Investment platforms

jae123

Hi wonder if someone could help me out.

I purchased 4 stocks n share Isas a few years ago which are held with the provider and am thinking of moving to a platform.
I understand the platform have either a fixed or percentage fee for me hold the investments with them , do they charge the same annual management charge as the provider or is this reduced in some way.

thanks in advance.
Jae123

jae123

Just to add to post is the amc and ocf the same

Albermarle

When you say you have Four ISA's with 'the provider' what exactly do you mean by that ? Do you mean the provider of the actual investments is also operating the ISA's as well? In this case the charge for the investments and the ISA might be rolled into one maybe?

jae123

Sorry
for example have one with framlington, and it’s held by them.

El_Torro

Typically the fund charges are the same no matter which platform you're using, assuming you're invested in exactly the same fund. Not all platforms offer the same funds. 

What differs is the platform charge. As you rightly say some platforms charge a flat percentage, some offer a fixed charge, some charge a combination of the two. Your best bet is to use a platform comparison tool (as already linked) to see which is best for you.

Remember that going with the cheapest platform isn't always the best option. You need to take into account which funds they offer, how user friendly their website is, how reliable their service is, etc...

jae123

Thanks so as I understand it 

As an example
 If I have a framlington fund which is held with framlington charging a AMC of 1.5%.
If I moved it to a platform I will pay a fee based either on a flat fee or percentage of the investment and also the 1.5% AMC.

underground99

jae123 said:

Thanks so as I understand it 

As an example
 If I have a framlington fund which is held with framlington charging a AMC of 1.5%.
If I moved it to a platform I will pay a fee based either on a flat fee or percentage of the investment and also the 1.5% AMC.

Not quite.  I mean yes, you will pay an explicit fee to the platform (percentage based or flat) and you will also be exposed to the annual running costs of the fund (the 1.5% or whatever).  However you'd generally expect to find that accessing the fund through a third-party platform, that ongoing management fee or ongoing charges figure, expense ratio, will be a lower number than if you went direct.   It would generally be the same from one platform to the next (albeit some platforms might have negotiated a special lower rate to get it lower than some other platforms), but the rate of management fee paid by platform customers would be lower than the standard 'full retail price' that you get from the fund manager direct.

If you buy a fund directly from the investment manager, where they have to do the administration of maintaining your personal account records and giving you customer service whenever you call them up and handling your personal subscription and redemption requests for relatively small amounts of money each time, it is an admin hassle and headache for them. They would rather the client they deal with would be a big financial institution or investment platform, and if they have to deal with small customers they will only do that if they can get a higher management fee for the privilege.

So the annual management charge or ongoing cost figure for the 'class' of fund share or fund unit that they give you going direct, will be quite high (e.g. 1.5%), whereas if they were dealing with an intermediary / fund platform (which handled the admin for its own individual customers) they would offer that class of shares at a lower charge, which helps you to afford to pay a platform/ custody fee to the middleman who runs your ISA independently of the fund management company.

Example, the Ongoing Charge Figure for AXA Framlington Managed Balanced Fund Class R (Class R being the expensive version, standing for 'retail') is 1.32%, which includes their high Annual Managment Charge of 1.25%.   However, their AXA Framlington Managed Balanced Fund Class Z (available on most platforms) has ongoing charge figure of only 0.7%, because the Annual Management Charge which the fund manager bills to that class is only 0.625%.   This means you can afford to spend a bunch of your own money on paying a platform fee to a third party platform operator and still be better off than if you had used AXA's Stocks & Shares ISA product.

The old fashioned way was to have a high management fee and the fund manager would give a kickback to fund platforms and investment advisers who helped distribute the product. Where customers went direct to the manager, the manager would keep the kickback themselves and spend the money running their own administration function to handle the individual customers.  After the FCA did a review several years ago, they said that it would be better if everyone could see who was getting paid what, so fund managers started to offered cheaper share classes via platforms and have the platforms invoice the customers directly for platform services (un-bundled, explicit pricing),  instead of a high price with a kickback (bundled, inclusive pricing).  But for customers who stayed with the fund manager direct, they generally kept the 'inclusive' high management fee versions.

The bottom line is that you can probably move all your fund holdings onto a single platform and end up with lower overall cost, not higher . It would just require the fund classes be converted along the way, so that you are using the unbundled unit class.

Eyeful

Perhaps looking through these might be of some use to you.
https://monevator.com/find-the-best-online-broker/
https://monevator.com/compare-uk-cheapest-online-brokers/

An annual fund charge of 1.5% is very high for funds today. I would check to see if your fund does not have a cheaper class you can transfer to. I suspect there is.

jae123

Thanks for advice.
I purchased these funds many years ago through an execution only service, but have never opened a platform, so they have been held with the fund providers all the time, I will have to look at these platforms or see a financial advisor.

jimjames

jae123 said:

Thanks so as I understand it 

As an example
 If I have a framlington fund which is held with framlington charging a AMC of 1.5%.
If I moved it to a platform I will pay a fee based either on a flat fee or percentage of the investment and also the 1.5% AMC.

1.5% sounds very expensive for the AMC, which fund is it?

For example I just checked one of their funds I hold on the iWeb platform which has MAC of 0.82% so if you're paying higher rates then that may be a legacy fund you could get cheaper elsewhere.
The best platform will really depend how much you have in total, some are better for higher balances than others.

Rollinghome

The cost of your investment will depend on which "class" of the funds you have and where you hold them. 

In most cases, with a few exceptions, you will pay for the most expensive class if you buy direct rather than hold on a platform.  The best platform to use will depend on how much you invest and how often you buy and sell.  Don't under-estimate how much the accumulated extra costs can be over a few years even on what appears to be a small difference. Similarly, if you have a fund that under-performs.

What you need to do is to refer to the KIID (the Key Investor Information Document) which all funds must have and which will have the all important ISIN code, the fund class, the charges, and some other information.

If you post the ISIN code here and some indication of how much is to be invested, then someone here will be able to point you in the right direction.

By using SnowMan's excellent spreadsheet you can calculate the costs of the various platforms for your particular situation. You can compare the performance of your funds using www.trustnet.com