Alliance Trust Savings has effectively hiked its fees by as much as 87.5 per cent for some clients in a move to flat fees that has seen initial administration fees increased but a number of supplementary dealing charges removed.
The platform has almost doubled its annual administration fee to £75 from £40 for an Isa/investment dealing account and from £135 to £155 from £135 excluding VAT for its self-invested pension wrapper with effect from 1 February.
Alliance Trust said the new fees will include ad hoc activity such as corporate action fees and cash withdrawals on non-Sipp accounts that were previously charged separately. Online and offline dealing fees remain unchanged and fees on child accounts have been frozen.
Patrick Mill, managing director at ATS, said that the platform is “fundamentally committed” to a transparent flat fee model as the value of an individual account does not change the cost of administering it.
He said: “We believe percentage charging structures are simply a tax on wealth. However, we have listened to feedback from our customers about the service we provide, our online service and the ad hoc charges that we apply to their accounts.
Mark Polson, principal of platform consultancy, The Lang Cat, said that while Sipp clients are seeing a 10 to 15 per cent rise in fees, Isa and investment dealing account clients will see a much larger 87.5 per cent hike on the standard option and 50 per cent on the version available to advised clients.
He added that the changes mean that the level at which the platform was the cheapest will increase increase to around £100,000 for a Sipp client.
In a blog on The Lang Cat website, Mr Polson wrote: “ATS is probably no longer so much in the hunt for sub-£100,000 Sipp business on a price basis. It’s absolutely back in its usual spot at the £100,000 mark, and by the time once again you’re up to [£500,000] then it remains by far the cheapest option.
“If you’re an investor with a small portfolio, maybe £50,000 in a pension and £30,000 in Isas, your adviser will probably point you away from ATS.”
He added that ATS remains a “compelling choice” on cost grounds as it ever did and even stated that it “was probably too cheap” before.
Mr Polson said: “ATS has a lot of work to do in terms of basic functionality; my hope is that this will allow them to get that done and deliver more of what advisers really need.”
As part of the price move, ATS has committed to keep charges at the new level until at least 2016 to provide customers peace of mind and is also offering free transfers until 28 February 2014 to customers who decide to move their investments.
Last year, in an interview with FTAdviser, Mr Mill revealed that the platform was on track to record double its 2012 sales total in the first quarter of 2013 alone.
Mr Mills said the platform, which previously operated an exclusively direct-to-consumer model, was coming from a “low base” and had risen adviser assets to around £500m. Total assets on the platform stood at around £4.5bn.
He added that the firm was seeking to increase adviser assets to around £3bn within three years, which would eventually represent around 35 per cent of the platform’s assets - equating to a total of approximately £8.5bn.
