Cofunds challenges wraps with new unbundled model

Platform giant Cofunds has denied it is instigating a pricing war with the wraps as it rolled-out an unbundled charging model.

The new model, which will go live in the middle of next year, includes a £40 annual charge and a sliding scale platform fee ranging from 0.29% to 0.15%, charged monthly to the cash account. There will be no switch or front end fees.

Cofunds has also requested fund managers issue a "completely clean" share class with a 0.75% AMC.

"We believe we should move to a new transparent model where the end investor is much clearer about what they are getting," said CEO Martin Davis (pictured). "This is about driving efficiencies for advisers."

All rebates - whether in the form of cash or units - will be paid back to investors, said Cofunds.

The FSA recently signalled its intention to ban both cash rebates paid to clients and fund manager rebates but Cofunds CEO Martin Davis said the ongoing uncertainty and lack of clarity from the regulator has "not been helpful".

In addition the pricing model, which Cofunds said will support a range of adviser fee models, will help IFAs consolidate their portfolios.

Head of proposition Verona Smith also revealed the new proposition will include greater VAT flexibility for advisers whilst facilitating the collection of initial fees.

Alongside its unbundled pricing structure, Cofunds is also widening its range of investments to include exchange traded funds (ETFs). The platform is currently conducting a pilot with a major stockbroker to enable the trading of ETFs.

CEO Martin Davis said the "aggressive" pricing structure has not been launched to start a pricing war and conceded the new fee model will impact the platform's revenues. But he added its financial muscle enabled it to bring the model to market.

Davis also said the platform will ramp up its execution-only offering by creating the infrastructure to allow brands to go directly to consumers. The platform also will launch a junior ISA for the execution-only space.

The new unbundled structure will not apply to its execution-only business and advisers can also opt to stay in the platform's current bundled offering. 

Davis said the new-look Cofunds will focus on three core propositions: its execution-only or "investor" business, the wealth space - which will remain the main part of the business - and the "enterprise" space covering stock brokers, life companies, banks and fund managers.

He added its institutional business, which recently agreed a tie-up with SEI, is on the verge of closing a couple of deals.

Cofunds is also putting in place a business transition programme for advisers covering areas including client segmentation, investment management and use of model portfolios.

New platform fees

Investors with assets worth up to £100,000: 0.29%
Assets between £100,001 and £250,000: 0.26%
Assets between £250,001 and £500,000: 0.23%
Assets between £500,001 and £1m: 0.2%
Over £1m: 0.15%