Fund managers looking to offer clean share classes could find it "cheaper" and "simpler" to adapt existing institutional share classes as opposed to developing new ones, Deloitte has suggested.
The recently confirmed ban on legacy commission post 2013, in addition to a likely ban on platform cash rebates, makes it imperative for fund managers to introduce RDR-compliant share classes with adviser commission and platform charges stripped out.
But business advisory firm Deloitte has said the cost of developing new factory-gate share classes will be "prohibitive", citing the need to seed the new share classes, register the classes and publish a prospectus and key information documents.
"The costs could be prohibitive, particularly if repeated across a large number of retail funds," said Deloitte lead investment partner Eliza Dungworth. "Rather than meet the high costs of developing new RDR share classes, fund managers are looking at adapting institutional share classes for retail investors."
In September, Cofunds called on fund managers to issue new share classes as it unveiled its new unbundled charging model and pricing structure, set for launch in the second half of this year.
Chief executive Martin Davis recently disclosed most fund managers are getting on board and are issuing, or planning to issue, clean share classes.
Schroders, Rathbones, Invesco Perpetual, Cazenove and Jupiter are among some of the fund managers to have issued RDR-compliant share classes. For more details click here.
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