Research conducted by the Association of Investment Companies has shown wide disparity between the costs faced by advisers of buying investment trust shares for clients via platforms.
The research, conducted with the Lang Cat, a consultancy firm, showed the cost of holding investment trusts in portfolios ranging from £25,000 to £1m across 17 platforms.
The charges generally take two forms, an annual ongoing charge, and transaction, or dealing costs.
Ongoing costs are generally levied as a percentage of client assets, though Alliance Trust Savings has a flat fee model.
Costs for trading investment companies were found to vary widely.
Two platforms, Ascentric and Seven IM, do not charge for trades, while Raymond James and Alliance Trust Savings offer a charging option where trades are included.
Otherwise, trading costs can be as little as £2 or as much as £25, or even more for large transactions.
The research looked at the cost of a portfolio invested 50/50 per cent in open-ended funds and investment companies, with four transactions (buys or sells) a year.
The data showed the costs for maintaining a £250,000 portfolio invested in this way range from 0.21 per cent of client assets at AJ Bell or Alliance Trust Savings to 0.6 per cent at Novia, which was a difference of more than £1,000 a year.
In the first half of 2017, purchases of investment companies on adviser platforms reached a record high of £513m, according to data from Matrix Financial Clarity.
| ADVISED PLATFORM | CORE CHARGES | AD HOC INVESTMENT COMPANY TRADING |
| Aegon Retirement Choices | Value Charge (pa) £0 – £29,999 0.60% £30,000 – £49,999 0.55%£50,000 – £99,999 0.50%£100,000 – £249,999 0.45% Balance over £250,000 0.00% | 15 |
| AJ Bell Investcentre | Value Charge (pa) £0 – £1m 0.20% £1m – £1.5m 0.15% £1.5m – £2m 0.10% £2m+ 0% | 3.95 |
| Alliance Trust Savings(inclusive charge option) | ISA and GIA : £225 | Product charge includes first 35 fund/ETI transactions a year £6.25 after that |
| Alliance Trust Savings(standard charge) | ISA and GIA : £30 a quarter | 9.95 |
| Ascentric | Value Charge (pa) £0 - £1m 0.30% £1m - £3m 0.10% £3m - £5m 0.06% Minimum charge£15 per month | no charge |
| Aviva Platform | Value Charge (pa) £0 – £400k 0.25% £400k+ 0.15% | Up to £15,000 costs £25 £15,001 – £30,000 costs £35 Above £30,001 costs £50 |
| Cofunds | Value Charge (pa) £0 – £100k 0.29% £100,001 – £250k 0.26%£250,001 – £500k 0.23% £500,001 – £1m 0.20% £1m+ 0.15% | |
| Elevate | Value Charge (pa) £0-£749,999 0.36% £750k – £999,999 0.33%£1m – £1,499,999 0.30% £1.5m + 0.25% Once a higher band is achieved the whole portfolio is charged at that rate. | £10.50 for ITs and ETPs, £12.50 for other securities.Can be reduced by aggregation to £5.50 and £7.50 respectively. |
| FundsNetwork | 0.25% | 0.1% on the value of the transaction |
| Hubwise | 0.2% per wrapper capped at £480 per year | 2 |
| Novia | Value Charge (pa) £0-£250k 0.50% £250k-£500k 0.40% £500k-£750k 0.30% £750k-£1m 0.20% £1m+ 0.15% Minimum £75pa | Two options available.Firstly, can open Novia Stockbroking account and link to wrapper. Ad hoc share dealing, 0.3% per trade subject to £15 minimum, £75 maximum. Additional wrapper charge of £17.50 + VAT per quarter (£84) Secondly, can purchase Investment Trusts directly through Novia Wrap account. Trading charge of 0.05% for all orders. A proportionate share of between a minimum of £5 and a maximum of £150 per trade applies. Additional 0.02% custody also applies. |
| Nucleus | Value Charge (pa)£0 - £500k 0.35% £500k - £1m 0.17%£1m+ 0.05% | 0.15% subject to a minimum of £13 |
| OMW | Value Charge (pa) £0 – £25k 0.50% £25k - £100k 0.35% £100k – £500k 0.30% £500k – £1m 0.25% £1m+ 0.15% | |
| Praemium | 0.30% | £2 aggregated where possible |
| Raymond James - Option 1 | Value Charge (pa) £0 - £500k 0.30% £500k - £1m 0.25% £1m 0.10% | no charge - fair usage policy applies |
| Raymond James - Option 2 | 0.25% | 12.5 |
| Raymond James - Option 3 | 0.15% + £50 + VAT account fee for ISA/GIA | 27 |
| Seven IM | Value Charge (pa) £0 - £500k 0.30% £500k - £1m 0.25% £1m 0.15% | no charge |
| Standard Life Wrap | Value Charge (pa) £0 - £99,99.99 0.40% £100k - £249,999.99 0.35%£250k - £499,999.99 0.30% £500k - £749,999.99 0.25% £750k - £999,999.99 0.15% £1m+ 0.10% | £10 if transaction is less than £25,000 £25 if transaction is between £25,000 and £99,9990. 025% per transaction if transaction is greater than £100,000 |
| Transact | £12 annual ISA charge Value Charge (pa) £0k - £600k 0.30%£600k - £1.2m 0.20%£1.2+ 0.075% If less than £120k is held the first £60k is charged at 0.50% | £3.75 - aggregated where possible and only applies once if trading across multiple wrappers. Where an express trade is requested, the cost is £10. |
| True Potential | 0.40% | 0.08% (minimum £14) for Investment Company transactions |
| Zurich Intermediary Platform | Value Charge (pa) £0 - £99,999.99 0.35% £100k - £250k 0.30% £250k - £1m 0.27% £1m+ 0.22% | £10.50 for transaction below £25,0000. 05% for transactions of £25,000 and above |
Steve Nelson, head of research at the Lang Cat, which conducted the research, said: “Cost is clearly only one aspect of a wider platform selection or due diligence exercise.
"But what we’ve found from our research with the AIC is that there is clear segmentation within the platform market.
"One of the original visions of the platform market was a wrapper and investment neutral environment. It is fair to say it has not quite panned out like that.
“However, if advisers are looking to include investment companies within an investment proposition, then there are a handful of platforms - typically those with in-house dealing desks - where trading costs are not a barrier.”
david.thorpe@ft.com
