The ban on UK execution-only brokers receiving trail commission takes effect in April 2014, so the few providers who have not yet announced their revised charges have been rushing to do so.
Taking FundsNetwork first, Fidelity will be charging a relatively straightforward 0.35% on fund holdings up to £250,000 and 0.2% from £250,000 to £1,000,000 (stocks, investment trusts and ETFs are not affected – the Fidelity share dealing service is a white label service operated by Charles Stanley). There’s no minimum charge.
That’s towards the middle of the pack on costs – the lack of a minimum fee means it’s better than some for smaller portfolios, but will be beaten by – for example – Charles Stanley Direct (Charles Stanley’s own d2c fund and share platform, not to be confused with the aforementioned white label share dealing operated for Fidelity).
If you’d prefer to use the FundsNetwork platform anyway, Fidelity’s direct pricing can still be beaten by using Cavendish Online, which is an execution-only broker that uses Funds Network. The cost here is 0.25%, with FundsNetwork taking 0.2% and Cavendish getting 0.05%. (This is Fidelity’s pricing for intermediaries of 0.25%, announced a couple of years ago, but with the fee split between Fidelity and Cavendish and a waiver of the £45 account fee.)
So at present, there is no reason that I’m aware of to go direct to Fidelity (and never has been – FundsNetwork has always been cheaper via Cavendish and other intermediaries.)
Changes take effect from 9th February 2014.
Turning to BestInvest (which runs on the SEI platform), the firm seems to have done something rather strange on its pricing [PDF]. For general dealing accounts and ISAs, it will be charging 0.4% up to £250,000 and 0.2% between £250,000 and £1,000,000, with no minimum and no charges on assets over £1,000,000. For SIPPs, it will be 0.3% on the first tier and 0.2% on the second tier, again with no minimum. These custody charges will apply to funds, shares, investment trusts and ETFs, replacing the existing £25+VAT quarterly charge for holding shares.
The oddity is of course that charges for the SIPP are less than for the ISA and general dealing account. That’s unique as far as I know among all pricing schemes announced so far and understandably so, since SIPPs are considerably more expensive to administer than ISAs.
It’s obviously a grab for market share on SIPPs and they’ll be relatively competitive for those, but not the cheapest at any bracket. For dealing accounts and ISAs, they are significantly less competitive.
Changes take effect from 1st March 2014.
Meanwhile Barclays Stockbrokers announced they’re charging 0.35% uncapped on funds, but with a minimum of £35 per year. There will be no charge above £500,000, which beats Fidelity for the largest portfolios – a comparison that’s relevant since, although few people seem to pick up on this, the funds part of the Barclays Stockbrokers service also runs on FundsNetwork. There’s a £30+VAT per year charge for ISAs and a £50+VAT per quarter charge for SIPPs, waived if you only hold funds.
Changes take effect from 1st March 2014.
Halifax, iWeb and iDealing
Lastly, a couple of less-mainstream (for funds) providers have announced some rather interesting charges.
Halifax Share Dealing will be charging £12.50 per fund trade with no explicit fund platform fee. In terms of account fees – which cover funds and shares/ETFs/investment trusts – there’s no fee at all on general dealing accounts, £15 on the ISA and £75 or £150 depending on size for SIPPs. iWeb Share Dealing is another identity for the Halifax service – it’s cheaper and effectively the same service. Charges here are £5 per trade, again with no explicit fund platform fee. For account fees, there’s no general account or ISA fee (although there is a £25 fee to open the account) and the same £75 or £150 fee as for SIPPs. Dividend reinvest will be charged at 2% capped at the relevant trading fee (£5 for iWeb, £12.50 for Halifax).
Whether Motley Fool Share Dealing, which is a Halifax white label, will be offering something similar doesn’t seem to have been announced. In any case, it’s unlikely that it would be cheaper than iWeb. As far as I know, iWeb/Halifax funds service uses the Cofunds platform, so this could be a very cost-effective way to access Cofunds for investors who trade in funds infrequently and in larger sizes.
Charges take effect from 31st March 2014.
As a potentially even cheaper option, iDealing have told me that they have begun providing access to funds from the major funds house with no dealing or platform charges. The only cost is the standard £5 per quarter account fee for dealing accounts and ISAs. Obviously, they can’t make any money on that – the purpose is to have it as a loss leader to round out the rest of the service.
Currently, Jupiter and M&G funds are available, and more major fund houses should be added over the rest of the year. This sounds like it could be very interesting proposition for cost-conscious investors, especially if providers such as Vanguard are added, since the new charging structures generally make low-cost trackers more expensive to hold than before.
Who’s cheapest now?
The very different charging structures that providers are trying makes it difficult to compare platforms, but this table from the Lang Cat gives a good idea of which are likely to be cheapest for different sized portfolios (although it’s worth noting that changing assumptions on dealing frequency, introducing a mix of shares and funds into your portfolio and other nuances mean the cheapest choice for many investors could differ).
I will update the supermarket comparison table once the final few providers have shown their hands. In the meantime, the guide to fund platform changes on Candid Money is an excellent way of tracking what’s going on.