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Nucleus labels platform fund incentives ‘disgusting’

Nucleus has hit out at deals that see platform charges waived if clients invest in particular funds.

Speaking at The Platforum Annual Conference in London today, Nucleus chief executive David Ferguson said such deals can be “incredibly damaging” and are “appalling behaviour”.

Ferguson says: “I think it is perfectly reasonable for a platform to have an in-house investment proposition. What troubles me is when there are artificial incentives there for people to invest into a multi-manager fund such as waiving platform fees, which is incredibly damaging.

“I think there are honey traps out there where the platform is given away for free because you go into a multi-manager fund with a TER of 2 or 3 per cent, which is just disgusting and is appalling behaviour and goes against the RDR.”

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

  1. David really is hot under the collar about this one and it’s causing him to get his facts completely wrong. The effective TER on an active multi-manager fund would be in the order of 1.6% and not remotely near the figures being asserted. For convenience of his argument, David is quoting the TER of the full fat share class which also includes the platform rebate and the adviser trail. Notwithstanding this error, the onus is always on the adviser to ascertain suitability. If a fund is suitable and the platform provider is also rebating its annual charge, everybody wins. How on earth this is “disgusting and appalling” only David will know!

  2. It could be worse. A platform might offer inducements that tie advisers in to them and incentivise them to place clients on that platform.

    Wouldn’t happen of course because it would be disgusting and appalling.

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