Head of proposition marketing Peter Jordan says there is a direct correlation between the level of unbundling and the cost to the consumer.
Research using Skandia’s Platformwatch tool shows that a client investing £157,200 across a range of wrappers and switching 20 per cent of the portfolio annually would incur a charge of between 1.79 per cent and 2.25 per cent, depending on the platform used.
One platform which unbundles nine separate charges would cost 2.25 per cent, compared with 1.99 per cent for a platform that unbundles six. Skandia Investment Solutions, which sets out four charges, says it would cost 1.79 per cent.
Jordan says: “It is debatable whether unbundling makes things easier to understand but if that is the direction that the RDR takes us in, it is important that it does not result in higher costs for investors.
“The use of multiple charges paves the way to portray a proposition as whiter than white due to the level of unbundling but this may not be the real reason for this complexity. Platforms must not be allowed to use complex charging structures to obscure the true cost of their service.”
But Nucleus chief executive David Ferguson says: “The market needs to unbundle in order for informed decisions to be made. We do not currently know how much is being retained by fund supermarkets in dirty margins, such as derisory interest rates on cash and kickbacks from fund managers.”
Novia chief executive Bill Vasilieff says: “Our charges are tiered and you will find at certain levels our charges are significantly less than Skandia’s. In addition, you cannot compare a simple supermarket, such as theirs, with full wealth manager platform like ours.”