RDR - How will it work in practise

pip895

grey_gym_sock wrote: »

1.2% is an unusually high commission. are HL giving some of it back as a rebate (so-called "loyalty bonus")?

although the platform review allows HL to keep legacy charging going until 2016 (your option (2)), they've said that they'll actually apply option (1), i.e. legacy business will get full rebates less their (so far undisclosed) new explicit charge.

Yes 1.2% is huge - made me wonder if it was a mistake - particularly as there is no loyalty bonus offered. Hope they live up to their promise - I don't really want the hassle of moving.

pip895

dunstonh wrote: »

Clean funds can often work out more expensive than retail funds net of rebate. Platforms have often been able to get improved terms. They lose those improved terms on clean funds.

Presumably this is all part of HL's on-going negotiations with the fund houses.


p.s. the fund is - RWC Global Growth Absolute Alpha

dunstonh

Archi_Bald wrote: »

Mine says HL currently receives commission of 0.000% per annum for Vanguard Lifestyle funds.

Would be nice if that meant they will continue to charge £2/month for VLS.

You can dream.

The FCA has recently looked at commercial arrangements between providers, fund houses and advisers to see if there is any breach of RDR principles. Two firms have been referred for enforcement and over 20 are in the further clarification stage (or get it adjusted quickly if not). They specifically were looking for signs of bias and commercial payback.

Platforms that had special offers on certain funds, such as part of full rebate of their normal published platform charge if xyz fund range was used have also been told to stop that as it is not allowed. This is why superclean has come about. The charges adjustments will be on the fund rather than a difference in the platform charges.

dunstonh

Porcupine wrote: »

Interesting. Just checked back through my history and it's been there since about August. Varies from 0.3% (Blackrock tracker) to 0.75% for Unicorn UK Income, others mostly at 0.5%. So a HL platform fee would probably mean an increase in costs for me.

On another platform with unbundled charges, the blackrock trackers are coming out at 0.1x% as the total net charge (the ongoing charge/TER - not the AMC). So, that is a good indication of the fund charge post changeover. However, it all depends on what the platform charge will be to see what the difference is.

Lokolo

pip895 wrote: »

Presumably this is all part of HL's on-going negotiations with the fund houses.


p.s. the fund is - RWC Global Growth Absolute Alpha

That has 1% with clean pricing (share class

2% in dirty, with 1.2% of it commission, so with full rebate it would be cheaper again to have dirty version.

Rollinghome

pip895 wrote: »

Yes 1.2% is huge - made me wonder if it was a mistake - particularly as there is no loyalty bonus offered. Hope they live up to their promise - I don't really want the hassle of moving.

It's huge but looks right for the Class A. It's an expensive fund: 2.35% ongoing charge plus 20% performance fee from which they pay 1.2% in commission to intermediaries. The 20% performance fee is taken on any return above 1 month LIBOR, which doesn't sound too demanding.

I'd be tempted to ask why they feel the need to pay so much in commission, bearing in mind that Arch Cru only needed to offer about the same to get their funds sold.

dunstonh

RWC Global Growth Absolute Alpha is an expensive offshore fund. It is also a low volume, niche fund and the type that will likely have to pay a platform more to get listed on it on a bundled basis. So, the platform cut is likely to be higher than your typical UT/OEIC fund.

Just to adjust Lokolo's figures, it is 1.30% in clean and 2.35% in dirty. It is always best to look at TER/OCF in the unbundled world as that is how the unbundled platforms refer to them.