Barclays smart investor removed platform charge

GeoffTF

https://forums.moneysavingexpert.com/discussion/comment/82027268#Comment_82027268

Scottish Widows is a little cheaper.

Chloe_G

Is SW cheaper? I was thinking of moving my S&S ISA from them to Barclays now.

Newbie_John

https://forums.moneysavingexpert.com/discussion/comment/82027606#Comment_82027606

It can't be.. it's already £0 :)

Free buying, free holding.

They only charge now £6 for ETF, share, Bonds unless you do regular investment and that's free too.

Spaceace

How do these platforms make any money for the operators when there are no holding fees?

In the case of my ISA I hold only shares and investment trusts, trade very rarely, have dividends reinvested and don't have uninvested cash in the account.

With the new fee structure my annual costs are likely to be nil or very close to nil. Whilst that's great from my perspective I don't understand how it makes commercial sense for Barclays or the other no-fee platforms.

Newbie_John

The free new ones like Trading212, IG etc they make money through spread. They would want you to buy/sell as often as you could.

GeoffTF

https://forums.moneysavingexpert.com/discussion/comment/82027788#Comment_82027788

It is a breach of the best execution rules for them to make money from the spread. They have to get you the best price on offer.

Some of the new brokers do not make money. Scottish Widows Share Dealing makes money from trading and foreign exchange commissions and uninvested cash. You will find Halifax Share Dealing Limited's accounts online. I expect Lloyds also hopes to cross sell other services.

Spaceace

https://forums.moneysavingexpert.com/discussion/comment/82027868#Comment_82027868

I guess cross-selling is a possible route to revenue but, in the past, I don't recall ever receiving any communication regarding Barclays' other products. I'm opted out of their marketing communications and intend to stay that way.

Under the previous fee schedule they were earning well over £100/year from me for simply holding my ISA investments and performing dividend reinvestment. As I see it, with the various communications I still receive by mail, they'll be operating my account at a loss. There must be many other 'buy and hold' investors in the same situation and I don't understand how that makes commercial sense - not that I am complaining, just curious.

Newbie_John

https://forums.moneysavingexpert.com/discussion/comment/82027868#Comment_82027868

Wrll, thats from IG website:

We make most of our money through spreads, with a small portion of our revenue coming from other fees. We aim to build lasting relationships with traders, and provide a range of tools to help you on your trading journey

Regarding Barclays, I think they lowered their earnings as they want to increase customer base - they've been around fairly long but still aren't that popular and quite a lot of new platforms like Trading212, IG, Revolut likely to have more customers just by simply offering free services. Come to a shop for a free ISA, leave with mortgage 😅 All I know is that they're not in a loss, and happy to also save £100+.

wmb194

https://forums.moneysavingexpert.com/discussion/comment/82027983#Comment_82027983

That's for CFDs i.e. gambling. As Geoff says, it's against the best execution rules for purchasing shares, ETFs etc and it also isn't my experience with IG Invest or any of the others: I watch the live exchange prices and usually trade within the indicated spread. They subsidise the stockbroking side of the business with the CFD side plus FX fees and interest on your cash. T212 appears to do some market making as well.

Freetrade has a 'freemium' model with some subscription tiers that offer additional benefits e.g., more interest, better customer service.

GeoffTF

https://forums.moneysavingexpert.com/discussion/comment/82027932#Comment_82027932

If you do not trade, your account does not cost them much. It adds to their Assets Under Management, which is a factor that a buyer would take into account when valuing the company. Lloyds waives the custody fees for the Lloyds branded accounts if you also have Private Banking with them. Lloyds will have millions of unprofitable current accounts. They are undoubtedly hoping that the people using these accounts will either borrow money from them or or take up their "wealth management". Santander has tried to sell me a Private Bank account and, on another occasion, wealth management.