Skandia is attempting to shake up the platform market with the launch of an online calculator, PriceWatch, to enable financial advisors to produce fund specific comparisons of the costs of different platforms.   

Although recent FSA guidance on pension switching and the downturn in investment markets places a sharper focus on platform expense, comparisons are challenging. Skandia say this has provided plenty of hiding places for expensive platform propositions and has encouraged the company to develop PriceWatch, n order to help advisors better understand the charging structures of the main platform providers.

“Projections in the platform market are a mess. Each platform offers a different charging model and has a different way of illustrating these charges. Trying to decipher how the differing charges add up is a challenge and any advisor wanting to compare price as part of a due diligence process spends a lot of time analysing the charging models and doing the maths. It is especially difficult to do this manually when not all platforms are up front about where the charges originate from,” said Peter Jordan, head of proposition marketing at Skandia.

“PriceWatch is no replacement for client specific projections but it provides advisors with a sense check when deciding which platform is most suitable. The tool will save advisors time while helping them demonstrate the rationale behind recommending one platform over another. Clearly price isn’t everything but it is a basic hygiene factor when selecting platforms and advisors need to at least understand any price differentials before they attempt to justify using a more expensive platform,” he added.

An advisor begins by choosing the product wrapper and investment amount and can then select a portfolio of funds. The tool will use Financial Express fund data and overlays all charges levied by each platform, including annual fees, initial charges, commission and Fund Manager Initial Charges, to show how the costs vary from platform to platform for the same portfolio being invested in the same product wrapper.

In addition, to illustrate why fund switching is becoming more important a switch turnover option is also available. It’s understood that to keep a client’s portfolio in line with their attitude to risk the need to rebalance from time to time is inevitable. An advisor will be able to estimate the percentage of switches they believe will be required each year and add this into the calculation. The tool will factor in the fee for switching charged by some providers and show how this impacts the total cost.

The platforms included in the comparison are the main providers in the market: Transact, Cofunds, FundsNetwork, Nucleus and Standard Life. The 200 funds that make up 90 per cent of the funds invested in on the Selestia Investment Solutions platform are available for selection and at launch the products available will be an ISA and the Collective Investment Account.

Launched in 1979, Skandia has funds under management of £36.3 billion (as at 30 September 2008).

Skandia is owned by Old Mutual, an international savings and wealth management company based in the

UK. Originating in
South Africa in 1845, the group has a portfolio of businesses offering asset management, life assurance, banking and general insurance services in over 40 countries in Europe, the
Americas,
Africa and Asia-Pacific.