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Martin Bamford closes ‘uncompetitive’ D2C platform to new business

Informed Choice managing director Martin Bamford has closed the advice firm’s direct-to-consumer proposition, IC Direct, to new business because its pricing terms had become uncompetitive.

In a note on the IC Direct website Bamford says the firm, which has operated a clean pricing structure since it launched in April last year, is no longer able to compete with the established D2C players.

Bamford says: “Following the recent announcement of new pricing structures from several leading investment platforms, we have carried out a review of our own pricing terms.

“We launched IC Direct last April, after more than a year of development, with a competitive and innovative charging structure. IC Direct was one of the first platforms to offer a clean pricing structure, at a time when our competitors presented a bundled annual management charge using rebates and commissions.

“As the rest of the market is moving to the clean pricing we originally adopted, we have concluded that our original pricing terms have become uncompetitive. Because we are a new entrant to the market without the scale to negotiate improved terms with our partners, we have decided to close IC Direct to new business.”

Bamford says existing customers can continue to access IC Direct and can transfer to alternative providers at no cost.

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. Paolo Standerwick 28th April 2014 at 9:27 am

    Small fry trying to compete with the really big boys!

  2. Martin
    I don’t gloat, nor do I presume to lecture. But I think this rather confirms 3 things that some of us old fogeys always knew from long experience.
    1. Technology is not always the answer. (And I am by no means a technophobe).
    2. Don’t race to the bottom. Someone bigger will always undercut you. Differentiate your proposition by all means – but play to your strength.
    3. Stick to your knitting. By all accounts Informed Choice has a good reputation in providing good face to face advice for those with the means and the desire.
    It has been very open and brave of you to ‘fess up’ and I hope others may learn from the experience.

  3. “Small fry trying to compete with the really big boys”

    An interesting statement from one respect, is it not one of the regulators main objectives that they should ensure that the financial services industry should promote competitiveness ??

    By Martin Wheatly’s recent comments about his wish to promote direct offerings; looks like it may not be working !

    Is size really an issue (excuse the Freudian slip) , maybe so but it shouldn’t

  4. @Martin – Much the same comments as Harry from me.

    Resolving this issue is within the FCA’s ambit. Is it unTCF to deny a client the right to issue an on-lone login for a D2C platform to an ADVISER of THEIR choice.

    It is THIS that the FCA should be focused upon and policing. Martin’s main/preferred WRAP I believe is Std Life’s, we use several, but some will not give firms on-line access unless they place a certain amount of business with that firm. Advice and product are now supposed to be separate and as such, providers should not be denying this right.

    Agency agreements should all be torn up for new business as we are NOT agents of the provider, we are agents of our clients and all we should be signing is their terms for web access on behalf of our clients and we should instead be using General Powers of Attorney with appropriate limitations to stop accidentally doing discretionary work when we only have advisory authorisation.

    The first company the FCA should sort this our with is HL as they should not be able to hold up Independent Credentials while denying their own D2C clients the right to use an adviser of THEIR choice. I would be quite happy to consider (don’t know that Ii would recommend as it is not an option at present) HL, were our clients allowed to give us on-line access to efficiently advise on their plans. As things stand, without on-line access, the manual work around make using HL for a client not cost effective and hence we recommend other than them and move off HL, but HL CHARGE for a client to be moved away which is a barrier to moving away contrary to TCF rules.

  5. Philip Castle is correct. Agency agreements are no longer relevant. Unfortunately far too many advisers are still acting as though they were the agent of the provider and far too many Platforms still require that an adviser ( with an agency) be involved.

    Quite why Informed Choice, as an advisory firm, thought it was appropriate to offer D2C I don’t know. My take is that the future is moving more towards Advisers giving advice ( for a fee), platforms administering ( for much lower charges than they currently require) and fund houses managing the funds. More and more there will be separation of these three activities. Perhaps one day all platforms will be D2C ? That day can’t come soon enough for me.

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