RDR to push investors to larger fund houses
Fidelity believes regulations that come into force next year will benefit groups such as itself that have already started adapting to the changes.
Large fund houses are likely to benefit from the regulatory changes that will accompany the introduction of the Retail Distribution Review (RDR), according to Fidelity’s Ben Waterhouse.
Waterhouse, head of UK retail sales at the group, believes that the trend towards multi-asset funds as a one-stop shop for investors is likely to increase after RDR, and that Fidelity is adapting its range in anticipation of this trend.
"There are a number of advisers looking to outsource the investment side of their business, enabling them to concentrate on the other financial adviser aspects," he said.
"This is to enable them to justify their fees by spending more time on their tax planning and other such services. We are focusing on being a support for their outsourcing."
"We are seeing quite a significant change in the fund distribution landscape, and I think RDR accelerates this change."
"One of the key differences that we are seeing is the polarisation between fund buyers and solution buyers," he explained.
Last week Rathbones’ Julian Chillingworth told FE Trustnet
that up to half of IFAs could be wiped out by RDR, but Waterhouse thinks this is overly pessimistic.
He commented: "My personal view is that we are not going to see that kind of fallout. I think the change we are seeing will take some time to work out."
"However, there are some advisers who are seeing this as a time to retire or sell out to a competitor. My sense is there’s going to be a growth in multi-asset products, particularly for low-value clients. It is becoming more competitive."
"You can divide the IFA community between those that would rather buy different funds and those who would want a one-stop solution. That’s where we would see a multi-asset solution. It depends on the IFA," he continued.
Waterhouse says Fidelity is investing further in its multi-asset business to take advantage of this change, and says a blend of multi-asset and multi-manager strategies is likely to become more popular.
Fidelity’s multi-asset and multi-manager range
Source: FE Analytics
In the last five years, Fidelity has launched seven multi-asset funds – including its multi-asset allocator range back in October 2011 – as well as the Fidelity Multimanager Balanced Portfolio, which sits alongside Fidelity Multimanager Growth and Multimanager Income.
"Traditionally multi-manager funds were a single asset class of unfettered products whereas multi-asset funds were fettered, but this is changing,"
"My view is that they were always similar types of vehicles and now they are coming together."
The struggling economy has made it harder for funds to attract inflows and driven investors to similar portfolios, which Waterhouse says Fidelity is looking to take advantage of.
"If your process post-RDR requires a specific rating that will mean the funds with a rating get higher inflows," he said.
"We are starting to see more and more concentration in fund flow. It does become extremely important for fund groups to bring to market leading and truly differentiated products."
"If you don’t provide something different it is harder and harder to get inflows," he finished.