Wealth managers fire warning shot over 'super clean' fund deals

A number of wealth managers have privately warned fund groups they will be less inclined to recommend funds which give preferential prices to the biggest distributors in the market, Investment Week understands.

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“It would present a challenge if we were promoting the same fund which was given to others  at a much cheaper rate. We would not be happy about groups that offer exclusivity to Hargreaves.

“If Hargreaves is able to offer a premium product exclusively, I think the whole industry will be heading on a downward spiral in price and it will be difficult to reward quality.”

Price war

However, other wealth managers have said they want to avoid getting drawn into a price war.

Ben Yearsley, head of investment research at Charles Stanley Direct, said although the firm wants to secure the best possible share price deals, investors should focus on the overall cost of the investment proposition.

“There is a lot of nervousness over pricing and the impact it is going to have on the industry. From our perspective, I think providers should not be getting too hot under the collar about 5bps,” he said.

Focus on performance

In a similar vein, Jason Hollands, managing director at Bestinvest, said performance, not charges, should be the most important metric for investors.

“Regardless of whether some distributors manage to procure better deals on certain funds, it will not stop us rating the funds.

“Our process is led by performance and we will not be changing it. For us, pricing is a secondary consideration,” he added.

What They Said Before Graham Dow, head of investment group relationships, Standard Life “The top fund groups recognise the value of engaging with Standard Life and the advisers we work with. We have had a number of detailed discussions and shared our Leading Platform Programme roadmap of platform developments. The approach of the fund groups to these discussions has been constructive and they have shown they understand the need to support a focus on transparency and total cost to customer.” Ian Gorham, chief executive, Hargreaves Lansdown “As we have always done, we will use our buying power to negotiate the best deals we can for clients. As commission free funds are becoming available, we will negotiate on these too. The policy of seeking the best deal will apply to all funds on the Vantage platform, including those which appear on the Wealth 150.”