Standard Life is today committing to a definitive timeline for becoming one of the first platforms to operate on a fully ‘clean' basis.
In November, Standard Life will carry out the bulk conversion of all investments in bundled share classes to their unbundled clean equivalent - including available discounted share classes (or ‘super-clean').
This means by the end of 2013 Standard Life will no longer offer the bundled retail share classes to new or existing customers on the platform except to facilitate re-registration. Prior to this date, advisers are able to consider investing in unbundled share classes - of which there are now more than 2,000 on the platform - when making or changing mutual fund investments for clients.
There are three key reasons why the platform is pushing ahead to do this in 2013:
- The income tax liability on rebates from bundled mutual funds is a significant increase in the cost to investing for most advisers' clients - between 0.15% and 0.40% on a typical bundled share class. By paying the rebate tax bill until the end of 2013 and decisively moving to unbundled share classes Standard Life is eliminating this additional cost, along with all the associated client conversations and tax reporting
- Supporting the FCA's desire for transparency. Clean share classes facilitate ease of comparison and healthy competition. This facilitates clarity of choice for advisers and their clients
- Completing a bulk conversion negates the requirement to create platform legacy. Having different clients in different share classes is difficult to justify as part of an on-going advice proposition. The consistent use of the cleanest share class helps advisers demonstrate that they are treating all clients fairly
David Tiller, Standard Life Head of Platform Propositions, said: "We are making a clean break by converting all funds on our platforms in bulk to unbundled share classes. We're doing this ahead of the FCA deadline, as we did with RDR, so advisers can focus on adding value for clients rather than asking them to manage the tax liability, deal with platform legacy issues or coordinate a drip feed conversion process over the next 2 years.
"Given the tax liability on rebates will increase the cost of investing in bundled share classes, it was difficult for us to justify continuing to offer them on our platforms when a better option is available. The conversion is an unprecedented piece of work but worth the effort. We want to help advisers and clients move to unbundled share classes quickly and efficiently. In an increasingly cost-conscious market demanding both simplicity and transparency, this approach was the only option that made sense to us".
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