New AJ Bell Youinvest charges

talexuser

Chickereeeee wrote: »

Argg, I have JUST (this month) moved to Youinvest specifically to get the cap on charges (previously with Fidelity).

C

Commiserations, I did the same several months ago. Now YouInvest will be marginally more expensive on my ISA, but conversely once I put in another 20k next year, it will be marginally cheaper than Fidelity again.

Unfortunately my partners and Mum's ISAs will be around £100 more expensive than Fidelity now, but not worth moving due to the transfer out charges. Mum needs monthly income for her care home fees, so a reliable platform is needed - the like of II is out due to the feedback here.

Yorkshire Building Soc has just written with their savings rate reductions. There is an amnesty for withdrawal restrictions. If this is normal for variable savings accounts, why cannot ISA platforms do the same thing, especially where the increase can be very high, as in this case?

Any feedback on how Snowman got on with his complaint, or is it still running? I feel like writing to my MP but I don't think it would achieve anything, particularly in the short term.

EdSwippet

talexuser wrote: »

If this is normal for variable savings accounts, why cannot ISA platforms do the same thing, ...?

They can. All others have so far, and it is only AJ Bell that have not.

talexuser

EdSwippet wrote: »

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

The most grievous omission example from the article is any mention of transfer out charges for people with large amount funds who were capped at £200 and now who might now be charged £700 or £800 (much more than the 25% quoted!) with £250 or £300 transfer out charges for 10 or 12 funds.

BLB53

Is there a logic underlying having a charging cap on ETFs but not on funds?

I suppose it's because HL operate a similar structure (but can get away with 0.45% on funds).

masonic

Simon_C_Brown wrote: »

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

It does depend on the trust, but there are a number of ITs with charges below 1% and ETFs with charges below 0.2%. On average I find myself paying a bit more ongoing for ITs, but the performance has tended to make that worthwhile. Where it doesn't make sense is if you only have a small amount to invest in each fund.

pavane

On the question of cap for ETF, it is not really a cap on ETF, they have just changed it to be based on % for small portfolio, but most will end up paying the capped rate as "custody" rather than as account fee. ETF is listed on stock exchange like shares, I really doubt they would ever do uncapped % for shares.

On the topic of fairness of % based, the admin workload is not really dependent on size but number of funds. It is easier and therefore cheaper in reality to administer a 500k account with 5 funds than a 5k account with 10 funds. A fair system would be based on number of funds held. Today's IT systems could keep track of this instead of value amounts as they do to calculate fees. I haven't seen anybody offer this but this would be the fair option.

Eric_the_half_a_bee

pavane wrote: »

On the topic of fairness of % based, the admin workload is not really dependent on size but number of funds. It is easier and therefore cheaper in reality to administer a 500k account with 5 funds than a 5k account with 10 funds. A fair system would be based on number of funds held. Today's IT systems could keep track of this instead of value amounts as they do to calculate fees. I haven't seen anybody offer this but this would be the fair option.

Very interesting. That suggests that for large simple portfolios, a company offering a flat fee per fund held could substantially undercut a % based fee and still make money. In a competitive market, a company offering such a charging structure should emerge.

masonic

Eric_the_half_a_bee wrote: »

Very interesting. That suggests that for large simple portfolios, a company offering a flat fee per fund held could substantially undercut a % based fee and still make money. In a competitive market, a company offering such a charging structure should emerge.

I suspect the trouble is attracting new customers. A certain amount of cross-subsidy from those with the larger portfolios seems to be beneficial. Once established, few people actually move to save money. There are still options for those who want flat fees though.

bowlhead99

masonic wrote: »

I suspect the trouble is attracting new customers. A certain amount of cross-subsidy from those with the larger portfolios seems to be beneficial. Once established, few people actually move to save money. There are still options for those who want flat fees though.

Yes, good luck splashing a banner on your front page saying that customers contributing £100pm to their ISA have to pay as much fees as if they had a £500k SIPP.

The reality is that the small customers who opened up their account this year want to get their account set up for free, which they think the business should do as an investment in the relationship, and they don't want to pay anything for exit fees because it's a breach of human rights and freedom, and they don't want to pay anything for their 48 purchases into two or three funds over the first couple of years because it's all done by computer, and the business had to buy the computer and premises and a workforce anyway, for the customers with the half million pound accounts (who might do a couple of fund switches over the same period).

And the big customers don't want to pay more for the account than the "little people" if they only want the same number of trades and statements as the little people...

Financial_Saddler

Unfortunately, these new "transparent, fair and simple charges" will lead to a more than doubling of charges from an existing £390 pa to £795 pa in my own case.
In terms of actions, my dealing account is a no-brainer as it is so simple that even Interactive Investor will be able to cope with it.
My SIPP, however, is something else entirely. I have been very happy with AJBell's administration but they have now dented my trust by implementing a platform charge which is higher than the OCF on some of my main fund holdings - which seems a ridiculous thing to do. I will probably initially look at the feasibility of reducing these funds and replacing them with ETF "equivalents".
Just as happened with HL, AJBell will find that plenty of holders of higher value accounts will not be as inert as they may hope.