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Pricing row as big platforms start unbundling

Fidelity FundsNetwork stole a march on rivals by last week becoming the first of the “big three” platforms to launch an unbundled pricing model.

Last year, the platform was the first to publish details of the fees it receives from fund management groups, something Cofunds and Skandia have refused to do.

FundsNetwork’s unbundled model sees a flat-rate charge of 0.25 per cent alongside a £45 annual account fee. The flat-rate annual charge is taken from the biggest fund held by the client at collection.

There will be no switching charges for those who decide to adopt the £45 account fee, which is optional until January, but switching charges apply for those who do not. The unbundled pricing model will run alongside FundsNetwork’s bundled charging structure.

Cofunds’ unbundled offering will be launched in July. The platform was the first of the big three to reveal its unbundled charges in September, which will be made up of a £40 annual charge and a sliding scale of annual charges from 0.15 per cent to 0.29 per cent.

Investors with assets up to £100,000 will be charged 0.29 per cent, between £100,001 and £250,000 is 0.26 per cent, between £250,001 and £500,000 is 0.23 per cent, for assets between £500,001 and £1m is 0.2 per cent and investors with over £1m will be charged 0.15 per cent. Chief executive of Cofunds Martin Davis (pictured) says FundsNetwork had the advantage of knowing Cofunds’ charges when it was setting its own. Fidelity’s are cheaper for clients investing up to £250,000.

Davis says: “We were the ones who started the serious debate about unbundled charges and clean share classes and we were brave enough to come out and set the prices we were comfortable with and that has not changed. We will not be getting into a tit for tat price war with anyone and we will not be changing our pricing before the unbundled launch.”

Skandia has yet to reveal specific details about its unbundled charges but says the model will launch in the fourth quarter. It will sit alongside a new flexible charging structure which will give advisers the option of taking income through charges or a percentage of investments via an up-front fee, ongoing charges taken from products, through fund switches or ad hoc fees.

Skandia says it will include a platform cash solution across all products and will support both independent and restricted advice models. It is talking to advisers about how best to support restricted models which could see advisers given a limited view of funds through the platform.

In September, Skandia said it was unlikely to ask fund managers for a clean share class as it believes unit rebates represent a better deal for clients.

The Lang Cat principal Mark Polson says Skandia is leaving the launch of its unbundled model too late for advisers to carry out sufficient due diligence. He says: “If you consider that proper due diligence could take up to two months, there are many advisers out there who want to get it done as soon as possible.

 “If Skandia is going to produce their charges for the unbundled structure so late in the day, it needs to have absolute trust from advisers that it will be worth staying with Skandia and I am not sure there is that level of trust anywhere.”

Skanda UK marketing director Nick Dixon says: “We will have a whole programme of support in place in the months leading up to the launch of adviser-charging to ensure advisers see a seamless transition to the new RDR-ready charging model with no interruption to their income streams.”



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