TD Direct introduce 0.35%pa platform fee from August 2013

grey_gym_sock

jamesd wrote: »

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.

well, i thought TD were using Cofunds to provide the funds element of their platform. in which case it would be Cofunds, not TD, receiving the platform fee. so what they say would be correct.

but Cofunds will still want to be paid something if all funds become clean. if TD's 0.35% explicit charge if going to cover whatever they'll end up paying Cofunds, as well as what they'll keep, then it's an overall price cut.

grey_gym_sock

koru wrote: »

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

interactive investor's own charges are fully open, and don't involve percentages.

however, they provide funds via Cofunds, who keep part of the platform fee, and pass part on to ii (who fully rebate their part to the customer). if all fund classes become clean, Cofunds will want to be paid in some other way. so we don't know how that will work.

ATS are apparently using entirely their own platform, so they don't have a similar issue.

koru

Cavendish uses Funds Network and as far as I know they do not currently sell any clean priced funds. When they do, presumably they will have to switch to the new Funds Network pricing model which also has a percentage fee, although I think it is a bit lower than TDD.

If ATS and Interactive Investor can sustain their current pricing models, they will be significantly better for anyone with a fair sized portfolio who does not trade frequently.

grey_gym_sock

jimjames wrote: »

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

"currently" being the operative word. there is a cross-subsidy from funds paying higher platform commissions to funds (such as HSBC retail trackers) paying lower platform commissions.

and i think there are no fully clean funds available via cavendish. e.g. HSBC class 'C' trackers, vanguard, blackrock class 'D' trackers.

though cavendish do seem to be doing a good job of keeping charges down, both their own and what they're negotiated with the platforms they work through. it could be a good place to go for smaller pots of funds.

koru

I agree, the Cofunds link for Interactive Investor has to put a question mark over whether they can sustain their current pricing.

There's a report just been published by https://www.theplatforum.com which reveals that Cofunds has £45 billion of assets on its platform, Funds Network has £38 billion and ATS has less than £4 billion. The economies of scale at the big boys must mean that their unit costs are way lower than ATS. I wonder if ATS can sustain its current pricing.

sabretoothtigger

srcandas wrote: »

But surely no great surprise. And the word 'massive' is a bit over the top.

Back in the day I can remember contemplating 5% initial charges and exit fees! even trackers werent cheap

Kids these days dont know how lucky they got it

SnowMan

If we are talking flat platform charges for large portfolios what about Sippdeal?

You've got the dealing fees and the £50pa platform charge but the C class of HSBC trackers appear to be on their funds list now as well as Vanguard. And you don't have those silly charges for getting cash out such as with ATS?

jem16

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%. 40% qualifies as a massive price increase for just about everyone, I hope.

I'm not sure that you can take the platform commission pre Platform Review and RDR) as standard.

Yes in bundled fund form, part of the normal amc would include a platform commission of 0.25%. However the majority of DIY platform providers also kept a cut of the IFA commission whilst providing no actual advice. This tended to be somehwere between 0.25% and 0.5%.

Without being able to have this part of the IFA commission, the platforms have to make up the difference somehow so it seems more than likely that most will go for a higher percentage fee.

Some platforms such as Cofunds and FundsNetwork are using an annual fee plus a percentage of around 0.25%/0.29%. In some cases the percentage is tiered.

Trackers used to get a good deal with most being subsidised by managed funds. Now the playing field has been levelled with all investment types being charged the same fee for using the platform. This is what RDR is all about.

There are going to be winners and losers. People will have to choose the platform that works best for their investment amount. In some cases going direct may be best.

ccbrowning

Why do they charge extra fees over here? I have an account with the US side (TD Ameritrade) and have no fees at all for funds and most ETFs have no fees, either. Ameritrade isn't even the only one offering this sort of deal.

I'll be sticking with HL here I guess, as the cheap trackers are either £1 or £2/mo, depending (not too bad once you can get say £5000+ in them) But as others have pointed out, those fees could always go up.

Jegersmart

bowlhead99 wrote: »

I agree for larger investments that's going to be pretty expensive (eg a supercheap tracker at 0.2% plus this fee ends up at over half a percent for a basic no frills tracker). I suppose you can't expect a broker to allow you to maintain an account with them without trading fees or commission income, as has been mentioned many times here before. It has only been possible in the past due to cross subsidy from things they generate income on.

For some smaller investment pots I suppose it could be OK. For example if you had £500 in a non-commission fund, it's £1.75 a year - this presumes you don't get hit with an annual fee too - while somewhere like H-L would be prohibitively expensive charging £2 a month, or others would charge you a trading fee on each transaction.

Of course, the competition might be doing absolutely anything with their fee structures a year from now. Nice of TD to give us some advance notice.

A percentage is a percentage......my SIPP fluctuates by several £1000's every day - the actual amount is irrelevant, it is the percentage that counts.

J