Some argue that a unit is clean if the rebate has been reinvested. But just because a rebate is no longer retained by the platform provider does not make it clean.
The challenge is that the lower cost is sometimes derived from fund managers providing a larger rebate that is reinvested – so not necessarily clean – which opens itself up to potential tax liabilities for the customer.
So even a clean share class in the eyes of one platform may not be clean in the eyes of another if they have secured a rebate.
Advisers need clarity so that they can offer the best investment options to their customers.
The regulator has been clear in its drive for transparency and the benefits this brings to the customer.
We, as an industry, have without doubt come a long way in demystifying the world of investment and the charges customers pay, although it is clear we have some way to go.
We need a consistent naming convention, and for those offering super-clean share classes, they must also offer the more common clean share class to facilitate reregistration when customers wish to move assets between platforms
Alistair Wilson is head of retail platform strategy at Zurich
Share classes: super clean gathers momentum
What do advisers and clients need to keep in mind?
Alistair Wilson, from Zurich, suggests: “Super-clean share classes, for example, can drive down unit costs for customers, though consideration needs to be given to the total cost of investment. The availability of super-clean share classes can also present challenges for customers who wish to move assets on to a new platform that is unable to offer the same share class.
“As the industry moves towards more flexible retirement arrangements next year, this issue is likely to gather momentum, with customers having greater choice of where to invest their assets. It is important, therefore, that advisers ask how platforms are dealing with rebates, super clean and the like, as the terms being used across the industry mean different things to different people.”
