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T Bailey raises annual charge and boosts trail commission

Multi-manager T Bailey is increasing the annual charges across its fund range in a move that will see it raise the trail commission it pays to advisers.

The annual charge will rise from 1.25 per cent to 1.5 per cent, with trail commission on its three multi-manager funds set to rise from 50 to 75 basis points from January 1, 2007.

The new structure will apply to all new and existing business on the group’s cautious managed, equity income and growth funds.

Industry reaction to the move has been mixed. Miton Optimal fund manager Tom McGrath says: “This smacks of desperation. A lot of greedy IFAs will be interested but I cannot see any of the main players moving to do the same.”

But Cockburn Lucas IFA Mike Horseman welcomes the move. He says: “Our own costs are huge. A renewal-based model is good for the industry although it can be a thorny issue and you must make sure the client understands the situation. If T Bailey can make it effective at 75 basis points, why can’t other groups do it?”

Park Row IFA Alan Colton says: “This should encourage other IFAs who are too cosy with some of the big groups to consider T Bailey and see they have a good proposition.”

T Bailey co fund manager Jason Britton says: “We recognise the IFA business model is under a lot of cost pressures and feel the 0.5 per cent commission is outdated.

“We think this will recompense advisers for what is an increasingly hard job. If other groups cannot afford to run their fund management from this sort of structure, they should review their cost base.”

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