Barclays smart investor removed platform charge

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82027778#Comment_82027778

They do not all make money. In the 12 months to March 2025, InvestEngine had a turnover of £715K and lost £10 Million.

That is not unusual for a typical Fintech company start up. They burn cash as they have to build systems and a customer base, with very little income. Eventually they probably hope to be bought when they have a big enough customer base.

It seems also they have withdrawn from actively managed portfolios, including their Retirement Glidepath. They did used to charge for these (0.25%) so now they will have no fees at all coming in.

I agree though that it does make you wonder about these zero/very low fee business models.

Even some of the 'big boys' have low caps on fees if you stick to exchange traded products ( as opposed to OEICs), and a generally better service, especially a fully flexible drawdown service.

GeoffTF

https://forums.moneysavingexpert.com/discussion/comment/82028590#Comment_82028590

Some of the "big boys" have low fee caps for OEICs too: Lloyds, Halifax, Scottish Widows, Barclays and Interactive Investor. Perhaps we can add Vanguard to that list, but they are not really competitive at any level nowadays.

TheTelltaleChart

Now that the ultra-low interest rate era is over, platforms can once again get a lot of revenue from interest on customers' uninvested cash, even after deducting the (usually very low) rates they pass on the the customers.

HSDL's accounts show that the majority of their income is from this source (they pass no interest at all on to customers, except in their SIPP). HSDL is profitable, though without that source of income, they wouldn't be. They also get significant revenue from 3 other general sources: (cheap) flat-rate dealing commissions, (expensive) FX commissions on non-£ trades, and account fees (applicable to their SIPPs, and to some non-iWeb(sorry, i mean Scottish Widows)-branded accounts).

Compare that to the "free" providers, and they probably have 3 of the same 4 revenue sources as HSDL, viz. all except flat-rate dealing commissions, importantly including the biggest one, interest on uninvested cash. (The "freemium" model involves collecting account fees from some customers.)

The reason many of the new providers tend to lose a lot of money is less to do with not charging enough and more with having higher costs on building out new IT functionality, advertizing, etc. Also because revenue won't reach a reasonable size until you have enough assets on the platform, whatever your charging scheme is. You can't just charge your first customer a £10m joining fee to cover your startup costs!