Bestinvest welcomes clarity of “RDR2” which will enable investors to better assess the value of services provided by different XO providers

26 April 2013

Bestinvest has welcomed the publication today of the long awaited FCA policy statement (PS13/1) covering payments to investment platform services from providers. The policy will see a move away from platform costs that are funded by payments from product providers to one where there will be a clear distinction between fund charges and platform costs. The revised regime will take effect from 6 April 2014 on new business, with existing investments to migrate across by 6 April 2016.

Peter Hall, Chief Executive of Bestinvest, commented:

“The statement today is very much in line with our expectations and we are strongly supportive of it. We welcome the transparency it heralds for investors, enabling them to better assess the value of the services they are receiving from brokers and platforms independently from the underlying fund charges.

Unlike many firms operating in the execution-only space, Bestinvest also has a substantial advisory and discretionary investment management business. In these latter areas, which account for half of our business, we have been operating on an explicit fee basis for some time and well ahead of RDR so we are entirely comfortable with a move to fee based model throughout our services.

We have undertaken considerable work in recent months in preparation for a potential new fee structure in the non-advised part of our business which will be based around commission-free ‘clean’ share classes and explicit platform charges.

We are encouraged that the FCA has flagged that where a business has previously been able to negotiate a rebate from a fund provider, the move to clean share classes should not be used as a reason by the funds industry to increase their fees. We have always sought to use our scale to get
attractive terms for our investors and will of course seek to access as low cost clean share classes as possible on those funds which are rated highly by our research team. Our ratings will however never be driven by price negotiations but based on rigorous and impartial research.

Although the FCA has indicated an 11 month timeline for firms to migrate to the new fee model, our intention will be to transition ahead of this. It is too early to guide on the exact timescale as across the industry this will be dependent on third-party administrators, where there is already pressure arising from the move to in specie transfers, and the speed at which fund groups can implement new share classes. In the meantime we will continue to ensure that it is cheaper to invest through ourselves than to go direct through a combination of discounts and rebates.”

Hall concluded: “We strongly believe RDR presents a significant opportunity for Bestinvest as we are well positioned to support those investors who have parted company with their previous adviser or been impacted by the retreat of banks in the advice space. Since the start of the year we have seen strong momentum in our non-advised business, with more than 25,000 people using our Free Investment Report Service & Tool. The range of services on offer for so-called ‘DIY’ investors differs enormously and are differentiated by much more than cost alone. We will continue to focus on providing non-advised clients with help in planning and managing their investments through access to rigorous research combined with powerful functionality at great value for money as we transition to the new fee model.”

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About Bestinvest:
Founded in 1986, Bestinvest was a pioneer of helping clients reduce the costs of investing through discounting commissions. Today Bestinvest has grown into a leading private client adviser which helps over 50,000 investors. Bestinvest offers a range of services including guidance, investment advice, financial planning and discretionary portfolio management all of which are underpinned by a commitment to rigorous investment research. Through its low cost Select service, Bestinvest offers execution-only investors a Self-Invested Personal Pension Plan (SIPP), Individual Savings Account (ISA), Junior ISA (JISA) and Investment Account with access to more than 2,000 funds as well as investment trusts, shares and Exchange Traded Funds. Bestinvest has won numerous awards including ‘Self-Select ISA Provider of the Year 2011’ and ‘UK Wealth Manager of the Year 2011’ as voted by readers of the Investors Chronicle and Financial Times and Investment Adviser of the Year 2012 at the Professional Adviser Awards. Headquartered in Mayfair, London, Bestinvest has 14 regional offices with 200 staff servicing clients with over £4 billion of assets.

About Tilney

Tilney is a leading investment and financial planning firm that builds on a heritage of more than 150 years. The Tilney Group operates under the Tilney brand for Investment Management and Financial Planning and Bestinvest for execution-only investing. We look after more than £22 billion of assets on our clients’ behalf and pride ourselves on offering the very highest levels of professional client service with transparent, competitive pricing across our entire range of solutions.

We offer a range of services for clients whether they would like to have their investments managed by us, require the support of a highly qualified adviser, prefer to make their own investment decisions or want to take more than one approach. We also have a nationwide team of expert financial planners to help clients with all aspects of financial planning, including retirement planning.

We have won numerous awards including Best Fund Platform and Best SIPP Provider at the 2017 City of London Wealth Management Awards; Investment Award – Cautious category in the Private Asset Management Awards; and Stockbroker of the Year, Execution-only Stockbroker of the Year and Self-select ISA Provider of the Year 2015, as voted by readers of the Financial Times and Investors Chronicle. We are pleased that our greatest source of new business is personal referrals from existing clients.

Headquartered in Mayfair, London, Tilney Group employs over 1,000 staff across our network of offices, giving us full UK coverage, and we combine our award-winning research and expertise to provide a personalised service to clients whatever their investment needs.