Survey: Highest platform fees 6x lowest on £100k pot
Findings from a new report into platform pricing reveals advisers should not be paying more than 40bps for the use of their advised investment platform
Platform charges vary by 600 per cent from the highest charge to the lowest charge for a £100,000 portfolio, data from Edinburgh-based specialist platforms and pensions consultancy, the lang cat, has revealed.
The lang cat’s Guide to platform pricing shows that although choice exists at all portfolio levels at or below that pricing point, it’s likely that prices will see “significant downward pressure” in 2013, exposing those firms who have less robust business models and potentially leading longer term to contraction in the market.
Its Guide to Platform Pricing shows that at all portfolio points, including very small pots, advisers have at least eight platforms to choose from inside charges of 40bps per annum.
At the crucial £100,000 point, the lowest cost provider is Alliance Trust Savings, coming in at just 0.09 per cent, including an allowance for trading costs. The most expensive provider is Axa Wealth’s Elevate platform at 0.55 per cent. On a £100,000 portfolio, the data show that charges vary 600 per cent from highest to lowest.
Garry McLuckie, head of marketing at Alliance Trust Savings, previously told FTAdviser that platforms will come under increasing pressure from advisers to move away from basis points-based charges post-Retail Distribution Review as intermediaries are increasingly forced to justify the full range of costs to clients.
Mark Polson, principal of the lang cat, highlighted that the market has moved a long way from the days when 50bps was considered a reasonable rate by the platform industry.
He said: “Now many providers such as Alliance Trust Savings, AJ Bell and Aviva have costs down well under 30bps, even allowing for typical annual trading costs, and many others are in the 30-40bps range. There is no good reason for any client to pay more than 40bps for access to a platform, unless they have a very small Sipp and no other holdings. And if that’s what they have, it’s debatable whether advised platforms are really aimed at them.
“This would be an appropriate time for those providers still expecting investors to pay 50bps and over to examine the competitive nature of the market and think about whether they’re really offering value to the clients of the advisers they work with.”