How does Genovo handle plan charges?

Nigel Ogram

Charges. Hardly the most exciting of subjects, but the regulator is clearly focussed on the negative outcomes that charges can inflict on clients, so they are quite prescriptive on how and when advice firms disclose charges. COBS 2.2A and 6.1ZA.17 in case you’re interested…

Suitability reports are the obvious medium for informing clients about charges but explaining them in a way that a client can understand isn’t easy. In this blog, we’re looking at the various ways that Genovo deals with plan charges.

Genovo has always dealt very well with plan charges (both ex-post and ex-ante). However, when we released Genovo Version 2, we took the opportunity to deliver a range of enhancements. Many of these changes were heavily influenced by the Consumer Understanding outcome of Consumer Duty – we had two aims:

1. 1. Ensure your clients can easily understand the impact of charges on their plans.
2. 2. Help you to deal with charges accurately and intuitively, thus speeding up the report writing process.

We think we’ve achieved both of these aims, but we’re not resting on our laurels just yet – we’ve been working on some exciting new features that will be coming soon. Read on for more info…

Ex-post charges disclosure

At Genovo, we’re strong advocates of not putting content in a suitability report that doesn’t need to be there, so if you’re disclosing ex-post charges, we’d normally suggest using the ‘Signpost to a separate charges statement’ option.

Ex-ante charges disclosure

We have a confession – we’re rather proud of the way Genovo handles ex-ante charges (i.e. a reasonable estimate of charges before they are incurred).

For v2, we put in a lot of effort into enhancing the charges steps – making data entry easier, revising how charges are displayed in reports with more granular detail and providing greater automation. This is what we’ve done:

1.       Automatic calculation of monetary values.

This is the bit we’re really proud of!  It’s all very well knowing that a plan has a platform charge of x%, an adviser charge of y% and an investment management charge of z%, but calculating the monetary value can be a daunting task. OK, it’s pretty easy if you’re half-competent with a calculator and it’s a one-off lump sum investment recommendation. But what about a regular contribution plan, or a plan with regular and ad-hoc withdrawals? In Genovo, you simply enter the percentage, and we’ll do the rest.

Genovo’s charges calculations take into account the existing fund value / investment amount, plus all monies coming into the plan over the next 12 months, less all monies going out of the plan over the next 12 months. The calculation excludes investment growth or losses, as these are impossible to quantify.

We’ve even written a comprehensive Knowledge Base article that covers in detail how the plan charges steps work and for total transparency we’ve even included the calculation formulae!

2.       Simplification of plan charges tables.

We’ve amalgamated all the investment management charges into a single value for the main plan charges tables, so the tables now show only four charges categories:

1. a. Product
2. b. Platform
3. c. Adviser
4. d. Investment management

Don’t worry – we still allow you to disclose the granular details of the investment management charges with up to seven charge categories in the Current Investment Strategy and Recommended Investment Strategy.

When we launched v2, we wanted the plan charges tables to look uniform and consistent, so we applied a standard view to all tables – all percentages were shown to three decimal places, monetary amounts to two decimal places and all four charges category columns were included, even if they were empty.

The vast majority of Genovo users have been perfectly happy with this approach, but after some feedback from a small number of persuasive users, we released a new feature that provides the option to remove ‘trailing zeros’ from percentages.

3.       ‘Before & after’ view of charges in review sections.

New recommendation sections have a plan charges step, but review sections have two plan charges steps – one for Current plan charges and another conditional step for Revised plan charges. The latter is triggered whenever there’s a Recommended Action that could result in changes to the charges of a plan (for example, switching the underlying investments, topping up, commencing a regular income etc.)

1. a. Current Plan Charges – states the plan’s charges before any recommended action
2. b. Revised Plan Charges – states the plan’s charges after any recommended action

This gives the client a much clearer ‘before & after’ illustration of the effect of any increase or decrease in charges following any recommendation pertaining to an existing plan.

