You are here: AdviserArchive: September 2012

Archive: September 2012

This page is for Professional Financial Advisers only Latest from Cofunds - week commencing 10 September 2012

IMPORTANT NOTICE: Updated disclosure documents

From next week, Cofunds will offer commission-free share classes for funds in our new unbundled 'Explicit Pricing Model'. This will enable you to select the pricing that works best for your clients, and is an important step towards readiness for RDR. In line with this, we've also updated our disclosure literature, effective 24 September 2012.

We previously split the Terms & Conditions of the Cofunds Platform to cater for advised and self-directed clients. Now there's a further distinction between the Explicit Pricing Model (Advised and Self-directed) and Implicit Pricing Model (Advised and Self-directed) terms, so you can provide your clients with documents tailored to their investment service. You'll need to provide these documents to your clients if you change their segment online or if you set up a trade for them from 24 September.

The Customer Agreements, the equivalent terms and conditions for pension products, have also been updated for the Sippcentre SIPP and Suffolk Life SIPPs. If your client is invested in one of these products and you change their segment online or if you set up a trade for them from 24 September, you need to provide them with the relevant documents.

Your Agreement with Cofunds, which sets out all the terms that apply to advisers/intermediaries, has also been updated.

None of the changes made are detrimental to you or your clients; they're simply to bring our disclosure documents in line with the improvements we've made. You can find all the updated disclosure and application forms on the Document Centre from Monday.

The changes are effective from 24 September 2012. For more information, please visit our RDR Page.

Introducing our new consolidated illustrations

To help you prepare for RDR, we'll shortly be making some big changes to the way you illustrate for your clients. We'll firstly be launching the 'Fees and Charges Schedule' that will detail all the fees and charges applicable to your clients' portfolios.

In addition, our Personalised Illustration Tool is currently being developed and will be available later this year. While the work is underway, the way you illustrate will be changing.

The Fees and Charges Schedule

Our new Fees and Charges Schedule will detail the fees and charges that will apply to a client's portfolio on Cofunds including:

  • Cofunds' platform charges and any applicable revenue from third parties (fund managers and product providers)
  • Adviser/intermediary one-off and ongoing advice fees (if applicable) and any ongoing commission
  • Fund information (including total ongoing charges, fund manager payments to Cofunds and Cofunds rebates to the client).

Personalised illustration tool

We're currently building our new personalised illustration tool. This will be available later this year and will generate fully personalised, high-quality illustrations within the Fees and Charges Schedule for every client.

In the meantime, you'll be able to generate personalised illustrations via the 'Trade' screens on the website for new clients to Cofunds. So, if you're trading on behalf of a client for the first time, the Fees and Charges Schedule will include a Personalised Illustration showing the effect of all charges - adviser, platform, fund and product - on a client's portfolio.

Unfortunately this will be unavailable for existing clients until the new tool is available later in the year.

The personalised illustration tool will:

  • Factor in a client's existing and planned investments - both in terms of products and underlying funds
  • Include the relevant adviser fee models that apply to that client segment
  • Take account of client preferences in terms of receiving income, cash withdrawals and Sale for Regular Payment instructions.

Keep an eye out for the 'RDR Essentials - Illustrations' guide which will be available in the next few weeks.

While we're building the Personalised Illustration Tool, personalised illustrations will unfortunately not be available via the 'Illustrations tab' on the website, including those that you currently have access to.

Generic illustrations will still be available via the 'Illustrations' tab. As well as generating personalised illustrations specific to a client, illustrations can be produced using generic selections of fund charges and/or wrappers - which could be useful when demonstrating charges to a prospective client.

How this affects illustrations for the Cofunds Pension Account (CPA)

While we develop the Personalised Illustration Tool, unfortunately you'll be unable to obtain a quote via the 'Fund Related Illustration' option within the Illustrations tab on the website. However, we're launching a Total Ongoing Charge/ Total Expense Ratio calculator that can help in the meantime.

To produce a quote for a CPA, go to the calculator which can be found in the illustrations tab and select the funds to be invested into. The blended TER will then be calculated - you can then produce a generic illustration and enter this TER to produce the quote.

Converting to commission-free share class funds

Later this year - for existing clients you move onto our Explicit Pricing Model - you'll be able to convert assets from commission-included to commission-free share classes in the same fund.

