See, they all bang on about ‘it’s not price, it’s value?‘ and all that kind of thing, and then the tweaking starts.

The latest tweak isn’t from a platform; it’s from a DFM. Brooks Mac, a highly respectable and well-supported DFM is cutting the charge for its model portfolios from an average of 60bps inc VAT down to 42bps inc VAT. There follows some justfication about platfom efficiencies and whatnot, but the truth is that the visibility of the pricing of these services is flattening out the market.

We did a bit of work on all this stuff for Skandia the other week, which made us unpopular with a lot of people! fine, can’t be friends with everyone. The main finding, though, was that the TCO of the portfolios themselves was relatively flat! a smidge more or less here or there. But the big cost, and the one that Skandia is clearly concentrating on, is the annual DFM charge, which ranges from zero for Skandia’s new kit through to 60bps or even more for some of the more rich-mahoganied guys with the impressive wristwatches.

We remain quizzical on why an ad valorem charge of even 30-40bps, with no capping or tiering, is the right model for renting the intellectual property and basic portfolio management of a centralised DFM model portfolio proposition, but that’s probably just us.

What really matters, though, is that advisers can start to see clearly what the costs of these services are; what they’re asking their clients to bear. And with that visibility and transparency in place, advisers and clients can start to attribute value or otherwise to what’s coming out of Brooks Mac and their competitors. And that makes the market healthier.

We expect to see further tweaking over the coming months; we’ll keep you updated!