IFP Sponsor NEWS
ETFs and RDR: what you need to know ETFs have arrived and are here to stay. They can also help you help your clients achieve their investment goals. In a post-RDR world, the ‘whole of market’ requirement will certainly require that you consider ETFs. The RDR consultation paper in section 2.9 refers to ETFs: “… to the extent that ETFs can be a cheap and transparent way to invest in a particular market, even under our current whole of market requirements, these products should be considered when deciding which products are suitable for a retail client.”1 The FSA appears to have recognised that ETFs can provide a “cheap and transparent way to invest” just like other index funds and that they should be included as part of the “whole of market requirements.” The consultation
paper picked up the two key benefits of ETFs for advisers: cost and transparency. They share these benefits with other index funds, such as Oeics. Ultimately, index ETFs simply offer another way to index, although there are some features of ETFs that you will need to know about before using them for your clients.
What are the key points? ETFs have proven to be a popular and flexible way of delivering pooled index funds at an even lower cost They offer another way to index and build solid, diversified investment portfolios. ETFs are not going anywhere and advisers will need educate themselves to meet the whole of market requirement under RDR Costs are key and understanding the full ‘round trip’ costs, or the cost
of buying, holding and selling an ETF, along with the breakeven point, are the keys to using ETFs wisely.
Discretionary permission Many advisers mistakenly believe that because ETFs trade on the stock exchange that they need discretionary permission from the FSA to give advice on them. Because this would ramp up personal indemnity costs, they feel that this would preclude the use of ETFs on a cost basis. But it’s worth repeating the fact that Ucits ETFs are just another fund that are covered by their normal permissions. They’re really just another pooled diversified fund with flexible access. Financial Services Authority, Consultation Paper 09/18 – Distribution of retail investments: Delivering the RDR. June 2009, p11.
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We’ll be at the IFP Conference 2012 at the Celtic Manor Resort from 1-3 October and look forward to seeing you there. Please come and see us on Stand 46 in the Exhibition Hall.
Pershing celebrates 25 years of helping financial companies in Europe to grow Pershing Limited, a BNY Mellon company, has been providing a comprehensive range of business solutions to financial companies in Europe for 25 years. Our relationship with the IFP provides us with a welcome opportunity to communicate directly with professional Financial Planners and Paraplanners right across the UK. Our New Model Custodian solution provides customisable custody, administration, portfolio management and trading support solutions for clients across the UK and Channel Islands. Managing over £38bn of customer assets and representing 477,000 investors, Pershing provides a comprehensive front, middle and back office solution which frees up wealth managers, Financial Planners and advisers to focus on their core business which is working on client relationships,
providing a Financial Planning service and investment advice. Our solution is open-architecture and multicurrency, covering all major asset classes including funds, investment trusts, ETFs, bonds and equities. As a custodian, the protection of client assets including cash is an integral part of our solution. Pershing recognises that each of our wealth management and Financial Planning clients will have differing sets of challenges and concerns and so we start by talking about their business and growth strategy. Developing understanding of our clients’ business objectives is the first step in establishing a proactive partnership that will deliver real value. We help clients with regulation, succession planning, technology and changing client demands to ensure they can develop clear business plans and strategy
and attract and retain profitable relationships. Our market is changing rapidly and we are experiencing strong demand for our services as companies seek to address increased regulation and risk management requirements. We strongly believe professionallymanaged, growth-orientated companies who serve investors with complex financial lives will benefit most from the changes resulting from the Retail Distribution Review (RDR) which comes into force from January 2013. Our focus is on helping these clients grow their businesses. Our New Model Custodian offering builds on Pershing’s existing wealth management solution, as well as Pershing’s longstanding experience in the US serving Registered Investment Advisers (RIAs) to provide high quality front-to-back office solutions to the UK financial market.
For more details visit: www.pershing.co.uk and do come and see us at Stand 14 at the IFP Conference from 1-3 October
IFP Sponsors IFP Platinum Sponsor Transact www.transact-online.co.uk
IFP Gold Sponsors Architas www.architas-mm.com AXA Wealth www.elevateplatform.co.uk Blackrock www.blackrock.co.uk Cazenove Capital Management http://www.cazenovecapital.com/ iShares www.iShares.net
Institute of Financial Planning Sponsors September 2012 Aberdeen Asset Management http://www.aberdeen-asset.co.uk/ Ascentric www.ascentric.co.uk Aviva www.aviva-for-advisers.co.uk Close Brothers Ltd www.closebrothersam.com/ intermediaries Db x-tracker www.dbxtrackers.com Dimensional Fund Advisors www.dfauk.com Dominion Funds www.dominion-funds.com E-volve Consulting www.e-volveconsulting.co.uk Hornbuckle Mitchell www.hornbuckle.co.uk HSBC Life www.hsbc.co.uk Independent Health Care Solutions www.ihcs.co.uk James Hay Partnership www.jameshay.co.uk JP Morgan www.jpmorganassetmanagement.co.uk/ adviser Just Retirement www.justadviser.com LGIM www.lgim.com Margetts www.margetts.com M&G www.mandg.co.uk Morningstar www.morningstar.co.uk NS & I www.nsandi.com Nucleus www.nucleusfinancial.com PAB Ltd www.pabltd.co.uk/info Parmenion www.parmenion.co.uk Pictet www.pictetfunds.com Pershing www.pershing.co.uk Prestwood Software www.prestwood-group.co.uk Prudential www.pruadviser.co.uk Scottish Widows www.scottishwidows.co.uk Seven Investment Management www.7im.co.uk Standard Life www.standardlife.co.uk Suffolk Life www.suffolklife.co.uk Thesis www.thesis-plc.com ThreeSixty www.threesixtyservices.co.uk Vanguard www.vanguard.co.uk Zurich www.zurichintermediary.co.uk
www.financialplanneronline.co.uk | October 2012 | 33