AJ Bell raising cap on shares custody charge

masonic

https://www.youinvest.co.uk/isa/charges-and-rates

Currently a maximum of £7.50 per quarter (£30 per year)

From 1st January will be maxiumum of £3.50 per month (£42 per year, 40% increase)

masonic

It also puts them just below Hargreaves Lansdown. I only hold a LISA there, and don't have the option to transfer it elsewhere as there are no other providers I could transfer to.

Alistair31

Assuming this applies to ETFs ? 

If so I need a cheaper home for my LISA which has ~£22k in VWRP ETF, anyone ? 

bowlhead99

masonic said:

https://www.youinvest.co.uk/isa/charges-and-rates

Currently a maximum of £7.50 per quarter (£30 per year)

From 1st January will be maxiumum of £3.50 per month (£42 per year, 40% increase)

Yes, I got their email today too - I also use their SIPP and with their new monthly fees the cap on custody for that is going up to £120 a year (£10pm) from £100 a year, which would affect those of us with more than £40k-worth of shares or exchange-traded instruments.   

I doubt the extra £20 a year on a pension of that sort of size is going to result in people running for the exits although the extra £12 a year on an shares or ETF / investment trust -based ISA of £17k+ is a relatively bigger hike.

Alistair31 said:

Assuming this applies to ETFs ? 

If so I need a cheaper home for my LISA which has ~£22k in VWRP ETF, anyone ? 

Yes it would apply to ETFs but there is relatively scant competition in the S&S LISA market (the biggest of the rivals, Hargreaves Lansdown, has a higher percentage and a a few pounds higher cap on the fees, and more expensive transaction fees for ETFs). 

The extra £12 a year that they'll now be charging on your £22k LISA is about 0.05%, so although this is a moneysaving site it barely seems worth moving to dodge the extra fee.

masonic

Alistair31 said:

Assuming this applies to ETFs ? 

Yes, shares, ETFs and Investment Trusts.

Alistair31 said:

If so I need a cheaper home for my LISA which has ~£22k in VWRP ETF, anyone ? 

It is still the cheapest option for a LISA as far as I can see.

Thrugelmir

As interest rates fall then platforms have to find other ways to generate revenues. Likewise exit fees are being abolished.  There's no free lunch to be had. 

Must be lots of new smaller accounts to adminster as well. Probably not profitable in the overall business model. 

garmeg

Thrugelmir said:

As interest rates fall then platforms have to find other ways to generate revenues. Likewise exit fees are being abolished.  There's no free lunch to be had. 

Must be lots of new smaller accounts to adminster as well. Probably not profitable in the overall business model. 

A J Bell Youinvest are not abolishing their exit fees, but I believe they are removing their drawdown fees?

EDIT: Exit fees have been reduced significantly though.

Alexland

Alistair31 said:

If so I need a cheaper home for my LISA which has ~£22k in VWRP ETF, anyone ? 

EQi investing in HSBC FTSE All World fund would be a cheaper platform and investment choice.

Herbalus

masonic said:

Alistair31 said:

Assuming this applies to ETFs ? 

Yes, shares, ETFs and Investment Trusts.

Alistair31 said:

If so I need a cheaper home for my LISA which has ~£22k in VWRP ETF, anyone ? 

It is still the cheapest option for a LISA as far as I can see.

Hmmm this is irksome. I spent a good while last week analysing a move from funds in my HL LISA to EFTs on AJ Bell for the £30 annual cap plus trading fees.

As HL cap is £45 annually on EFTs within the LISA, it barely seems worthwhile transferring to AJ Bell for £42 annually. I know trading costs are higher with HL but I would move to 2 trades a year so again is a very small difference.

I guess it saves me the hassle of transferring at least.

bowlhead99

Thrugelmir said:

As interest rates fall then platforms have to find other ways to generate revenues. Likewise exit fees are being abolished.  There's no free lunch to be had. 

Must be lots of new smaller accounts to adminster as well. Probably not profitable in the overall business model. 

Small accounts are only really 'worth it' for platforms on the hope that they grow into bigger accounts. Or in the case of smaller startup platforms, in the hope that adding an additional customer number is something that if you sell out of the business further down the line, someone someone else with deep pockets would pay good money to buy off you in the hope to better monetize the customer count in due course.

With the FCA saying that exit costs were a barrier  consumers exercising their free choice and stifled competition, the bigger platforms that charge percentages on funds administered (e.g. HL and Youinvest etc) were happy to be seen to embrace the dropping of account closure costs in the hope that it came across as a 'customer friendly' sounding measure, while hurting the smaller fixed-fee rivals who had a model of charging for the services consumed rather than the number of 0s on the end of the account balance.

If you can't charge to take a customer on from a rival at acquisition (because your marketing team would get angry that you were putting customers off) and you can't charge to eventually hand them off to a rival on exit, theoretically everyone will have to up their service game to minimise customer exits. Inevitably though, the admin will still need to be done, so the ongoing costs (whether max £ per month, or max per £ invested or whatever) is going to end up rising - whether for all, or just for some cohort of customers who might be more easily able to bear it.

masonic

Alexland said:

Alistair31 said:

If so I need a cheaper home for my LISA which has ~£22k in VWRP ETF, anyone ? 

EQi investing in HSBC FTSE All World fund would be a cheaper platform and investment choice.

Interesting option, although it looks like the 0.2% custody fee is uncapped, so it is outright cheaper for less then £21k, but more expensive above that unless you can pick a cheaper fund or funds to hold within it, in which case the threshold at which AJ Bell becomes cheaper will be somewhat higher.