Platforms are adding share classes rapidly. This could lead to a discussion between advisers and clients as to what is acceptable: to delay investments while the funds are made available or move to a different platform where the funds are available?
Advisers are in a difficult position. They have a duty to act in their clients’ best interests, but new fund share classes and unbundled charged funds are emerging every day and it is likely that ‘super clean’ share classes will start emerging shortly.
Any funds discounted beyond clean introduce either a potential tax consideration, in the case of unbundled pricing, or a potential barrier to re-registration, in the case of super clean.
Clean shares might look less complicated, but a significant number of standard clean share class funds have ended up being priced higher than the dirty equivalent after stripping out commission and rebate.
Advisers should ensure they have documented their platform selection process in respect of their firm and for individual clients. Their advice should also fully document the reasons for selecting a platform and the share class across all relevant factors, not just price.
Simon Thomas is head of regulatory policy of Tenet
