Superclean to become the new clean – Barclays research

The Barclays Equity Research team has analysed the changes taking place with part 1 of RDR turning one year old.

With part 1 of the Retail Distribution Review (RDR) now almost 12 months old, the Barclays Equity Research team has reviewed the changes taking place in the asset management industry.

According to the research, “clean” fund share classes, stripping out advisory and distribution fees, have already become established, while the debate will now focus on pressure to offer discounted “superclean” versions.

“Manufacturers are attempting to limit these discounts to only the largest distributors and across a select fund range, but we ask the question whether this trend becomes more widespread,” the report reads.

Before April, direct to consumer (D2C) platforms must set out their direct fees. We believe this will be accompanied by greater detail of superclean discounts, causing the debate to intensify.

D2C platforms to detail direct pricing and superclean discounts: In December the key D2C platforms are likely to detail how they will start charging retail customers direct. We believe this is likely to be a sliding scale account charge in bps of assets on platform, Barclays’ report also highlighted.

“In our opinion, pricing is likely to be in the range of 30-70bps, but we question quite how price sensitive customers are likely to be, with levels of service, brand trust and marketing spend being as important determinants of platform usage. At the same time as outlining fees, the larger platforms are also likely to unveil superclean discounts,” the report read.

The research also said that platforms are set to become increasingly dominant, as retail customers’ desire to see one aggregate picture of their savings across multiple manufacturers with real-time access and valuations, favours platform usage.

“We believe the RDR causes strong growth in self-direction and orphaned UK clients, particularly due to “Sunset Clauses” causing further trail commissions to be switched off,” the report also said.

Click here to read full research Superclean – coming to a platform near you

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