Until share class conversions are available later this year, you can convert your client's assets manually by selling the appropriate commission-included share class funds and then buying the required commission-free share class funds. This will need to be processed as two separate transactions - if you try to process this as a switch, a warning message will appear.

Please note that buying and selling units could trigger a CGT event and the client would be out of the market for a short time.

Requesting a conversion from accumulation units to income units or vice-versa is considered a 'unit conversion' and remains unaffected by the introduction of Explicit Pricing.

Updates to the document centre and literature

We'll also be updating our document centre soon, so you can easily find the appropriate documents for our four new investment services. Our forms, sales aids and other literature have been updated to reflect which investment service they're applicable to - making it simple to identify the correct version for your client.

The document centre will be split into the four investment services - Advised Explicit, Advised Implicit, Self-directed Explicit and Self-directed Implicit. For more details on the investment services, take a look at RDR Essentials - Investment Services & Share Classes.

Literature specific to each investment service will be labelled in the following way:

Literature Labels

If there is no label on a piece of literature it means that it's generic, and can be used for any clients.

Application forms

It's especially important to use the correct version of the application forms for your client when instructing trades. This will help avoid any unnecessary delays and referrals.

Fund lists

Later this month, the fund lists available within the Document Centre will be updated to show commission-free share class funds. These will be easily distinguishable from commission-included share class funds as each will be preceded by a carat symbol '^'.

L&G Portfolio Plus SIPP and Explicit Pricing

The L&G Portfolio Plus SIPP is going to work a little differently to the other products available on the platform. Although this SIPP will be available to clients within the Explicit Pricing Model, it won't currently allow investment within commission-free share class funds. Therefore, any investment, either existing or new business, will have to be made into commission-included share class funds.

Existing L&G Portfolio Plus SIPP clients

Clients with this product, who are assigned to a segment with explicit pricing, can continue to top up into their SIPP - however, only into commission-included share class funds.

Instructions will need to be submitted for both switches and top ups using a paper application form. Online trading will be unavailable when investing on behalf of clients who are in an explicit pricing segment.

New L&G Portfolio Plus SIPP clients

All new clients wanting to take out an L&G Portfolio Plus SIPP will need to be within a segment with implicit pricing and will therefore only be able to access commission-included funds.

Any existing clients within an explicit pricing segment that wish to open a new L&G Portfolio Plus SIPP, can still do so, but will need to invest into commission-included share class funds using an offline application form.

The L&G Portfolio Plus SIPP will be able to include commission-free share class funds later this year.

Morningstar OBSR model portfolios

Despite the launch of explicit pricing later this month, the Morningstar OBSR model portfolios will only be available for investment within commission-included share class funds. Equivalent model portfolios suitable for investment within commission-free share class funds will be available later this year.

Morningstar OBSR will then have two versions of the Researched Fund Panel to cater for both explicit and implicit pricing. There are two sectors that won't have fund panels within the Explicit Pricing Model until later this year - UK Equity & Bond sector and North American Smaller Companies sector.

Getting paid post-RDR

If you're looking to use Cofunds to administer your fees, but haven't as yet set up fee models, take a look at our 'How do I?' section to find out more.

You can set up as many different fee models as you need - contact your Strategic Partnership Manager to set your fee models up now.

Cofunds Cash Account - A standard requirement

To help transition your business from commission to fees, where you have a client that doesn't currently have a Cofunds Cash Account, we'll shortly be setting one up for them.

The Cofunds Cash Account provides your clients with the flexibility to choose how to pay both platform charges and adviser fees. The Investment-based Platform Charge and the Fixed Platform Charge being introduced this month will be deducted from your client's Cofunds Cash Account.

For details on how charges will be taken from the Cofunds Cash Account and how to ensure fees are paid, take a look at our helpful guide RDR Essentials - Platform Charges.

Introducing the KIID Builder

If you're just looking for the Key Investor Information Documents relevant to your clients' investments, you can use the new KIID Builder we're launching soon, rather than go through the illustrations process. Our simple tool allows you to select all the required funds and, at a click of a button, all the KIIDs you need will be generated and be ready to print. You can find it within 'Client servicing' under the 'Illustrations' tab on the website.

Corporate actions

View details of recent and upcoming corporate actions.