Skandia’s new pricing is ‘a chance missed’, experts
Advisers and commentators have started to react to Skandia’s new unbundled pricing model for its platform announced earlier today.
Skandia is the last of the big three fund platforms to announce its unbundled pricing structure, after both Fidelity FundsNetwork and Cofunds - unbundling its own charges from fund managers’ and financial advisers’ in response to the new RDR rules.
The group has said it will levy a single platform charge based on the level of customer assets on the platform with no additional charge for product wrappers. The minimum monthly charge of £8.33 is part of the tiered charging structure – not on top of it, Skandia added.
The first £25,000 of assets will be charged at 0.5 per cent a year, £25,000-£100,000 charged at 0.35 per cent, £100,000-£500,000 charged at 0.3 per cent, £500,000-£1m charged at 0.25 per cent and £1m+ at 0.15 per cent.
Mark Polson, principal at platform consultancy The Lang Cat, said the new structure was potentially an opportunity missed for the group in terms of trying to offer customers a lower price than its peers.
“Skandia had a chance to really lead on pricing and put the boot into the others,” he said.
“It chose not to do that, and while I respect that, it feels like a chance missed. I’m also not a fan of tiering structures generally - they’re complex and do more to protect the provider than the client.”
Mr Polson said based on his analysis of platforms Skandia is “a little more expensive” for funds and Isas.
“Skandia is full of smart people and they know this - they’re hoping that their better rebates will make the difference and allow them to take a little more in terms of charges while keeping the total cost of investing the same,” he said.
But Mr Polson added when Skandia’s tax wrapper and pensions are considered the platform “comes alive”.
“It’s a good multi-wrapper proposition and the pricing looks much sharper when you look at a case that has, say, Isa, GIA [general investment account] and pension money,” he added.
Martin Bamford, managing director at Informed Choice, said prices on the big three platforms are all “broadly the same” when considering some typical client portfolio sizes and activity levels.
“Leaving aside price, as this is broadly comparable between the three, the main considerations will be service standards, range of available funds, online capability and financial strength,” he said.
“As there is so little in it between these three platform providers, advisers would be justified to view them solely as administration providers and focus more energy on the underlying investment strategy.”
Mr Bamford added he uses all of the big three platforms but the majority of new investments go to smaller player Ascentric because “they offer the best service and they are competitively priced for our typical client portfolio sizes”.