TD Direct introduce 0.35%pa platform fee from August 2013

jabba42

RetiredInThailand wrote: »

For ETFs you dont need a "platform", you just need a broker. Most of the online ones will do trades for between GBP7.50 / GBP15.00 and many of them will waive their yearly fee/CREST fee for a holding of that size. Mine does.

For what it's worth I dumped my HSBC tracker funds and bought iShare ETF trackers instead, saving myself quite a lot in yearly fees.

When I say platform I mean online brokers

RetiredInThailand

If you intend trading often go with one that has lower trading fees, though this may also entail some sort of yearly fee. If you intend buying ETF trackers and hanging onto them for the medium to long term and doing little or no trading, look for one that has no yearly fee and higher trading fees. I pay nothing per year if I make no trades, and GBP15 per trade if I trade.

russellthecrispbag

TD Direct Investment Charged me £100 to close my ISA account even though I did not have any shares held in it, having sold everything several weeks ago. That seems like day light robbery to me.

EdGasket

Got my first bill from TD Direct Investing for their platform charge. I was not expecting it as I thought it only applies to 'clean' funds and I bought my fund a long time ago and it is not a clean fund. Can anyone clarify whether this platform fee applies across the board and not just to clean funds?
The fund in question is L&G's Index Linked gilts fund with a charge of 0.25% pa. Now TD's platform charge has more than doubled the cost of holding this fund assuming it should apply to this fund!!!

EdGasket

Bump - anyone?

grey_gym_sock

AFAIR, TD first introduced a 0.35% charge for funds paying a rebate of at least 0.5%; and then announced a 0.35% charge for clean funds. it wasn't very clear to me (though i don't have an account with TD) whether this would also apply to funds in between, i.e. with some commission or rebate, but less than 0.5%.

what communications did you get as an account holder?

EdGasket

Basically some information on their website referring to clean funds and how a clean fund plus their platform fee was cheaper than a non-clean fund. This led me to believe initially that the platform fee only applies to clean funds however reading about the platform fee now they just say 'funds'.
Rereading the email that came with the bill I note it says 'all funds':
"Information about our platform fee
Since August 2013 we’ve been charging a platform fee of 0.35% on all funds to cover our distribution costs. This is calculated daily and applied twice a year. See our Rates & Charges for more details."

As my fund is an ACC fund there are no distributions so why do I need to cover their 'distribution costs'??

I guess that is the answer then. Their included example shows a saving with a clean fund and platform fee however on a fund that didn't charge much anyway it is now much more expensive to own in TD Direct than before. Have to sell up and buy an ETF instead I think.

bowlhead99

EdGasket wrote: »

As my fund is an ACC fund there are no distributions so why do I need to cover their 'distribution costs'??

This is a terminology thing.

The process of "distributing" funds among investing institutions and the general public via a platform, or "placing" the units of funds (which are operated by fund managers) in the hands of retail and institutional customers - both of them basically mean: offering funds and making them available to customers.

This process of "distribution" has a cost: whether running their own platform or or paying someone to provide a white-label solution in the background, and whether the funds are inc or acc , they have compliance costs, infrastructure costs, admin costs, customer service costs etc. These costs are higher if you trade a lot or make more contributions or withdrawals, or if there is HMRC compliance (annual reporting, plus recovering tax in a SIPP or withheld interest in an ISA or SIPP).

So, when referring to distribution costs, they are talking about selling fund investment opportunities to you: i.e. "fund distribution"... as in the recent "Retail Distribution Review" which tries to eliminate cross-subsidy and product bias as they cover the costs of "distributing" funds to current and potential retail customers like yourself... rather than you having a "distribution" versus "accumulation" flavour of fund.

You are right: depending on the amount you have in your account, you may better off buying and holding an ETF equivalent of your fund, paying the costs of their "stockbrokerage" service, with dealing charges and inactivity fees if you don't qualify for waivers - rather than their "funds platform" which attracts platform fees. Like you, I just got my platform fee advice email for 2013 H2, but it was only something like 19p.

HTH

TCA

Am I right in thinking that if you hold only shares in a TD Direct trading account (valued over £15k), then you pay absolutely nothing?

This would seem to be on a par with IWeb (ok, account opening fee £25) and X-O. i.e. no custody fees. Slightly more expensive dealing fees, slightly more expensive exit costs but cheaper regular investing and dividend reinvestment. YouInvest similar too but I don't fancy them.

bowlhead99

That's right, no inactivity fees on that level of shares holding; although obviously you have to pay dealing fees for each trade like at any broker. Share trading / brokerage services is something they have been doing well for a lot longer than fund platform services. They are very competent at it (lots of international markets, multi--currency cash account, smartphone app trading, extended settlement trading, etc), with the only real downside being high fx fees.

You don't need the 15k balance if you have the regular-investing version of the account, or if you have a linked S&S ISA account. So if you had say only 10k of shares investments and some spare ISA capacity you could put 6k in the shares ISA (qualifying for the ISA admin fee waiver by having more than the minimum for that product), and then 4k in the normal trading account (qualifying for the waiver by holding the ISA product).