IFAs piled into balanced funds to maximise commission - HSBC

Analysts at HSBC have suggested the popularity of balanced funds towards the end of 2012 was due to advisers attempting to maximise commission income before the implementation of new rules following the Retail Distribution Review (RDR).

Funds in the Investment Management Association's (IMA's) Mixed Investment categories - which house most balanced funds - were noticeably more popular just before the commission ban, the bank said. Given balanced or multi-asset funds are, theoretically, less likely to underperform, the bank argued, clients were less likely to request a switch, allowing the adviser to keep commission for longer. Under rules set out by the Financial Services Authority (FSA), commission was banned on retail investment products from 1 January. However, advisers are in most cases allowed to retain the tr...