Hargreaves: IFA exits may prevent fund charge cuts

Hargreaves Lansdown has questioned whether cuts to fund charges post RDR will be as widespread as the FSA forecast in its recent Platform Consultation paper, as providers struggle to cope with IFA exits from the market.

The wealth manager, which also runs direct to consumer platform Vantage, notes the FSA's comment it "would be surprised if [annual management] charges were maintained at current levels." Hargreaves says: "We understand the logic of their expectation of a fall, whilst noting market forces are the key driver of prices rather than regulatory change. "However, we wait with interest to see if such changes will occur to the extent FSA envisage." It warns if the IFA population shrinks, fund managers may need to retain income to finance alternative distribution and advertising strategies. ...