Product providers with 'no gain no fee' products are making more inroads with IFAs. First State Inve...
Product providers with 'no gain no fee' products are making more inroads with IFAs. First State Investments has announced it has signed a distribution agreement with Zurich IFA Group to offer its 'fee adjusted product' through the 'P' share class of the First State Global Opportunities Fund from tomorrow.
"In recent years investor's faith in our industry has been battered by a combination of falling markets and a plethora of corporate scandals. The fee adjusted structure can act as an olive branch to a sceptical consumer and might help re-build investor faith in the integrity of the fund management industry," says Richard Jones, director UK retail sales.
"We are not promising alchemy here, we are simply prepared to be judged, and paid, on the strength of our performance when compared with our peers. Sandler has been calling for a clearer relationship between charges and performance. Well here it is".
At Bedlam Asset Management, a new fund management company promoting the principles of transparency and fee structures which better align with absolute performance, finding an ideal fee structure is not easy. But according to Ian McCallum, executive director, Bedlam's model is the best one that is available within current regulatory limitations.
In short, if the quarterly performance does not exceed 1.25% (in absolute terms), then Bedlam will not charge a management fee for that quarter. It'll also mean that IFA will not get a trail. A fee of 1.4% will be charged for performance in access of 1.25%, though a 'taper fee' can be introduced to reduce the charge.
According to McCallum, this structure will ensure the fund manager works harder to achieve performance. He adds, however, what is equally important to fees is the transparency Bedlam will be willing to provide. All of the fund's holdings, and changes to the portfolio, will be accessible to view online.
According to Jim Reeve, managing director of Zurich IFA Group, the new approach to fee structure will be a popular fund choice for more cautious investors and will help IFAs to thrive in a bear market.
‘Important to have an anchor’
Report to be written by TPR
Lack of innovation for solutions
Some 2,000 consumers affected