trail commission

dunstonh

If you say an AMC is 1.5% pre RDR/platform review then it would not be a surprise if you see managed funds charging 0.5%, IFA 0.5% and platform 0.5%.

However, one of the major issues is that some platforms are taking much more than 0.5% and leaving the fund house with little margin. So, it is possible that charges of the fund may come down more over time.

At the moment ISTM the small investor is being subsidised by the fees extracted from the large investors investments. Under the new schemes presumably the fees will move more towards flat rate charges.

And if you look at current unbundled platforms, then their charges tend to be tiered in some way where small investors pay more than larger ones. You cant see that changing post platform review when cross subsidy will be harder to implement (although not banned)

gadgetmind

dunstonh wrote: »

it would not be a surprise if you see managed funds charging 0.5%

I might (just) pay that, but it's 10bp more than I'm paying right now.

IFA 0.5%

But not that.

and platform 0.5%.

Nor that as my current 0.4% is all in.

RDR is going to be interesting, and I'm sure there will be winners and losers, but I'm pretty determined not to be a loser.

dunstonh

Nor that as my current 0.4% is all in.

You wont have to pay the platform charge if you dont use a platform. It is expected that fund houses will see an upturn in direct business like it used to be. Plus, some will get into bed with certain platforms to distribute their funds with discounts on the platform charge. However, there may still be a charge to cover cost of distribution with some and that could include trackers.

For example, Vanguard if you go direct require high value investments. If you want them without that then you need a platform.

gadgetmind

dunstonh wrote: »

However, there may still be a charge to cover cost of distribution with some and that could include trackers.

I don't think anyone objects to visible and reasonable charges.

For example, Vanguard if you go direct require high value investments. If you want them without that then you need a platform.

Their business model in the US is rather different and I suspect the £100k minimum in the UK was really because they didn't want to be bogged down with direct business while they built recognition via the established platforms.

TBH I'd prefer a platform as while I'm happy with 80% of a portfolio being in their equity trackers, I want more flexibility with the rest. Even their bond trackers don't appeal as I want more control over sectors and duration.

mbailey

gadgetmind wrote: »

RDR is going to be interesting, and I'm sure there will be winners and losers, but I'm pretty determined not to be a loser.

I guess all of us on here would like be in the same boat, it's just going to take some time before all the costs from the providers are known and we can make an informed decision where to go...