A warning from Rathbone’s trust business that some UK discretionary fund managers are trying to secure relationships with independent financial advisors by offering “unsustainably” low prices have been challenged by an investment house.

Last week, Ian Buckley, chief executive of Rathbone Brother's trust division, was reported by Citywire as saying that Rathbone was losing business to competitors who cut fees to attract IFA business. The article did not name such competitors, and Buckley did not give any names when asked about this issue by WealthBriefing last week.

He later told this publication: “We were seeing one or two people offering services to IFAs at a margin that would not be appropriate for us to deliver.” He also argued that it was "absolutely appropriate" for prices to vary depending on the type and scope of the discretionary service offered. "We pride ourselves on the level of service that we offer to our clients," Buckley said.

His comments come at a time when financial advisors are looking to spin off investment management activities as part of structural changes encouraged by the Retail Distribution Review, a UK programme of reforms which tighten qualification standards and seek to drive out the use of sales commissions by IFAs.

One provider of discretionary fund management, London & Capital, said that in the age of investment platforms, it should be possible to sustainably offer services at a low price.

“At 25 basis points London & Capital is the most competitive player in the market, and it has a super-low minimum investment at just £1,000,” the firm said in an emailed statement.

“80 per cent of the UK’s wealth management industry is controlled by IFAs and many of those intermediaries are working in small practices. They face numerous challenges as we race towards the implementation of the Retail Distribution Review, not least the qualifications they are required to secure if they are to advise on investment matters going forward, and the re-engineering of their existing business model,” Richard Leigh, managing director at London & Capital, said in the same statement.

“It therefore disappoints me that some providers of DFM services appear to be more concerned about the margin they believe they should be making on the services they provide than the issues being faced by the intermediary community they purport to serve,” he continued.

“At London & Capital we have made available to the mass-affluent market an investment process proven over almost 20 years, through a range of risk-graded managed portfolios.  In the age of the platform I see no reason why it should not be possible to provide a DFM investment service of this nature cost-effectively, and for that to be sustainable,” he added.