Whilst most of the media’s post-RDR focus has centred on adviser charging, platforms are also having to think long and hard about their fee structures.
Most platforms, with Alliance Trust Savings a notable exception, operate a charging model based on assets held.
Many operate a tiered approach depending on asset size. However, there are awkward questions to be answered over whether the charges associated with larger levels of assets can be justified.
There may be an extra burden on platforms associated with big orders and the increased risk involved, but whether this equates to the current differences you see in fees depending on asset size is questionable.
Alongside the debate on platform charges, we also have the PR circus around the preferential share classes platforms are looking to negotiate with fund groups.
Certain platforms may have won an early PR victory by persuading some media outlets to use an outrageously loaded and subjective term (super clean) to describe the deals they have negotiated with fund groups.
A few basis points shaved off a few funds is not likely to influence selection and we will have to hear about some serious discounts on popular funds before most advisers will sit up and take notice. Whilst details on individual fund deals are yet to be announced, asset managers are more likely to offer lower charges on newer or less popular funds.
It is likely that most platforms will end up having access to the various different new or institutional share classes being touted. Without considerable levels of assets these new share classes could attract additional expenses which cancel out the lower AMC.
Any pressure to drive down costs to the investor should be welcomed. However it is hard to shake the sense that these deals are more about marketing the platform to advisers than anything else.
Whether this trend translates to lower costs for the end investor remains to be seen.
However, it is likely that other issues, such as overall fee structures, sustainability and service levels are likely to have a more dramatic effect on the way the market shapes up.