Upcoming feature #2 – we introduced the ‘before & after’ approach of the Current plan charges and Revised plan charges steps, we removed the ‘Comparison of Investment Strategy Charges’ step when recommending a change of investment strategy. We believed that the presence of the ‘before & after’ would be sufficient to inform clients of any change to their charges. However, after more feedback from a handful of users, we will be reinstating the implicit statement of the charges difference (positive or negative) by adding a ‘Difference’ column to the Revised Plan Charges table.

4.       Consolidated plan charges *STANDALONE ALTERNATIVE* section

By default, the plan charges tables are located in their appropriate sections. When you’re reviewing or recommending one or two plans, this is fine, as there won’t be many charges tables. However, if you have a more complex report, with several plans of multiple product types being reviewed, with several recommended actions, plus potentially a number of new plan recommendations, it would be quite easy to end up with lots of plan charges tables, spread across a number of report sections.

To counter this, we’ve come up with a really neat feature. Simply add the Consolidated plan charges *STANDALONE ALTERNATIVE* section into your report, position it where you want it, and all the various plan charges tables will be consolidated within a single dedicated Plan Charges section.

This Knowledge Base article explains all you need to know.

5.       Upcoming feature #3

We’ve lost count of the times we’ve been asked if plan charges can be pre-populated. If only it were that easy… We’ve yet to find a back-office system that records plan charges in percentage terms, let alone makes the data available via their API.

We’d love to build a feature that we can then populate with charges data, but there are just too many variations – plans have different charges for some distribution channels, platforms have different charges for varying investment amounts (and even ‘family discounts’). Adviser charging is infinitely variable, as is the cost of the underlying investments. It’s simply not feasible.

So – we’ve put our thinking caps on and come up with a solution that goes quite a long way to achieving the goal. Say hello to the Genovo plan charges profile library…

This is another ‘does what it says on the tin’ Genovo feature. Within here you’ll be able to select a combination of a Genovo recommendation section, provider, and product type, and then enter the charges associated with that entity, for example:

We’re not expecting you to build and maintain your own charges library for all plans from all providers, but merely to add the plans that you recommend most often.

All the charges fields can be populated if required. We suspect you’ll probably want to leave the Investment Management field blank, as it could be different for each client. However, if you operate model portfolios with the same charging structure, there’s nothing to stop you populating these values too.

After adding a plan into the Plan summary step of a new recommendation section, when you reach the Plan charges step, if the plan you’ve added has a corresponding entry in the Plan charges profiles library, you’ll see a new Add charges from library button. Clicking this will populate the percentage charges and the equivalent monetary charge will then be calculated instantly.

The Genovo Knowledge Base

There are Knowledge Base articles to explain how the three ex-ante plan charges steps work:

• An overview of the Plan Charges step in the recommendation sections
• An overview of the Current Plan Charges step
• An overview of the Revised Plan Charges step

There are lots of other articles in the Genovo Knowledge Base that cover charges. Simply access the Knowledge Base by clicking the  icon on the Genovo sidebar and then do a search for ‘charges’. There’s loads of results, including how to deal with charges when writing a simple ‘bed & ISA’ report, through to more complex scenarios such as How to write a report consolidating one or more existing plans into another existing plan.

Nigel’s knowledge

The upcoming new features mentioned above are part of a wider package that we’re almost finished working on. It will be released soon, when everything is done – watch this space!

Further reading

You’ll find loads more really useful information in:

• Genovo’s series of User Tip blogs;
• the extensive Genovo Knowledge Base;
• the collection of really useful Genovo matrices;
• the ever popular Genovo video tutorials;

Of course, if you’re still stuck, or just need a helping hand, you can always submit a support ticket and we’ll get straight back to you.

Finally – make sure you don’t miss any of our hints & tips – subscribe and get email alerts when we update our blog.

Share this post

< Back to latest news