Fidelity new charging structure

sterlingstash

Anyone else got the new charging structure letter from Fidelity? It looks like the 0.5% trail (which Cavendish refunds) is now going to be taken directly from our investment. Or have I misunderstood, and the AMC will be reduced by this 0.5%, leaving the status quo?

dunstonh

What you describe doesnt match the info we have. Plus, you cannot compare an unbundled charging structure with a bundled one just by looking at trail commission.

An unbundled charging structure will charge you explicitly but will rebate trail commission and platform commission. It should also give you access to clean share classes as they become available.

psychic_teabag

I got that letter. On second reading I decided that the 0.5% was just an example (and probably not the best example they could have picked, though perhaps most typical).

You say Canvendish does the refund, but I thought it was actually Fidelity that do the refund. Cavendish have just arranged that the adviser fee is 0.

So Cavendish clients basically just have to substitute 0.0% as the adviser fee in the letter. So I think it's basically just saying that previously, they would refund all of the commission part of the AMC to us. Now they will rebate the commission back into the ISA, and then deduct 0% from the account and give it to Cavendish.

So the net effect may be that the extra 0.5% stays inside the ISA, rather than being removed. Which would be a good thing as far as I'm concerned.

But I may well have got it all wrong.

dunstonh

Fidelity's unbundled offering is 0.25% plus an annual charge of £45 (with other charge details to follow). That doesnt match what you are saying here.

Is it possible that you are not being offered the unbundled option yet but a hybrid option that is just rebating the fund based trail and not the platform commission?

sterlingstash

Thanks both. There was no talk of the £45 annual charge in that letter, but it did (from memory) refer to RDR as the reason for the changes they were making.
So sounds like just a change in the money-go-round process which has no impact on the current fees actually incurred?

And we may expect some further changes to come...

Rollinghome

psychic_teabag wrote: »

But I may well have got it all wrong.

I read it the same way though their letter wouldn't win any prizes for plain English.

I believe the £45 account charge, paid as £22.50 every six months, was introduced by Fidelity in 2010 as an optional alternative to paying them initial and switching fees. Cavendish clients don't pay initial or switching fees nor the account charge.

dunstonh

sterlingstash wrote: »

Thanks both. There was no talk of the £45 annual charge in that letter, but it did (from memory) refer to RDR as the reason for the changes they were making.
So sounds like just a change in the money-go-round process which has no impact on the current fees actually incurred?

And we may expect some further changes to come...

This would indicate that it is not the unbundled platform charges that will have to come in for new business (and top ups). It is an interim change.

The Fidelity unbundled option is £45 pa. and 0.25% p.a. and will see natural trail and platform commission rebated. People on the unbundled platform will also get access to clean share classes, ETFs etc.

Rollinghome

It is still a bundled offering with Fidelity receiving their platform fee from the AMC and 0.05% from that going to Cavendish.

The FSA have said they expect to publish their policy statement on platforms before the end of this year but that new rules wouldn't be enforced until the end of the following year. In the meantime I'd tend to regard all fee announcements as "interim" with the likelihood of further changes before and after 2014 in response to moves by competitors.

There's every chance that instead of requiring the same percentage fee for £500k as for £5k that a flat or scaled fee will be offered by someone - and I can't imagine there being a long queue to pay someone a platform fee to hold an ETF or IT.

Deneb

Explanation from Cavendish for their customers on FundsNetwork. They state that the proposed £45 charge will not apply.

http://www.cavendishonline.co.uk/investments/RDR

jem16

Deneb wrote: »

http://www.cavendishonline.co.uk/investments/RDR

From this link it states the following;

The effect of the Platform Paper, which is expected to be implemented in 2014, will be to outlaw payments from fund groups and platforms to advisers and clients outside the above charging structures (so to remove hidden kick-backs). We don’t think this will affect our current charging structures, and even if the details change we are confident that we can maintain our current position as the cheapest route to invest in funds.

At the moment, Cavendish are receiving 0.05% of the Platform fee of 0.25% that Fidelity currently receive. After the Platform Review that 0.25% will have to be explicity charged so how do Cavendish think that this will not affect their current charging structure?

Porcupine

I was messing about with the 'buy an ISA' form from Cavendish via Fidelity.
Something surprised me. If I tick 'passive' in the MorningStar-powered search thing they provide, a whole load of ETFs and I-class funds pop up. Does that really mean I can buy ETFs with no deal fees? There's a 0.25% additional fee to hold them. but I can live with that. For example, the cheapest fund is 0.09%. So even with the 0.25% addition it's still competitive. Or will I go through the process and be told that the minimum spend is a million pounds or something?

Is this unusual, or the norm in the post-RDR new world order?