Mountains

Retail Distribution Review

Rules following the Retail Distribution Review (“RDR”) came into force on 1 January 2013.  These rules effectively ban all commission paid from retail products to financial intermediaries.

What does this mean?

From 1st January 2013 investors with an adviser are no longer be able to invest in retail products that pay a built in commission/fee to an adviser.  Therefore, Margetts have launched new share classes for all funds that comply with the RDR rules.

The Margetts Annual Management Charge (“AMC”) has been reduced on B share classes to reflect the fact that commission/fees are not being paid from the product.

Any investments in the legacy share classes will remain unaffected.  However, no new money can be invested in these share classes where there is a financial intermediary, unless they are part of an existing regular investment.

The legacy share classes are still available to retail investors without an adviser, however this will be for execution only investments and therefore no commission will be paid to a financial intermediary.

The new share classes are part of the existing funds and receive the same management.  The only difference between new share classes and legacy share classes is the cost.

Is there new literature and application forms?

Yes, Margetts have moved to using Key Investor Information (“KII”) Documents, Non-UCITS Retail Scheme Key Investor Information (“NURS-KII”) Documents and Supplementary Information Documents (“SID”).  These documents replace the Simplified Prospectus and Application Form.

The website will provide documents and application forms for the B share classes only.  For literature relating to legacy share classes please contact the office on 0121 236 2380 or admin@margetts.com.

What will happen if my investor client wishes to make a change to their portfolio?

Any advised changes to a portfolio held in legacy share classes must be reinvested into B share classes.  For example, if a client holds four of the Margetts funds in legacy share classes and wants to sell one of the funds and reinvest into another, then they will have to purchase B shares with the proceeds from their sale.

If a regular investment amount or the split of the investment is amended then the whole regular investment in the future will be invested in B share classes.

Can Margetts pay a fee to me for providing advice?

Margetts have introduced an adviser charging facility to help investors pay their adviser for the services they receive.  The facility requires the investor to complete an Adviser Charge Facilitation Consent Form.  The form can instruct Margetts to pay an initial fee from the investment amount before it is invested and allows an ongoing fee to be paid to an adviser by encashing units from the portfolio.

The benefit of this system is that clients do not have to make separate payments and the amounts can be calculated automatically by Margetts and paid on a regular basis.  Investors are able to set a percentage fee or fixed fee and they are able to set the frequency of payments.  In addition, they are able to cancel the fee at any time.

Statements will be sent to investors every six months including a breakdown of the payments.

Exceptions to the above

Corporate platforms, non-advised investors and international investors/agents can still purchase the legacy share classes post 1st January 2013.  In order to verify that the investor is eligible, additional agreements have been imposed.

If you have any queries please do not hesitate to contact us.