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Seasonal software

With one month to go until the end of the tax year, it increasingly appears there is an Isa season taking place. Around 50 per cent of Isa investments via IFAs are now placed via fund supermarkets, as opposed to 20 per cent of all new Isas.

Cofunds told me recently that it is already seeing a threefold increase in new Isa cases over this time last year. Fidelity suggests that while we have not yet returned to the levels of the busiest Isa seasons three or four years ago, there is certainly a step-change over early 2003.

Earlier reports suggested that many IFAs were not planning significant activity in this traditionally busy period. Any advisers wanting to take last-minute action might find the software that is the subject of this week&#39s column valuable.

A major benefit of fund supermarkets, in addition to greater flexibility and fund choice, is the ability to pull together clients&#39 investments from a wide range of fund managers. This makes it easier to manage and modify a client&#39s asset allocation without additional charges. This is often achieved by the re-registration of investments that have been held individually into a supermarket. Advisers can have the opportunity to hoover up investments that a client may have made previously direct with a fund manager or via an earlier adviser.

A small number of fund managers are resisting re-registration which is a short-sigh-ted approach as they are almost certainly putting themselves at the top of the list of any funds to cash in if there is a need for portfolio realignment when reviewing the client&#39s asset allocation.

A further benefit of re-registration is that, in the last 18 months, increasing numbers of managers have started paying trail commission on unwrapped investments when re-registered into a fund supermarket. This provides a significant opportunity to increase the adviser&#39s income.

The example in the table above shows a typical portfolio that a client might have assembled. This comprises investments made before the current adviser was appointed, both direct and via a previous IFA. The re-registration process increases the adviser&#39s income nearly fivefold as they will now be receiving trail commission each year on the majority of the client&#39s assets. This is achieved at no cost to the client but does give them more choice.

Paper-based re-registration can be time-consuming. An individual application and authority to transfer has to be completed for each Pep or Isa manager with a signature for each. Terms and conditions from the accepting supermarket and key features documents for each fund have to be delivered.

Cofunds first launched its consolidation assistant software to minimise paperwork in February 2003. Over 1,000 copies are now used by IFAs and it accounts for around 40 per cent of new transfer authorities being received by the firm.

The package has recently been relaunched and now contains a simple client database, making it easier to process such cases in stages rather than having to do it all at once. In an eight-screen process, the adviser first selects the client and confirms their details. It then details all their current holdings, including product type, old plan manager fund manger and fund name. These are populated from drop-down menus, giving the full range of retail funds currently in issue in the UK. Plan references are also entered.

The software will identify which funds can be re-registered to the platform and if this can be done without incurring costs. This is an ideal point to review the client&#39s asset allocation and ensure the investments are consistent with the attitude to risk. If the portfolio needs rebalancing, any funds that are no longer appropriate can be cashed.

You enter the new funds to replace them and a further screen allows for the purchase of any additional funds. This can include 2003/04 and 2004/05 Isa applications.

Account details can be entered for any income payments that are to be made before the system generates all the documents, including application forms and key features documents both for Cofunds and the underlying funds. A checklist for the IFA and the client are available with a standard reasons-why letter. PDF versions of all the documents are also created in a folder within the Cofunds software on the user&#39s hard drive so that copies can be retrieved and printed.

When it is this easy, I cannot see why any adviser arranging a new ISA would not also carry out a re-registration exercise at the same time, providing the client with greater flexibility in the future.


Close Property Investment – Fixed Uplift Properties

Type: Closed-ended fund Aim: Growth and income by investing in UK commercial property Minimum investment: Lump sum £25,000 Investment split: 100% UK commercial property Place of registration: Isle of Man Charges: Annual 3.5%, performance fee 20% Commission:Initial 3.15% Tel: 0870 733 3773

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