the choice we made in choosing Elevate has paid dividends. The commitment to be RDR compliant has never been in question. Whilst not everything is perfect, we cannot always get what we want, they in my view are still head and shoulders better than any other platform we have clients on. I am sure that some experiences have not been like ours and you will all have your own opinion, but you cannot fault the commitment to the cause of being committed to the adviser and the principal of RDR.

    If the ex bank adviser would like to contact me, I may be able to help with his problem.

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