Fidelity FundsNetwork Platform Charge

westy22

I have an account with Fidelity FundsNetwork through Cavendish Online. After paying Cavendish a small one-off fee I benefit from 100% rebated trail commission on most of my investments.

I went onto FundsNetwork this morning and discovered that Cavendish have 'opted-in' my account to the new Fidelity Platform Charge of £45 per year - not that I have had any sort of communication from either Fidelity or Cavendish regarding this!

This new platform fee provides me with the 'benefit' of no initial charges on funds and no switching charges between funds. The vast majority of funds on the platform did not have any initial charges anyway (and I avoided those that do!). Also, in the past 5 years of investing on the platform I have never, ever made a switch - I tend to research my funds, buy them, and then stick with them.

Apparently, I have a 30 day cooling-off period from this opt-in and I presume that, at some stage, Fidelity or Cavendish will deem to communicate with me about this. Do any other users have any views on this recent introduction of a discrete platform charge?:(

mike88

I didn't know about this. But on the other hand I receive over thousand a year in rebated annual management charges so I shall not be too bothered. Like you I tend to hang on to my funds. Strangely when I have switched I have found that although the Cavendish website indicates that there is a miniscule initial charge on some funds I have never been charged one.

westy22

I have no problem with sticking with my Cavendish/Fidelity arrangement as I too earn well from the trail commission rebate. However, by buying funds with no initial charges and by not switching funds, the platform effectively costs me nothing at present. It now seems that I will have to pay £45 pa.

I think that my main concern is that if I decide to opt-out of the new platform fee then Fidelity may subsequently move the goalposts and I will find that many more funds start to attract initial fees!

The onset of RDR seems to be here and now (before we even know what the FSA are recommending!).

jem16

westy22 wrote: »

I have an account with Fidelity FundsNetwork through Cavendish Online. After paying Cavendish a small one-off fee I benefit from 100% rebated trail commission on most of my investments.

Part of the benefit is that you also receive 100% rebated initial commission by Cavendish.

I went onto FundsNetwork this morning and discovered that Cavendish have 'opted-in' my account to the new Fidelity Platform Charge of £45 per year - not that I have had any sort of communication from either Fidelity or Cavendish regarding this!

It should have been Cavendish that informed you as they are acting on your behalf.

This new platform fee provides me with the 'benefit' of no initial charges on funds and no switching charges between funds. The vast majority of funds on the platform did not have any initial charges anyway (and I avoided those that do!). Also, in the past 5 years of investing on the platform I have never, ever made a switch - I tend to research my funds, buy them, and then stick with them.

It won't benefit you but I wonder how it will benefit Cavendish?

Apparently, I have a 30 day cooling-off period from this opt-in and I presume that, at some stage, Fidelity or Cavendish will deem to communicate with me about this. Do any other users have any views on this recent introduction of a discrete platform charge?:(

Most of the platforms are moving over to unbundling in case the FSA does ban the bundled platforms. Fidelity have had this charging structure for those with over £50k for the last year. Now they have dropped the amount to around £18k I believe. At the moment their platform charge is slightly cheaper than others as they're probably trying to attract the business.

I would be asking Cavendish why they have opted you in without asking you.

jem16

westy22 wrote: »

I think that my main concern is that if I decide to opt-out of the new platform fee then Fidelity may subsequently move the goalposts and I will find that many more funds start to attract initial fees!

As part of Cavendish's contract with you is that they rebate 100% of the initial commission, surely it wouldn't matter what Fidelity do?

If you look at Fundsnetwork itself (not via Cavendish), almost all(if not all) of its funds carry an initial charge which is what Cavendish have agreed to rebate to you by paying the set up fee.

Sounds a wee bit sneaky of Cavendish to then put you onto a platform charge method of charging and still charge a £25 fee.

mike88

jem: Cavendish rebate 100% of the trail commission (around 0.5% per annum) but you are charged a small initial charge (around 0.5%) on some funds for purchases and switches. However, many are free. In the case of those with largish portfolios the annual commission rebate is consideable.

You may be confusing the initial charge with trail commission which are different. Apologies if I've misunderstood your post. However you are correct in saying that it is Cavendish's responsibility to inform their clients.

jem16

mike88 wrote: »

jYou may be confusing the initial charge with trail commission which are different.

No I wasn't getting them mixed up - it does say that Cavendish rebate 100% of the initial commission.

However what I did forget is that the normal maximum initial commission for OEICs is 3% and that some funds have an initial commission of up to 5%. So yes it will be that some funds have an initial commission of 1% or 2% and in that case having a platform fee with no initial fee may help.

Where it will benefit is for those investors who regularly switch funds to rebalance - anything over £18k worth of switches (or less if it allows you to choose from all the funds) sees it better to use the platform fee. Although in saying that Bed&ISA is not included in the no switch fee.

Cavendish

Hello All,
We apologise for not making clients aware of this charge and its implications prior to the Fidelity announcement (we are developing the website at the moment). It is something that we set up free of charge for clients with portfolios over £50,000 last year and means that clients with these larger portfolios benefitted from free switching and no initial charges. We were aware that Fidelity would introduce a charge in August this year and we have the option to opt all clients out of this system and so none will be charged a fee unless you proactively opt in. All clients will be opted out.

Cavendish Online will be contacting all our Fidelity clients in the next few weeks to provide information about this Platform Charge along with instructions how to opt back in to the system.

We have until the 24th November to decide whether they would like to opt-in. The first half-yearly payment of £22.50 will be taken shortly after this date. The key dates are:
25th July - Fidelity announcement of client charge
23rd August - Charge becomes applicable
24th November - Last opt out date to avoid charge (using 3 month cooling off notice).

By opting-in to the scheme clients will have no switching fees and no initial charges (although most initial charges are zero anyway via Cavendish). Switch charges are currently 0.25% for portfolios under £50,000 and so as a generalisation, it will be beneficial for clients who anticipate switching more than £18,000 in the year.

If you have any further queries please contact [EMAIL="admin@cavendishonline.co.uk"]admin@cavendishonline.co.uk[/EMAIL]

Cavendish Online

talexuser

The old switching fee was was 0.25% I think so if you switched 18k of funds you paid £45 under the old system. If you had more in switched funds it would be more expensive than the new.

So I guess the new arrangement is good if you have several funds worth more and make more than one switch a year?

I wonder if Cavendish are paying the £45 out of the yearly trial commision rebated to you?

Edit : posted same time as Cavendish answer above!

westy22

I wonder if Cavendish are paying the £45 out of the yearly trial commision rebated to you?

According to the Fidelity website the account holder will pay £22.50 per 6 months from the single largest fund holding in the following order:
a) cash account if applicable
b) cancelling units from an unwrapped (non-ISA) holding
c) cancelling units from a wrapped holding i.e. ISA

westy22

We were aware that Fidelity would introduce a charge in August this year and we have the option to opt all clients out of this system and so none will be charged a fee unless you proactively opt in. All clients will be opted out.

Cavendish Online - when I look at my account at Fidelity it tells me that Cavendish opted me in to the new charge structure wef 25 July!