Terry Huddart, technical communications manager of Nucleus, discusses the demise of the fund supermarket structure and scrutinises the new-look platform space.
The majority of bundled (and of course semi-bundled) platforms have now revealed their new world charging structures, which means it will not be long before the FSA’s goal of transparent consumer charging becomes a reality.
This is where advisers are remunerated explicitly by their clients and the smoke and mirrors of commission disappears.
An interesting dynamic in all of this is that unbundled models – which have been, let’s say encouraged, to become transparent by regulation – will be starting from scratch in the new-look platform space and in a pricing sense, all platforms will adopt the wrap model.
Death of the supermarket salesman
It is great to see the likes of Cofunds really embrace the essence of explicit pricing and this is a clear indicator of an ultimately healthier market.
There is of course no doubt that the fund supermarket model had a good ten years and indeed, away from the charging side of things, supermarkets should be congratulated for the role they played in harnessing technology to improve efficiencies in the sector.
Even before the RDR comes into force, the supermarket dominance has been gradually eroded by wraps. Establishing both AUA and inflow figures in the platform market is admittedly a rather murky business because not everyone publicly reports figures in the same way, and some purely report headline figures that require a degree of estimation to allow like-for-like comparisons.
So apologies in advance for having to use terms like ‘circa’ when providing the following figures. Back in December 2001, supermarkets accounted for 97% of the circa £10.4bn of assets under management (AUA) in the fledgling UK platform market. By December 2005, the overall market had grown to circa £34.6bn AUA with a still considerable 94% of it on supermarkets.
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