Flat pricing sees Alliance shed small clients for HNWs

Alliance Trust Savings has announced that total platform assets have hit £6bn, as its director revealed an influx of wealthier customers have mitigated the loss of a number of clients with smaller portfolios following a move to flat pricing in January.

At the turn of the year the firm effectively hiked its fees by as much as 87.5 per cent for some clients as part of a move to flat fees that saw initial administration fees increased, while several supplementary dealing charges were removed.

Patrick Mill, managing director at Alliance Trust Savings, told FTAdviser that while the firm has lost customers since the change was made, it has gained more assets overall.

He explained: “The average portfolio of customers we’ve lost was around £24,000 and the average portfolio we’ve gained is over £90,000.

“So our new pricing doesn’t necessarily work for those at the lower end, but pricing at the top does work, so they’re attracted to us. Customer numbers are broadly the same, but less assets have left and more assets have been gained, so that’s helped drive asset growth.

“Since transparent charging came in and other platforms came out with their charges, people have consolidated, existing customers have taken assets they had on other platforms over to us.”

At the time of the changes in January, Mark Polson, principal of platform consultancy The Lang Cat, said that the changes would mean that the level at which the platform was the cheapest will increase to around £100,000 for a Sipp client.

Alliance also revealed that intermediary assets now stand in excess of £1bn, following a 400 per cent increase in new intermediary business. Mr Mill said that in the first six months of the year the firm doubled the amount of accounts opened through intermediaries.

Mr Mill previously told FTAdviser in February 2013 that the firm was seeking to increase adviser assets to around £3bn within three years, eventually representing around 35 per cent of the platform’s assets, or a total of approximately £8.5bn.

He commented that the firm was ahead of target on building adviser assets, but admitted gaps in technology that meant the platform could not do model portfolios or discretionary fund managers and that it would be investing to close the gap to rivals.

In February Alliance Trust Savings announced a deal with online trading technology provider GBST to revamp its platform proposition for new intermediated business from early 2015.

“We have high hopes for intermediaries, they like our pricing model and what we offer, but we need to deliver that functionality, so we’re investing heavily in new technology and see next year as a big one for us in terms of intermediary assets.”