New AJ Bell Youinvest charges

JohnRo

BLB53 wrote: »

Look at possible swap to ETFs? Charges capped at £100 p.a.

That's certainly what I'd be looking into, even if the ETF is not an exact match.

bigadaj wrote: »

There is a cost in actually holding, running and reporting an account, and dealing, so,the most transparent costs for money is a base cost and a hopefully small dealing fee. Percentage base fees obviously work for those with small holdings, but in those cases the investors with larger holdings are subsidising those with lesser amounts, so a sort of socialised capitalism possibly.

That doesn't really justify the taxation charging method imho. It's obviously going to work well for those being subsidised, it would be interesting to know what the account size/custody fee cut off actually is for fund based execution only platform profitability.

I realise it won't be a stationary amount and will be different for each platform with development. workforce, advertising, systems, portfolio admin etc. costs

Perhaps not relevant to AJB but looking very briefly at 2015 figures for Charles Stanley, £21B AUM, £73M costs, £4M profit. Suggests very crudely something like an average 0.35% fee required in 2015 to cover costs across all accounts. I tried and failed to distil the CSD fund based execution only figures from their annual report. It just doesn't contain that level of detail.

They only charge 0.25% via their direct platform though so no surprise their annual report shows they made a loss at CSD in 2015 with substantial profit elsewhere via discretionary management and the advisory parts of their business. That said the direct platform loss is much reduced year on year and platform itself still quite new with ongoing development and restructuring costs heavily front loaded. Many using CSD currently are clearly being subsidised though.

All that said a substantial chunk of the fund based nominee custody cost has to be universal and probably is remarkably similar for all execution only nominee accounts of all sizes on all platforms.

Anyway I'm in favour of explicit fixed fee service charges, which is in large part what has steered me towards platform based IT investment.

bigadaj

Interesting numbers, I'd agree about favouring clarity and an open book approach, as far as possible, but at the end of the day I'll go with the cheapest option for my investing preferences with a reasonable basic level of service.

In terms of regulation then I think the current system doesn't work too badly but they need to keep an eye on excessive transfer charges and whether these are waived when a charging model is amended, as that is only logical given that it's the platform that has effectively broken the contract with the consumer.

Eric_the_half_a_bee

BLB53 wrote: »

Look at possible swap to ETFs? Charges capped at £100 p.a.

Is there a logic underlying having a charging cap on ETFs but not on funds? That is, a cost difference to AJ Bell between administering the two types of investment? Because if there is not, I can see the ETF cap being removed too in due course.

Simon_C_Brown

It's very disappointing. I am looking at Alliance Trust Savings who seem to cap at £7.50 + vat per account per month but I bet they are about to hike their charges too.

EdGasket

With an ETF, you pay A J Bell a dealing charge which perhaps mitigates what they'd like to charge just for holding the ETF.

Simon_C_Brown

I looked at switching to Investment Trusts and EFTs too but their fund charges are punative, as far as I can see.

EdGasket

The 'One-off payment of a tax free lump sum, income payment, uncrystallised funds pension lump sum or small lump sum' charge of £25 is now much lower It was previously £75 for a UFPLS payment.

banjodog

Article in the Telegraph
http://www.telegraph.co.uk/investing/funds/popular-investment-shop-aj-bell-raises-prices-by-25pc/

EdSwippet

banjodog wrote: »

Article in the Telegraph...

It's not so much an 'article' as it is just thinly puffed up parroting of Youinvest's own marketing slime. :-(

bowlhead99

For my SIPP the changes are fine.

Annual SIPP general custody/administration:
was £100pa, now £0 (I am in the >£20k total fund size bracket)

Annual custody of shares/ITs/ETFs:
was £0pa, now £100

Annual custody of funds on platform:
was 0.2% +£9.95 dealing (or £1.50 purchases with advance booking monthly)
now 0.25% +£1.50 dealing whether advance booked or not.

As I have a few pounds saving here and there from the reduced transaction fees, I have spare money to afford the extra platform charges on fund products. In my case, say 5+ buys and 5+ sells, this could be £30-£50 a year or so but probably less.

So I can perhaps afford to hold £60-100k+ of 'fund platform' products before the extra fees on that side offset the transaction fees savings; if nothing else, I won't have the same compunction to wait for the monthly 'regular investing' deal date to do a trade at a cheap price.

So it works for me with an IT/ ETF-heavy portfolio. I am nowhere near drawdown so don't care about that stuff, but seems there would be some savings if I was.

Of the 'percentage based' fund platform providers their old 0.2% (plus transaction fees of typically £1.50 a pop if you used the regular investing feature to do it) was very competitive for holding funds, though of course it wasn't as cheap as those with a low non-percentage based fee.

At 0.25% with only nominal transaction fees they are still competitive IMHO. None of the other mainstream percentage-based providers do less than 0.25%. And eliminating the SIPP admin fee is great if a SIPP is what you want from them. Just not if you have hundreds of thousands of pounds of Funds where the removal of the cap will affect a lot of people.

For those with larger funds holdings than mine it still probably won't be cheaper to hop back to a different mainstream percentage- based provider like HL or Fidelity or Cavendish or Charles Stanley, TD Direct, Trustnet, Selftrade, Close Bros, Best Invest etc. Although I suppose Best Invest and perhaps others let you get a lower tiered rate by combining products and family members so there might be a point at which you could move a big SIPP there and save some money.

For ISAs, bringing in a fee for shares is unwelcome, but I use TDDirect for my ISA anyway, as it is mostly ITs and shares and they have a fee waiver if you put a decent amount with them or sign up to regular investing.

As ever there will be winners and losers.