TD Direct introduce 0.35%pa platform fee from August 2013

JohnRo

gadgetmind wrote: »

Do they provide ISA and SIPP wrappers? It's the need for these wrappers that throws us at the mercy of platforms.

No they don't, not that its a deal breaker anyway (for me) with a minimum £100,000 per fund investment requirement.

Yes, all funds are UCITS products and qualify for inclusion within a tax wrapper - but Vanguard Asset Management, Limited does not offer an ISA or SIPP wrapper.

grey_gym_sock

TD are providing something for the money. it's a platform. you can try to go direct instead, but there are problems with that. for vanguard, minimum investment size and lack of tax-exempt wrappers. for HSBC trackers, perhaps you still can for their old "retail" funds classes, but their Global Investment Centre seems to be turning into a something like a platform - with fees. for actively managed funds, it's just more expensive to go direct.

if you want to avoid percentage fees, you can go to alliance trust. though they do have a quarterly fee, as well as transaction fees. so it's only cost-effective for larger pots.

i expect there will be other providers who won't have percentage fees, too, but i think ATS are so far the only 1 who both don't have percentage fees and have a clear post-platform-review charging structure.

jamesd

srcandas wrote: »

the word 'massive' is a bit over the top.

The standard commission for platform providers is 0.25-0.3% or so. TD Waterhouse plan to charge 0.35%. That's a massive increase of 0.35 / 0.25 * 100% -100 = 40%. 40% qualifies as a massive price increase for just about everyone, I hope.

Alliance Trust has a pricing structure that would work better for large, low trading, amounts. HL today (but not yet revised) for smaller or only a few low AMC funds.

What's interesting in their current pricing is that they think that they can charge no platform fee for low cost funds like many trackers. If they can do it for them, why can't they do it for others? The answer seems to be: a cross-subsidy from some investors to others, those using active managed to those using passive.

JohnRo wrote: »

TD state trail commission, it says nothing about AMC ... That means a fund paying more than 0.5% trail commission is reduced down to a fee of 0.35% ... and a fund paying less than 0.5% trail commission is reduced to zero.

A fund charging 1.5% AMC is normally paying 0.75-0.8% trail commission of which 0.25-0.3% goes to the platform. TD Waterhouse are taking 40% more than the standard platform cut.

MrTyo

I may be reading this wrong but isnt the 0.35% fee on the new Clean Funds rather than every existing fund under the sun, as JohnRo says the other .35% is about trail commission. Again im only new at this so will gladly accept im wrong

grey_gym_sock

jamesd wrote: »

The standard commission for platform providers is 0.25-0.3% or so. TD Waterhouse plan to charge 0.35%. That's a massive increase of 0.35 / 0.25 * 100% -100 = 40%.

but aren't they currently getting both the 0.25-0.3% for platform providers and the 0.5% trail commission (supposed to be for financial advisors)?

SnowMan

MrTyo wrote: »

I may be reading this wrong but isnt the 0.35% fee on the new Clean Funds rather than every existing fund under the sun, as JohnRo says the other .35% is about trail commission. Again im only new at this so will gladly accept im wrong

There is a question mark over funds that pay some trail commission below 0.5%.

As most investors were looking to invest in the clean classes such as the HSBC C class that is what the discussion has been concentrated on.

However it is not clear what will happen to funds such as the HSBC retail class trackers which may or may not pay TD some commission. I wouldn't however assume they will be unaffected when the platform charge is introduced for the clean classes.

grey_gym_sock

MrTyo wrote: »

I may be reading this wrong but isnt the 0.35% fee on the new Clean Funds rather than every existing fund under the sun, as JohnRo says the other .35% is about trail commission. Again im only new at this so will gladly accept im wrong

they have an existing 0.35% fee which only applies to funds paying at least 0.5% trail commission (in exchange for rebating all trail commission).

they are going to start charging 0.35% for clean funds (ones with no trail commission).

AFAICS, they haven't said anything about funds in between, i.e. with trail commission greater than 0 but less than 0.5%. but it seems likely that the same fee would apply to them.

EDIT: that is ignoring platform commission. HSBC retail trackers apparently pay no trail commission but some platform commission. so they are not strictly clean. the clean funds that TD has started offering recently are strictly clean. so far, TD have not offered to rebate any platform commission. but they have started offering funds that don't pay it in the first place.

jamesd

grey_gym_sock wrote: »

but aren't they currently getting both the 0.25-0.3% for platform providers and the 0.5% trail commission (supposed to be for financial advisors)?

I certainly hope not, because one of their charge pages says that they currently rebate all commission received from non-clean funds in exchange for taking their platform fee. If they were only rebating 0.5% and keeping the extra platform bit they would I hope have some serious explaining to do to the FSA and redress paying to do.

SnowMan wrote: »

There is a question mark over funds that pay some trail commission below 0.5%.

Right. And I don't know what they will do.

Why would they be charging 0.35% platform fee for one set of funds that pays no commission and not charging it for another set? They can't use commission or not to differentiate because neither is paying commission (or some may be paying less than 0.5% commission).

Still, they might decide to continue their apparent current cross-subsidy approach to keep the charges lower for some trackers than many other funds. But with the FSA apparently trying to eliminate cross-subsidies from one group of investors to another I'm not sure how the FSA would regard that sort of difference between two sets of nil or low commission funds.

Anyone using the currently nil platform charge funds at TD Waterhouse would presumably want to ask them and see if they will make any binding commitments.

koru

grey_gym_sock wrote: »

i expect there will be other providers who won't have percentage fees, too, but i think ATS are so far the only 1 who both don't have percentage fees and have a clear post-platform-review charging structure.

This is also true of Interactive Investor. Their quarterly fee is higher than ATS, but covers multiple accounts for you and your family.

jimjames

StevieJ wrote: »

Why not go direct to the source of the Tracker e.g. L&G?

Or use Cavendish if the fund is one they offer. Certainly the HSBC trackers are and there is no charge currently to hold them.