Following Fidelity FundsNetwork’s decision to reveal details of the fees it receives from fund management groups, there has been a predictable call for those who are not already doing so to follow suit.
Cofunds says it is developing an unbundled pricing model, the details of which are set to be announced this month, although it has not specified whether it will publish all the fund manager payments it currently receives.
Skandia says it cannot reveal the figures because of contractual agreements it has entered into with fund managers.
I managed to get hold of a copy of details of Skandia’s income from fund managers from 2009, which the firm says is now “significantly” out of date.
The list makes interesting reading, with most popular funds offering a payment of between 0.8 and 0.9 per cent, including adviser trail, so between 0.3 and 0.4 per cent was being kept if you take away an average trail of 0.5 per cent.
In comparison to Fidelity’s fund manager fees, this is higher than the 0.25 per cent fee taken from the majority of funds on FundsNetwork.
Skandia’s argument is that as long as the customer knows the overall price they are paying, and sharing in the rebates that it has negotiated from the fund groups, do they need to know every payment? “We believe we get best rates. Ultimately that will make us cheapest wrap for fund price, best customer outcome,” tweeted Skandia head of proposition Graham Bentley in defence of non-disclosure earlier this week.
Some might say it is a useful excuse for Skandia to say that fund manager agreements prevent it from “broadcasting commercially sensitive information such as their rebate arrangements”. But is Skandia breaching requirements set out in the European Mifid directive?
Under Mifid, a platform is required to reveal the fund manager fees if they are asked but having asked Skandia directly, I was told that only clients or their advisers were able to request this information.
It was surprising, then, to learn a number of IFAs who had requested this information had also been refused access to the fund manager fees Skandia receives.
After putting this to Skandia, I was then given the following statement: “Under Mifid requirements we only have an obligation to disclose fund manager rebate data to our clients. If however, an adviser is acting on behalf of a client when enquiring about the data and is able to demonstrate this, then it is common practice for us to send them the data.”
However, if an adviser is asking on behalf of a potential client, as some advisers have done since the Fidelity announcement, Skandia says it has discretion about whether or not to give out this information.
Skandia adds that only five clients have asked for the rebate material over the last 12 months and they have all received the information.
It appears that Skandia is making it as difficult as possible to obtain the information which you may well say it is entitled to as it looks to guard its commercial arrangements.
In another tweet, Bentley says: “Post RDR all rebates go to client; I don’t intend to lose advantage rebate terms will provide for customers.”
Skandia sounds like it is sticking to its guns and will not be following FundsNetwork in disclosing its fees. Time, and future business levels, will tell whether advisers and their clients agree with this stance.
Sam MacDonald is the wrap and distribution reporter at Money Marketing- follow him on twitter here