This week saw an extraordinary claim by HSBC.
The bank suggested a spike in sales of balanced funds towards the end of last year was evidence of IFAs commission-grabbing ahead of the implementation of the Retail Distribution Review (RDR) rules.
Here’s its rationale: according to HSBC, balanced funds are, theoretically, less likely to underperform, meaning investors will be happy to stay put.
This, HSBC said, keeps the commission tap running (remember: advisers continue to receive commission on retail investment products arranged prior to the 31 December RDR deadline, provided no new advice is given).
Is this a case of a pot calling a kettle you-know-what?
HSBC’s claim was extraordinary for two reasons.
Firstly, there is little evidence to support its assertion. While it is true that the IMA Mixed Investment (20-60% Shares) sector – which houses most balanced funds – top-sold in November and December on investment platform Cofunds, it has also been the best-selling sector overall in four of the last six years to 2011, according to the IMA. Hardly a commission grab.
Secondly, the bank offers no other explanation for why funds in the sector continue to prove popular with advisers and investors.
Perhaps somebody should notify HSBC that maybe, just maybe, the sales data is indicative of investors’ risk appetite. As one IFAonline.co.uk reader noted, HSBC’s conclusions may say more about its in-house sales culture than about any perceived unethical adviser trend.
Scott Sinclair is editor of IFAonline.co.uk and Professional Adviser
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