Private client stockbroker Killik & Co claims fund supermarkets are poor value for investors.
In a comparison of charging structures, Killik says buying funds through either Fidel-ity's FundsNetwork or Cofunds is more expensive than using a private client stockbroker.
Killik collectives analyst Mick Gilligan cites the ABN Amro UK select opportunities fund as an example. He says the fund has a 5 per cent initial charge if the investor uses an IFA or 2 per cent if they go direct. But through Killik, he says the initial charge is 1.9 per cent.
Gilligan says: “The figures may come as a surprise to some investors. You do not expect to pay more for execution-only services when you can get advice and all the benefits of a fund supermarket at less cost through a stockbroker.
“The difficulty facing the majority of IFA businesses is they are forced by regulations to justify recommendations on a client-by-client basis whereas stockbrokers are better positioned to do this centrally.
“The additional paperwork and time involved means many IFAs have little choice but to pass this cost on to their clients. We are urging investors to check how much they are being charged and, if they are being charged more than they need be, to seek an alternative.”
Fidelity marketing director David Cowdell says: “I do not think they are comparing like with like. I disagree with the premise that investors go to fund supermarkets to get an execution-only service. They come for a whole host of reasons, such as tools, instant access and 24-hour dealing. I do not think this is a fair comparison.”
Cofunds head of sales Rodney Aldridge says IFAs can negotiate their own deals with providers on Cofunds, and disputes that some do not pay less than Killik. He says: “From a cost perspective, Cofunds is neutral, so I do not really see the point Killik is trying to make.”