VIEWPOINT RETAIL DISTRIBUTION REVIEW
SUMMARY
Fund groups need to confirm
their post-RDR fund prices,
and the launch of additional
share classes remains a real
possibility.
The use of passive and active
products will become more
polarised, while performance
fees will become more
common for fund managers
with a proven track record of
delivering alpha.
Asset managers are under
pressure to deliver more
innovative, solutions-led
products and this will become
even more apparent beyond
2012.
“
Most [asset
managers] have
worked out distribution
strategies more
broadly, and know
where the market
is going. But will
we be able to, or be
expected to, make any
rebate payments to
platforms themselves
for the services that
they provide?
”
Simon Ellis, managing director,
unit trusts, Legal & General
BY GARY SHEPHERD
Wherever the party, I am
almost certain you would
have heard poodle rockers
Europe’s all-time classic
‘The Final Countdown’
during your New Years Eve
celebrations. Now into a
hopefully sober 2012, the
reality is that we are in the
final stretch in terms of RDR
with less than 12 months
to go until the FSA’s final
rules are adopted.
Talk with IFAs and
wealth managers and the
overriding feeling is that
they are well on their way
to being ready, if they are
not already there. Bodies
such as the IFP, AIFA and
CII have certainly been
busy in ensuring their
members are up to scratch
in terms of qualifications
and business practice,
while professionalism has
been a key topic at various
road shows and events.
l Unresolved issues
But what of the fund
groups? While plenty of
pre-emptive arrangements
have been made, there
remains a certain frustration
that – as we go to
press at least – the FSA has
yet to finalise all its rules,
particularly those around
platforms.
“The biggest issue for
all fund management companies
is around pricing
and share classes,” says
Simon Ellis, managing
director, unit trusts, at
Legal & General.
Wealth managers are ready for the post-RDR world but are
With the FSA having delayed its clarification on platforms
there is still room for things to change in 2012
“Most of us have worked
out our distribution strategies
more broadly, and
know where the market
is going. But will we be
able to, or be expected to,
make any rebate payments
to platforms themselves for
the services that they provide?
The second issue,
which is unclear and a real
mess, is the treatment of
existing trail and should
that continue in the event
of various circumstances?”
Jasper Berens, head of
UK retail at JPMorgan Asset
Management, outlines two
different costs that fund
managers need to think
about: what their quoted
AMC is and what their
expenses on top of that are.
He believes that while we
may not have a completed
answer until well into 2012,
the extent to which groups
may or may not struggle
depends upon their size.
“It largely depends on
the size of the asset management
group, how many
existing share classes they
have and whether or not
they have onshore and
offshore business, that is,
Oeics and Sicavs,” he says.
“It depends how much
of their business is on platforms,
how much of their
business comes direct from
IFAs and what size direct
books they have. That is
the difference between
why some fund managers
are finding it easy and
others are finding it tough.”
l Factory gate pricing
For the larger groups, the
real change will most likely
be just a slight shift to
their existing share classes,
but it depends what they
come in at with their factory
gate price.
Some groups have
already laid out plans to
take to market. Schroders,
for example, has launched
a commission-free share
class for platforms, with all
of its UK-domiciled funds
charged at 0.75% (half of
the typical AMC of 1.5%).
The firm has also
launched a new suite
of three low-cost RDRfriendly
funds as an “alternative
to passive investing”.
The latest, Dynamic
Multi-Asset Fund, managed
by Johanna Kyrklund, is
a reconstruction of her
existing Diversified Target
Return Fund with a TER
capped at 50bps.
Similarly, JPMorgan last
year introduced its first
“RDR-ready Oeic”, the
JPM UK Active Index Plus
Fund – previously the UK
Active 350 Fund – which
was revamped with a significantly
reduced AMC of
0.25%. It may only offer
a limited amount of alpha
but, says Berens, it does
still have the chance of
20 PORTFOLIO ADVISER [www.portfolio-adviser.com] JANUARY 2012
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