TD Direct introduce 0.35%pa platform fee from August 2013

jamesd

ccbrowning wrote: »

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.

There's a charge somewhere, you just have to work out where. Some candidates include a payment from the fund for being on the platform, dealing costs and loads/commissions of various types charged by the fund but paid to the platform.

RetiredInThailand

ccbrowning wrote: »

Why do they charge extra fees over here?

Because no one complains or goes elsewhere.

You are absolutely correct that there is no practical difference between owning stocks or tracker ETFs or tracker funds, yet the first two can be held here for no charge at all and the last one attracts a 0.3% (or more) fee. There is no sense in it and no reason why it should be so.

grey_gym_sock

RetiredInThailand wrote: »

there is no practical difference between owning stocks or tracker ETFs or tracker funds, yet the first two can be held here for no charge at all and the last one attracts a 0.3% (or more) fee.

the differences are:

1) there are dealing fees for stocks and ETFs

2) i suspect that ppl who buy stocks/ETFs tend to hold a lot more uninvested cash than ppl who buy funds. TD will also get some interest from this cash (on top of any interest they pay you).

you give the impression that you expect a platform to be run with zero revenue. this is unrealistic, no matter how much ppl complain.

JohnRo

grey_gym_sock wrote: »

you give the impression that you expect a platform to be run with zero revenue. this is unrealistic, no matter how much ppl complain.

The thing that grates on me is the percentage fee, why can't a fixed price be charged and perhaps additional fixed charges for additional services if required, is it just a method of milking wealthier customers?

In this digital, technological age there is surely no more administrative work involved for the company running the execution only service in handling an account with £500 in it to one with £1m in it.

Perhaps FUM insurances and liabilities are a factor?

Jegersmart

JohnRo wrote: »

The thing that grates on me is the percentage fee, why can't a fixed price be charged and perhaps additional fixed charges for additional services if required, is it just a method of milking wealthier customers?

In this digital, technological age there is surely no more administrative work involved for the company running the execution only service in handling an account with £500 in it to one with £1m in it.

Perhaps FUM insurances and liabilities are a factor?

A fixed fee would be FAR less fair......?

J

grey_gym_sock

there are options if you want to avoid percentage fees, especially ATS. i do see the logic of fixed fees. however, it's only likely to be worthwhile for bigger pots.

the whole RDR / platform review is going to be of most benefit for wealthier investors, because when all charges are explicit, it's possible to shop around and avoid percentage charges - if you're prepared to pay high enough fixed charges.

JohnRo

Jegersmart wrote: »

A fixed fee would be FAR less fair......?

J

How so? They're providing exactly the same service to each customer. Why should one customer account be charged x times more than another just because it contains a larger balance?

Jegersmart

JohnRo wrote: »

How so? They're providing exactly the same service to each customer. Why should one customer account be charged x times more than another just because it contains a larger balance?

If I have a larger balance than you, i get more value from the service they provide. If a SIPP provider starts to charge £1000 per year to provide the platform service and I have £1M in my pension and you have £50k, who will have a problem with the fixed charge?

Most funds have an AMC/TER - if the platform provider's "share" of the TER is being taken away then they need to replace it with something. A fixed fee would disadvantage many people, I don't see that as fair.......

Perhaps we should apply a fixed charge on income tax as well? I will settle on a £30k tax bill right now - how does that work for you? How would that work for some of the people on MSE who are looking to save £4k in 2013?

J

JohnRo

Jegersmart wrote: »

If I have a larger balance than you, i get more value from the service they provide. If a SIPP provider starts to charge £1000 per year to provide the platform service and I have £1M in my pension and you have £50k, who will have a problem with the fixed charge?

Most funds have an AMC/TER - if the platform provider's "share" of the TER is being taken away then they need to replace it with something. A fixed fee would disadvantage many people, I don't see that as fair.......

Perhaps we should apply a fixed charge on income tax as well? I will settle on a £30k tax bill right now - how does that work for you? How would that work for some of the people on MSE who are looking to save £4k in 2013?

J

I take the point about a larger pot obtaining better value but hyperbole aside, the rest of your post is comparing apples and oranges imho. It could just as easily be argued a smaller pot constantly trading back and forth for the same percentage fee is getting massively better value than a much larger pot sat paying large fees for little or nothing.

I personally don't see the connection between what investment amounts you hold and a platforms entitlement to a slice of that amount. They provide a service which facilitates the purchase, sale and viewing of that investment and should get paid for those services they provide. There has to be a charge based approximately on costs and some profit, not just fleecing wealthier customers.

A more apt analogy for me would be something like a toll road charging a percentage based on the market value of your vehicle, is that fair?

RetiredInThailand

grey_gym_sock wrote: »

the differences are:

1) there are dealing fees for stocks and ETFs

2) i suspect that ppl who buy stocks/ETFs tend to hold a lot more uninvested cash than ppl who buy funds. TD will also get some interest from this cash (on top of any interest they pay you).

you give the impression that you expect a platform to be run with zero revenue. this is unrealistic, no matter how much ppl complain.

Dealing fees of GBP10 or so for purchase is reasonable and I would be prepared to pay this for a fund purchase. I see no reason why I should pay a large annual fee of 0.3% for nothing. I have a fairly large holding of shares and ETFs and I dont pay a bean for those, even though the broker has to deal with all the dividends and corporate actions. There are no dividends or corporate actions with the HSBC ACC trackers.

My trading account with my broker always has zero funds in it, as all transactions are settled by direct credit or debit to a savings account. So there's no money being earned there either.

Personally I dont see why I need a "platform" at all to hold tracker funds. They can just bung them into my nominee CREST account along with all the others.