Platform provider Transact announced that it will reduce its charges and cut its fee threshold in an effort to make its product more profitable over the long term.
From 1 April Transact’s annual commission charge will move to 0.3 per cent from 0.31 per cent, and the charging threshold will drop from £150,000 to £120,000.
The company stated a correlation between profitability and charge reductions, as identified in the FinalytiQ Platform Profitability Report last year which found that “profitable platforms are far more likely to be sustainable and more likely to pass cost-savings to clients in the long run”.
In the most recent results to 30 September 2015, the platform made a £20.3m profit before tax compared to £17.7m during the same period in 2014.
Jonathan Gunby, chief development officer at Transact, said that the company’s ability to remain profitable has resulted in improved outcomes for advisers and their clients, and added that the price change will not affect the sustainability of Transact’s business model.
“As always, we want to make doing business and managing portfolios with Transact as simple, efficient and cost-effective as possible.”
Scott Gallacher, chartered financial planner at Rowley Turton Private Wealth Management said that he is a “big fan” of the Transact platform and believes it to be one of the best platforms available.
He added that as Transact have continuously looked to cut charges as that platform has become larger and more profitable over time.
“This is clearly very welcome. Historically Transact were a little expensive but their investment and product options were arguably the best and worth the extra for wealthier clients who needed that additional flexibility.”
In February rival platform provider Ascentric announced it would be increasing its charges, though scrapping some other fees.
Ascentric users are charged 0.3 per cent charge for assets up to £1m, 0.1 per cent for assets between £1m and £3m, and 0.06 per cent for assets between £3m and £5m. Terms are available on request for assets of more than £5m.
The platform previously charged 0.25 per cent for assets up to £1m, so this group sees its platform charge increase by 0.05 percentage points.
Previous charges that have been scrapped were up to £20 per trade, up to £60 per year to invest in its model portfolios, and a £150 annual charge each on self-invested personal pensions and drawdown.
julia.faurschou@ft.com
