Private client stockbroker Killik & Co has launched an attack on fund supermarkets by saying they do ...
Two supermarkets are implicated in the broker's attack: Fidelity Funds Network and Co-Funds.
"Both direct and IFA routes can prove costly when compared to a stockbroker where investors can get cheaper charges and advice, as well as consolidated statements," says the company's collectives analyst Mick Gilligan.
He points to funds such as the ABN Amro UK Select Opportunities, which Killik & Co says comes with an initial charge of up to 5% if bought through an IFA or 2% if purchased directly - but in either case is more expensive than its own 1.9% charge.
That would equate to a £217 saving on an initial investment worth £7,000, the stockbroker says.
Another example is the HSBC UK Growth and Income fund, which is said to come with an initial charge of 4% if acquired through an IFA, or 2% if purchased directly - compared to the 1.65% fee charged by Killik & Co.
"The difficulty facing the majority of IFA businesses is that they are forced by regulations to justify fund recommendations on a client by client basis wheras stockbrokers are better positioned to do this centrally," says Gilligan.
"The additional paperwork and time involved means many IFAs have little choice but to pass this cost on to their clients. We are urging investors to check how much they are being charged and if they are being charged more than need be to seek and alternative."
Fidelity answered through a spokeswoman that the Killik & Co view lacked backing given the entire range of services available through its supermarket, which could not be reflected through a simple straight comparison of figures.
"The supermarkets provide a range of facilities above and beyond just buying a product, such as tools for IFAs," she said.
"These services are part of a package that is not just about price. Regarding the 5% charges quoted, that is not always the case either given that IFAs can give rebates so the client ends up paying less, for example when considering an ISA. There is an overall service proposition."
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