By James Thorneley The AITC is planning to launch an industry-owned fund supermarket that will inclu...
By James Thorneley
The AITC is planning to launch an industry-owned fund supermarket that will include unit trusts and pension products as well as investment trusts.
Daniel Godfrey, director general of the AITC, has issued proposals for the establishment of generic products to be created specifically for the supermarket and for it to be financed by the 'its' campaign.
He said marketing support for the products would need to be maintained for the foreseeable future after they were launched, while the its campaign has only two years more to run.
This may mean the option to opt out of the 'its' campaign is discontinued. Godfrey suggested that members could agree to a medium term funding of between 1% to 1.5% of their gross assets.
Godfrey is proposing to offer an Isa, a savings account, personal pension and executive personal pension via an online supermarket. He envisages the products would allow advisers to buy any investment trust, unit, Oeic or Ucits registered fund.
He said: "IFAs will either buy other products elsewhere anyway or be less inclined to use our service which means that opportunities for them to buy investment trusts are lost.
"Consider the IFA who would like to mix investment trusts and unit trusts in a client's Isa portfolio.
"The client can only have one Isa per year, so if we do not offer the combination, the IFA will probably choose unit trusts only.
Making our service into a truly comprehensive collective funds supermarket may give it the edge that encourages advisers to test the water."
There is a lack of homogeneity among charges and commission levels of existing investment trust saving products, Godfrey said.
In contrast IFAs know when they buy a unit trust they will receive 3% commission and 0.5% renewal.
Godfrey believes for the aims of the 'its' campaign to succeed it must be made as easy as possible for IFAs to purchase investment trusts.
Godfrey said the supermarket will be self-funding, once an administration business is up and running.
Charges made to clients will cover the running costs as well as the cost of commission to IFAs. The commission levels will be 3% front end and 0.5% trail.
The business would be set up as a joint venture between the AITC and an administrator, using the latter's systems and personnel.
Godfrey is proposing the initial financing of the company would be raised through inviting members of the AITC to subscribe for shares in the company.
The number of shares that they would be invited to buy would be the same as they might otherwise be asked to contribute to the its programme.
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