Clerical Medical International (CMI) has developed a quotation system to show advisers how annual ma...
Clerical Medical International (CMI) has developed a quotation system to show advisers how annual management charge (AMC) rebates impact the performance of portfolios.
Rod MacDonald, marketing manager at CMI, said it had been testing the quotation system internally for a month. He said: "The service will provide intermediaries with a transparent tool on how much fund houses rebate and how this affects the performance of an investor's portfolio. The system can be used for intermediaries who have clients who wish to invest in our offshore Global Investor product.
"It uses an open architecture approach so intermediaries will have access to rebate information on thousands of funds which are acceptable under Channel Islands and UK law."
MacDonald said CMI believed the product would play a key part in treating customers fairly and give advisers complete transparency in relation to how rebates impacted performance. He said: "Feedback from advisers has suggested the quotation system will help their sales process when recommending an offshore portfolio bond."
CMI negotiates discounts with fund management groups on annual management and initial charges. MacDonald added that the discounted investment terms helped reduce the effect of ongoing charges, so more money could be invested by the client from day one. He warned that offshore investors could be losing thousands in extra costs if life companies failed to offer rebates.
For example, if an AMC on a fund was 1.26%, but 0.75% of this was rebated, an initial investment worth £250,000, with a projected growth rate of 5% over 10 years, would be worth £341,000 compared to £324,000 if the fees were not rebated.
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