Brian Dennehy, the managing director of Dennehy Weller, today criticised the management of Cofunds in an open letter sent to Brett Williams, chief executive of the fund platform.
In the letter the author warns of “frequent confusion over leadership and direction” from Cofunds, accusing the management of following policies designed to increase the value of the company at IPO, rather than servicing the needs of its clients.
As an example of this, the letter points to the Cofunds’ summer conference on emerging markets held last year. The letter says the company was selling emerging market funds to advisers, a policy which Dennehy calls “bizarre”.
The arrival of Legal & General (L&G) as a major shareholder has also brought into question the independence of the fund platform, according to Dennehy.
He says without changes to the current model, he has doubts over whether the business can meet the proposals set out in the Retail Distribution Review. The letter calls on Williams to focus on providing a “simple infrastructure” for advisers to lessen the administrative burden of investing, rather than rushing towards an IPO.
Alastair Conway, the marketing and proposition director at Cofunds, says he is “disappointed” with the way the concerns have been addressed.
“I think we are very clear in what we want to be doing,” says Conway. “We want to support financial planning for advisers, and there’s no ambiguity in our minds.”
Conway says Dennehy’s worries are not shared by most of the customers that he has spoken to who use the platform, and in fact most are supportive to the company’s growth plans through increasing the services it offers.
“We got ourselves into profitability last year and we want to do the same this year. That’s what advisers want to see, because if we don’t do that then we’re a charity and not a business,” he says.
On the subject of whether L&G present a challenge to Cofunds’ independence, Conway strongly rejects the suggestion.
“L&G are an important partner, but they are far from having a position where they can dictate what we should do,” he says. “We’re not looking past the fact that we still need to do the basics very well, but it is not our job to tell advisers how to interact with us, just as we don’t need advisers telling us how to run our business.”