Investment groups will be able to automate the transfer of fund-based renewal commission from one in...
Investment groups will be able to automate the transfer of fund-based renewal commission from one intermediary to another when a client moves adviser, writes Robert Stock.
Jupiter and Dresdner are both examining the issue after Aberdeen said it would start transferring renewal from 1 October this year, where a client gives authorisation.
This follows systems developments by external administrator International Financial Data Services (IFDS), which has just changed its name from EFDS. All three use the company.
The move would bring them into line with groups such as Fidelity, JP Morgan Flemings, Schroders, Foreign & Colonial, Invesco Perpetual and Threadneedle, all of which, providing written client authorisation is obtained, will readily transfer trail.
Jupiter, Hendersons and Gartmore, which use IFDS, already offer the facility for renewal transfer but carry this out manually and the IDFS systems developments will, if they subscribe to them, make the process less time-consuming.
In order not to damage relations with discount brokers, which rely on the income stream from renewal, most groups stipulate written authorisation from clients must be obtained, a measure designed to discourage wholesale poaching of clients.
Jonathan Polin, managing director for sales at Aberdeen, said: 'Trail commission is becoming more and more important in the funding of IFA businesses. At the end of the day, the embedded value of an IFA firm is the trail commission.
'We are obviously not the first to offer commission transfer but we believe that we have taken on board all of the various issues which are live in the marketplace at the current time and are delivering a more rounded and better-structured service offering than most other providers.'
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