As of March 1, 2022, former ATS clients will have to pay a percentage of what they invest on the Embark platform, rather than a flat fee.
The changes, which have been hinted at for some time by the firm, took one IFA by surprise, who highlighted some of his clients will have to pay 300 per cent more in fees, despite Embark stating “no customers will face a substantial increase”. However, he admitted Embark was still "relatively well-priced" compared to others.
In an email sent to advisers yesterday (20 January) and seen by FTAdviser, Embark’s chief commercial officer Toby Larkman said: “For all ATS customers that came across to Embark Platform in November 2020, we promised to maintain for a transitional period the flat fee you previously paid.
“Now that a year has passed, we are moving you across to our tiered approach to charges that we use for other customers of Embark Platform.
“From 1 March 2022, instead of a flat fee, you will pay a percentage of the total amount you invest, capped annually depending on which account/s you have.
“By moving to our tiered pricing, some customers will pay less than they have been, while others will pay more. As mentioned, even for those who pay more, our annual charge cap means no customers will face a substantial increase.”
Alongside the fee changes, Embark hinted “new features”, saying it was still “busy working on significant adjustments to Embark Platform” and that it will keep advisers posted on them.
Fee changes commencing March 1, 2022
| Band | Sipp | Isa | Junior Isa | GIA/TPIA | GIA Corporate |
| £0-150k | 0.25% | 0.15% | 0.10% | 0.15% | 0.15% |
| £150,001-£500k | 0.10% | 0.10% | 0.00% | 0.10% | 0.10% |
| £500,000+ | 0.00% | 0.00% | 0.00% | 0.00% | 0.10% |
| Annual charge cap | £725 | £575 | £150 | £575 | No cap |
Flat fees for ATS clients prior to charge change
| ISA | £132 per annum |
| General Investment Account | £132 per annum |
| General Investment Account Corporate | £132 per annum |
| Pension Account | £277.20 per annum (additional £100 p.a. applies for income drawdown) |
One IFA using Embark, Future Life Capital, told FTAdviser the change will see 89 per cent of its clients experience an increase in fees.
Of this client majority, 39 per cent will pay 100 per cent more in fees, 21 per cent will pay 50 per cent more, and 7 per cent will pay an eye-watering 300 per cent more.
How clients at Future Life Capital will be affected
| Total no of clients seeing increase | 89% |
| Total no of clients seeing decrease | 11% |
| Increase more than 25% | 20% |
| Increase more than 50% | 21% |
| Increase more than 100% | 39% |
| Increase more than 200% | 2% |
| Increase more than 300% | 7% |
Trevor Whiting, a director at Future Life Capital, said what he termed “whopping price increases” can only be to consumer detriment, arguing not enough innovation has been done to justify 2-3 times the cost. “It doesn’t add up.”
The director continued: “This is not so much about whether the client is getting good value for money comparatively, as the table indicates that within the advised market they are still - from March - relatively well-priced.
“It is really about the statement about customers facing 'not a significant increase', which is patently incorrect. Also, a measured statement about improvements to come, but to be honest, there have hitherto been no improvements, only discoveries of platform weakness that we have unearthed."
As part of its annual review, Future Life Capital will review platform suitability. But Whiting said: “We are running a project that might mean we need to transfer clients sooner.”
ATS clients have exchanged a number of hands over the years. Originally, the accounts were sold to Interactive Investor for £40m in 2018. This saw existing direct-to-consumer accounts moved to the II platform, whilst advised clients were left on the old ATS platform.
II then sold the advised clients book to Embark in 2019, which led to a migration to Embark completed in February 2021.
In July last year, Lloyds announced its £390m takeover of Embark, which Whiting highlighted as “even more change” for original clients of ATS.
Embark expressed its intention to move ATS clients away from the flat fee model back in October 2019, arguing it was a “regressive” structure for investors with less than half a billion pounds and “made ATS very uncompetitive as a business”.
Phil Smith, Embark’s group CEO, said at the time: "We see [the cap] lasting for the foreseeable future because we want to be fair to their customers. Quite what will happen over the next 10 years I can't say.”
An Embark spokesperson said the new structure was a "competitively priced basis-point model", in line with its standard approach and that of other platforms.
They added: "Both advisers and customers have been notified and provided with access to independently sourced price comparison data. This will ensure we can continue to provide our customers with market-leading platform services.”
ruby.hinchliffe@ft.com
