Transact  

Transact has 'no interest' in winning smaller clients

Transact has 'no interest' in winning smaller clients

The Transact platform will never be the cheapest in the adviser market and has “no interest” in winning lots of clients that have small pots of assets, according to chief executive Ian Taylor. 

Mr Taylor admitted Transact's pricing was not considered competitive for smaller clients as he pointed to a divide in the platform market.

He said: “We are by no means the cheapest in the adviser market, but I don’t want to be. We don’t do deals on the platform charges and I can say I think that our pricing is not very competitive for smaller pots of assets, but winning loads of those doesn’t really interest us.

"I think the way the platform market has evolved is you have some that are basically supermarkets, you ring them up, and say what you want and they do it. And that’s fine, but our model is to offer an enhanced service to advisers.

"Firstly, some of the firms that have the ‘supermarket’ type model are the ones where the technology hasn’t worked, but secondly, we want to work with the advisers. I do not see us as fintech business.”

The relative unattractiveness of Transact’s pricing structure for smaller pots is evident from the fact that smaller pots are charged more in annual fees than larger ones.

Single or consolidated portfolios of less than £100,000

Annual Charge

£0 - £60,000

0.50%

0.29%

Single or consolidated portfolios of £100,000 and above

Annual Charge

£0 - £600,000

0.29%

0.19%

0.07%

On the remainder

0.05%

Transact pricing structure. Source: Transact

Mr Taylor said the divide between platform models was likely to become more stark in the years ahead with “supermarket” type platforms more inclined to offer a tiered pricing structure for a basic “supermarket” level of service and an enhanced service, while his platform will only seek to offer the enhanced service.

He did, however, commit to cutting charges for users of the Transact platform in the years ahead. 

Mr Taylor said: “As chief executive of a listed company I have three groups of stakeholders to keep happy, shareholders, clients and staff.

"And there is a certain amount of cash generated every year, and we distribute it between the three stakeholders, in the form of dividends to shareholders, bonuses to staff and price cuts to advisers.” 

Transact most recently announced a price cut in March 2019 for one aspect of its product range (buy commission) following a comprehensive cut to platform charges in December 2017. 

Mike Barrett, consultant at the Lang Cat, said the clients that typically use the Transact platform have a broader range of investment needs and so benefit from Transact having products such as investment trusts, which are not available on other platforms.

He added: "The client with the smaller pot of assets simply doesn't need the extras that Transact and other platforms provide."  

The company listed on the stock exchange in March 2018, and for the year to the end of September 2018 recorded a profit of £40.9m. 

Over the past year, the shares of Integrafin, the company that owns Transact, have risen from £3.64 to £3.87. 

david.thorpe@ft.com