Clients of the Standard Life Wrap platform will be able to lock in their existing platform fee when they enter drawdown, the platform's recently appointed chief executive has said.
Noel Butwell, who took up his role in July 2019, announced the changes as part of a repricing of the platform fees on Wrap, saying clients entering decumulation often ended up paying a higher percentage in fees than they should.
He said this was because a client's pot falls in value as they draw down their assets and under the tiered fee structure this has historically meant fees have risen.
For example, a client with £1m of assets on the platform would pay 0.10 per cent as a fee but as soon as they enter decumulation and the pot of assets they have on the platform shrinks to below £1m, they fall into the higher fee bracket of 0.15 per cent.
Under the new pricing structure, which Mr Butwell called Drawdown Price Lock, clients will pay the price in drawdown they paid before they entered drawdown, all the way to zero.
He said: “Most platforms, including Wrap, have traditionally operated a model designed to reward savers where fees fall as the client’s pot increases. Unfortunately, this means as clients start to use their savings to fund their retirement, that percentage goes back up as money is withdrawn creating an increasing drag as their pot declines.
“From April 2020, advisers can prevent this happening by ‘locking in’ the fee their clients pay when their percentage rate is at its lowest level. That way, those who invest with Wrap will benefit from lower fees all the way through retirement, and not just at outset.”
Ben Hammond, platform director at Altus, said: “This is something that seems to be very good for the client, I haven’t heard of another firm doing it quite like this. And from the platform’s point of view, it probably means clients will stay on the platform for longer.”
Meanwhile under the new pricing structure there will be four instead of six pricing tiers.
Under the previous pricing structure, an Isa client with assets of between zero and £100,000 paid 0.40 per cent, while Sipp clients paid 0.55 per cent. Under the new pricing structure all clients with up to £250,000 will pay 0.35 per cent.
Mr Hammond said Standard Life Wrap was a platform where the pricing was not particularly competitive for clients with smaller pots of assets and the new pricing structure addresses that.
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