Sometimes we read a story which we think shines a strategic torch on the road ahead, providing an illustration beyond the company in question of some general market moves. Interesting news from Cazenove Capital Management this week as the manager unveils the X share class as the default for platforms, waiving the £1m minimum entry, and carrying a clean charge of 75bps for equity funds and 50bps for multi-manager funds (according to Money Marketing).

D2C platform clients will pay 1% and direct customers to Cazenove will pay 1.5%. The group is being pretty clear about where it wants business to come from – financial advisers who use platforms. If D2C platform clients pay 1% this is the first sign of the market moving ahead of the regulator here – so far XO platforms have been excluded from the rebate ban but this sort of move shifts their goalposts and makes it very hard for them to take the same margins which they are today. In one sense, this move will please adviser platforms (and certainly the smaller ones) as it helps make a case for using them. We think that those platforms doing the client aggregation work should receive institutional pricing. In the future ‘retail’ will only mean direct, as all advised business will be aggregated in some way.

The group also announced linking the multi-manager to Distribution Technology who have risk-profiled the range. This makes for a potentially compelling proposition for smaller clients if used in conjunction with a cheaper platform. Easy process, outsourced investment, reasonable costs. Nice one. We’ve thought for a while that multi-manager was losing out in the march to a ‘centralised investment process’, when models or discretionary won’t be fit for everyone. At 50bps you can’t really argue about cost and it brings this option back into focus – it certainly takes the fight to the model portfolio route. Other multi-managers have re-thought their relationships with platforms too – Architas made a splash last year when Axa waived their platform fee on Architas assets held on platform. I suspect we’ll see more of this ‘cross-selling’ from life co platforms and this will present good opportunities for some clients.

Back to Cazenove, and the problem is that the group have bet heavily on platforms here but proffered their distribution ‘champions’ a deal which has no skin in the game for them. Today. They will also inevitably see assets migrate to this cheaper share class. This is easier to do for a newer fund group such as Cazenove with ‘only’ about £4 billion in funds. It’s a much tougher call for the big boys with significant back books to worry about and they really are agonizing over this.

We think Cazenove’s moves get 10 out of 10 in the classroom for future positioning. But out there on the mean streets we bet there will be some really interesting meetings around mahogany tables with some of the bigger platforms who won’t like (justifiably?) being offered the same deal as the minnows. 2012’s comedy of manners is just how to express this in our new squeaky clean world!?

Have a great weekend everyone. Little Bee is nearly 2 and insistent that 4am is time to get up and watch Sleeping Beauty, which turns Mummy into Awake Ugly. Yawn. The battle continues……………

Holly