Speaking at the recent FSA Asset Management Conference, FSA technical specialist Rory Percival said: "One easy test is if it looks and feels like advice than it probably is advice from a consumer's point of view."
So does issuing your list of preferred funds or one of your investment gurus putting together an appropriate portfolio for a growth investor constitute advice? I've always thought that investors look at this as advice, despite all the disclaimers. But it would be annoying to see a regulatory clampdown on what is essentially useful information for investors who don't want to pay for advice.
What matters more and I would prefer the regulator to address is transparency of costs across platforms. Now we have industry acceptance of a need for better cost transparency among the funds themselves, what we also need is better cost transparency across the platforms that sell them.
Trying to compare fund platform fees is too difficult for investors. Take Alliance Trust Savings, one of the simplest platform offerings. Although its fees are difficult to find on the site, the company tells me there is a flat fee for holding your assets on the platform (£40 for an Isa and £135 for a Sipp), plus a flat rate dealing charge of £12.50 whenever you choose to buy or sell an asset. It also rebates all commission to investors. I like this proposition because investors get to know what they are paying in pounds and pence. But Alliance Trust Savings admits that the model doesn't work as well for small investors.
Other platforms deal in basis points, whereby you will know that a small percentage of your investment is going out over time. This will vary from investment to investment and is more difficult for investors to grasp the actual monetary value, but may work out a better deal for smaller investors who are starting out.
New fund platform Rplan already gives investors a monthly account summary stating exactly how much has been paid in fees and commission in pounds and pence over the period. I would like to see a requirement for all platforms to do this.
