Jupiter is set to shake up the way groups develop funds by polling its key IFA partners about recent regulatory chan-ges in a move likely to prompt the group to introduce performance-related fees.
In a radical departure from the way firms traditionally test funds, Jupiter is asking its distribution partners to comment on a range of options it is considering in the wake of the FSA's liberalisation of fund regulation. Paramount among these are its plans for more innovative charging structures, particularly in terms of performance-related fees, which it says could be introduced in a number of ways depending on IFAs' preference.
The options range from the rolling out of multiple unit classes with performance-related elements to the scrapping of Jupiter's initial charge and replacement of its annual fee with an exit penalty. IFAs can also opt for a modification of the annual charge with the introduction of a lower exit charge or variants thereof.
Once the results are known, Jupiter will test the preferred options on its fund range. If they work, Jupiter will introduce them or, if they do not, the group will consider launching new products featuring the preferred options.
A consultation document will be sent to the group's leading 100 intermediaries, with any changes made after the FSA finalises its rules this year. Joint managing director Gordon Davidson says: “We want a model that works both for us and the client.”
Chelsea Financial Services managing director Darius McDermott says: “The issue of performance-related fees is extremely important and the fact that Jupiter will be talking to IFAs before it does anything is very encouraging.”