Meteor Asset Management has recently launched a new securities brokerage service to allow advisers to access multiple securities.
The plan for a new securities brokerage service was unveiled by Meteor Investment Solutions MD David Stuff (pictured) in October 2012, as a way to allow investors and advisers to have one account from which to purchase a number of plans and securities.
"What we are basically saying is that if you want a plan we still can provide you with one, but if you don't want to buy a plan as it was you can now buy only the underlying security and place it in the account," said Meteor's MD Graham Devile. "If you want to transact with it via a platform or if you want to buy it from a stockbroker that is also fine. What we are saying is that we're agnostic about how you purchase."
Devile told SRP that Meteor had been thinking about this proposition for some time but that the Retail Distribution Review had been the catalyst to move the firm into offering an account that can access multiple securities, including daily traded securities.
The firm expects that 95% of the structured products business will be done through wrap accounts in the short term and the new Omnium account will provide Meteor with an edge as "this will be the best way to consolidate the administration for those buying securities for structured products," according to Devile.
"You want to see structured products held clearly alongside any other assets in a client's portfolio, and you don't need to have the administration and custody charges for every product you have," he said. "If you take this route, investors will have to pay an explicit administration charge for the account, and the custody charges will change to 30-35bps depending on how you want to set up your account. The products will look significantly better because instead of pricing at for instance 98%, they will be pricing effectively at 94%."
However, a number of quarters in the UK market believe that this approach will take some time to get traction.
"Ultimately most providers are comfortable maintaining the plan model as the known entity for independent financial advisers (IFAs), and IFAs will still prefer the plan, said Ian Lowes, MD at Lowes Financial Management. "I think the idea of directly investing in securities will take some time to get traction as the products will look different, but I don't see structured plans disappearing in six months."
Lowes said that the choice of directly accessing the securities may cut some costs but it will have a limited effect. It is unknown if IFAs have permission to sell securities and some compliance officers may not be comfortable with this approach.
"They differ from plan managers that are still selling their products in a plan format, but that is not to say either that it is the right or wrong decision," said James Harrington, head of structured solutions at Legal & General Investments. "It gives more availability to the market of different ways of accessing products and that can only be applauded. If this is the route the market will take only time will tell, but I don't see market participants choosing this direction solely straight away."