The Modular iPlan pricing structure replaces some transactional fees with an adjusted platform charge, which the company stated is meant to better suit its typical client base with a larger portfolio.
The core increase on the Modular iPlan will see a £20 annual on-panel stockbroker and investment manager fee added, while the off-panel fee will increase from £50 to £70.
The annual managed property charge will increase from £750 to £950 and a 0.5 per cent property development charge, £50 pre-funding property expenses charge, and a £100 drawdown closure charge have been added.
Property purchase or transfer in fees via a non-panel solicitor will increase from £800 to £1,100 while those transferring out will see fees increase from £650 to £800.
According to the company, recent pension and regulation changes have made administering pensions more expensive, and so re-pricing allows the platform to respond to these changes while continuing to develop flexible products, enhance systems and improve services.
James Hay chief executive Alastair Conway said that, while re-pricing is often an “understandably emotive subject”, the changes are “absolutely the right thing for us to be doing” as it will give the company scope to invest in its underlying technology and adapt to regulation.
But Dennis Hall, chief executive and chartered financial planner at Yellowtail Financial Planning, said the move goes against the trend of platforms moving to reduce fees and questioned the scale of the business compared to its peers.
“One wonders if they were a bigger size if they would have to put the price up. The trend for larger platforms has been to reduce fees.”
Changes will be phased in, starting with the IPS products from 28 April, followed by the Modular iPlan changes from 31 May, including the introduction of a new tiered structure for the annual investment centre platform charge.
This tiered structure charge will start at 0.25 per cent on the first £300,000 and reduce in stages to 0.01 per cent on investments over £1.5m.
Based on James Hay’s average Modular iPlan portfolio size, the changes will result in an annual average increase of around 0.036 per cent, according to the company.
The headline charge for Modular iPlan will be cut from £195 to £175 for investments up to £200,000 and waived completely for portfolios worth more than £200,000.
The £50 fee for contributions and the £50 per cash transfer-in fee will both be removed, which James Hay said will bring its platform charging more in line with platform standards.
Fees levied on self-invested personal pensions (Sipps) in drawdown will now be calculated on an “event driven” basis and will only be applicable to those customers using capped drawdown.
Mr Conway said that the changes will allow the company to improve their products and services and adapt to changing regulation.
“We are focused on getting the basics right and have put service top of the list. It’s important to note that these changes have very little impact on our competitive pricing position against our peers. We are still well priced – especially for our core market, where we are still 5bps below the market average,” Mr Conway said.
Mike Barrett, consultancy director at the langcat, said that the most popular platform is not necessarily the cheapest, as advisers need a product that can keep up with their complex demands.
He added that pension flows, often large contributions, now dominate the platform space while smaller Isa contributions are dwindling.
“Price is not a determinant of where the money goes. The platforms that are attracting flows are charging a level that merits the service of the overall proposition, which often means that it’s not the cheapest that wins.”
julia.faurschou@ft.com
