Alan Hudson’s ground-breaking announcement that AFH will absorb platform fees has received a mixed response from competitors.
Since the announcement that AFH will scrap platform fees, there has certainly been a mixed response from competitors. Some view the decision as being too good to be true, claiming that advisers will face pressure to cover the costs themselves. Here we address the critical responses and clarify how this forward thinking strategy has the client’s best interests at the forefront.
The platform market study conducted by the FCA revealed that financial advisers often select platforms that provide a beneficial service to themselves as opposed to what is cheapest for the client. Alan Hudson stated that ‘this would be fine if the adviser was paying for it, but they aren’t.’ It, therefore, seems unreasonable to expect clients to pay this unnecessary charge when it creates no added value to their investments. It’s this philosophy that has been the driving force behind the decision to abolish platform fees. This solution means that it’s possible for clients to make the most of their investments, as they no longer have to factor in a deadweight deduction.
From here, there have been many questions surrounding how these costs will be covered. Initially, AFH’s growing purchasing power meant that lower platform fees were able to be negotiated over time. As a company that now has £4 billion in funds under management and over 200 financial advisers, AFH has reached a scale at which it has the means to absorb the cost of platform fees itself. No one likes the idea of having to pay excessive charges and with our client-focused ethos, you no longer have to.
It’s important to note here that, AFH will not be increasing any other charges to compensate for eliminating platform fees. The primary objective of this decision was to create a compelling proposition for clients.
There is an ever-growing emphasis placed on businesses today for transparency and sincerity. The solution of scrapping platform fees evidences that AFH is concerned with making decisions that are in alignment with our clients’ interests – and that of the FCA. Furthermore, with the FCA’s increasing focus on clients receiving the best value for money, we believe that this is a pioneering decision that will cause other firms to reconsider their long-term business strategies.
If you would like to know whether you could benefit from the services AFH has to offer, please give us a call or fill in our contact form to speak with one of our independent financial advisers.
This article is for generic information only and should not be constructed as advice. Please contact us before proceeding with any course of action.