Platforms still need to collect fees on sick investments: Aegis

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Investment administration platform Aegis has refuted recent media claims that charging fees on impaired assets is unfair.

Thursday, June 19th 2008, 6:04AM

by David Chaplin

Ryland said Aegis fees - which average about 30 basis points - are only "a small component of the overall adviser fee and relate to the administration of assets".

"The administration required for impaired assets continues and often increases," he said. "It is important to note that the investor can discuss with their adviser the option of transferring the assets to their own name - providing the issuer allows this."

Ryland would not disclose the amount of distressed assets, such as finance companies in administration or under moratorium, currently on the platform, however, he said it represents "a very small proportion of total custodial funds held on Aegis".

In a message sent to Institute of Financial Adviser (IFA) members yesterday, the outgoing president, Simon Hassan, also defended Aegis' right to charge fees on impaired investments.

"While a platform provider will also need to consider issues around fair valuations, they are unlikely to have to face all the moral or ethical issues that an adviser needs to," Hassan said in the letter.

Ryland said Aegis prices assets based on official sources such as the last unit price for managed funds. In the case of assets in receivership he said Aegis used the mid-point of the receivers' estimated range of possible values.

"If the unit holders have agreed to a moratorium where the management have indicated the capital should be repaid over time the price will remain a dollar and the holdings adjusted accordingly to reflect any capital repayments," Ryland said. "No accrued interest is carried in the valuation.

We will review the appropriateness of this valuation throughout the capital repayment process."

In his message to IFA members yesterday, Hassan said advisers should consider "the soundness of advice and remuneration that is fair" when judging how to charge for investments such as distressed finance company debentures.

"So with a finance company in receivership - where sound research and diversification are in evidence - using the average of a range provided by the receiver (and diligently keeping this up to date) appears to meet the fairness test," he said. "Moratoriums may present more difficult problems - calling for very careful judgement. And once again, the final test will be what a jury of your peers would think."

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