AXA Investment Managers in London has announced that it is to negotiate flat fee rates on investment services for its UK pension fund clients, becoming the first manager to abandon so called ‘soft commissions’ following the recommendations of the government-initiated Myners report into institutional investment.
The firm says the initiative, which at present is solely targeted at UK institutions, should come to fruition in the next two to three months following a discussion period with pension funds and their advisers.
AXA says it will not be waiting for the results of a report on the subject commissioned by the Fund Managers Association (FMA), nor the view of the UK Treasury on the Myners report, before moving forward with its proposals.
Chris Cheetham, global chief investment officer at AXA, comments: “Our aim is to tender services to our customers in a way that best suits them and meets their needs, this is about transparency and giving pensions funds choice.
“The plan is that we will be talking to our clients and their advisers over the next two to three months and seeking their views, seeing how they would like this to work for them.
“If they wish us to go down the Myners route then that is what we will do. We’ve thought about this very carefully and we don’t think it is necessary to wait, for example, from the report from the FMA.”
Cheetham concedes that the move may not save clients money, but points to the business logic behind AXA’s decision: “This may or may not save money for clients, that’s not clear. The issues here are quite complex, we’ve thought about this quite carefully but I don’t think anyone can predict what will happen if indeed the industry starts to go down this route, which it may or may not.
“We don’t know how clients will react and we don’t know how investment managers will react.
“What we do know is that we are in the business of delivering superior investment returns in a way that suits clients, both in terms of packaging, pricing and reporting and so on.”
While the charge structure is UK focused at present, he adds that demand may see it rolled out overseas: “This is a UK initiative today. It is clearly a business decision on how we see the UK institutional market today.
“Whether other people do this or whether we do it in other markets will also be a business decision depending on customer demand and the conventions in those different markets.”