AXA Wealth Elevate has laid out affects of changes required by the introduction of the new platform rules on advisers and their clients.

The changes include:

  • All new business going into clean share classes from April 2014
  • The need to amend model portfolios from April 2014
  • Closure of the bundled composite charging structure on the platform with assets moved to unbundled explicit charging

David Thompson, managing director, AXA Wealth Elevate said: "With the Retail Distribution Review and the subsequent new rules for platforms*, the regulator has made clear its desire for clear, transparent charging. Having been established as an RDR-friendly business we were well set for this cultural change but, like others, need to continue to adapt to the regulatory environment."

Clean share classes
From April 2014 all new fund business will go into clean share classes, with retail classes closed to new investment (other than regular contributions).

Thompson added: "With over 2,500 clean shares made available this year, AXA Wealth Elevate has enabled advisers, and their clients, to gradually move to this new way of investing. We are already seeing more than 75 per cent of new flows on the platform into clean share classes so advisers are seemingly ready for this change. Existing investments, including regular contributions, are unaffected and can continue to be held in rebate-paying share classes, until they are switched or sold.

"A new clean share class comparison tool will be available from December 2013. This will allow advisers to search for clean share equivalents of rebate-paying funds, provide a comparison of costs, and upload details of model portfolios to instantly create clean share versions, where available. Model portfolios with rebate-paying investments won’t be able to be rebalanced after 6 April 2014. The new tool will help advisers quickly see the investment funds and share classes in existing models and where rebate paying share classes will need to be removed."

Closure of the bundled composite charging structure
Platforms will not be permitted to retain fund rebates for new investment from 6 April 2014. This means that AXA Wealth Elevate will no longer be able to offer the bundled composite charging structure, which will be closed to new business in December 2013.

The small number of remaining bundled composite clients will be moved to the unbundled explicit structure during February 2014.

Thompson added: "This process will make it easier and simpler for advisers, as they will not have to convert accounts individually at the time a new investment or fund switch is requested. This avoids the problem of accounts being locked for a period while the charging structure is changed. When existing bundled composite clients are moved to the explicit charging structure we will no longer be offering the payment of pre-RDR trail commission through the platform. As part of the migration to explicit terms, clients will begin receiving the full value of the rebates being paid from their investment funds, instead of these payments being used for platform charges and adviser remuneration. Advisers will be supported in agreeing an alternative adviser charge with their clients and need to complete an adviser charging agreement to ensure they can continue to be remunerated for the ongoing service provided. Advisers can do this through the fully automated online process on the platform, which allows them to create a new charges document and an adviser charge agreement for them to discuss with their client.

"The new regulations are a real challenge for platforms and advisers. However, having met the challenge of the RDR we are determined to help advisers again come through this process with even stronger business models and client propositions."