Another Friday, another bunch of platforms to round up. This time we welcome Halifax Sharedealing and Bestinvest to the party – we’ll move past the fact they’re late and celebrate that they’re here at all. Nearly everyone has announced now; we lack Chelsea and a few of the smaller brokers, but that’s about it.
The reason timeliness is important is that we’re heading into a key investment season – deadlines shouldn’t matter, but as HMRC are finding once again today, they do. Investors need time to assess whether they should be keeping their money where it is, investing somewhere different or transferring, and the more time they have the better. I’d like to have seen more announce last year, rather than all waiting for Hargreaves.
Never mind. Let’s do Halifax Sharedealing first, as it announced yesterday. Now, bear in mind here that iWeb (our price champions so far) are also part of Haffilax, so close comparison is in order. Costs will be Â£12.50 a trade here (compared to Â£5 a pop on iWeb). General unwrapped accounts are free (same). No set up fee for ISA (compared to Â£25 for iWeb). Annual ISA fee – Â£15 inc VAT compared to Â£0 on iWeb. SIPP – Â£75pa for funds less than Â£50k; Â£150 for over that (same as iWeb).
As with all fixed fee providers, this works well for larger funds, but is notso hotso for your Â£10k ISA. Even if you didn’t trade a lot – maybe twice in a year – your annual cost would be Â£40 for that Â£10k investment, representing 0.4%; you can get the same thing for Â£25 over at Charles Stanley. The differences with iWeb are interesting and I’d like to understand more about the marketing structure behind the two propositions – is one puppeteer behind them both? Are we all part of a TWISTED SCIENCE EXPERIMENT BY AN EVIL MASTERMIND? I think we should be told.
But broadly this is fine; your choice with the fixed fee guys is whether you prefer someone whose centre of gravity is funds, like ATS, or broking like HFX. Both are cost effective if you’ve got a bit put by.
Having dealt with flat fee, let’s hop over to percentage-based world and have a look at Bestinvest. It’s one of the chunkier discount broker propositions (known for its annual Spot The Dog list of crappy funds) andÂ behind the scenes uses SEI’s platform – which also powers propositions from Towry, Baker Tilly and several other large advisory outfits. So you’re getting Bestinvest’s marketing proposition on SEI’s kit – but it’s important to note that you can’t just approach SEI directly.
Anyway, Bestinvest has gone for 0.4% for its ISA up to Â£250k. Funds up to Â£1m are 0.2%, and it’s free over Â£1m. Weirdly, its SIPP is cheaper than the ISA or GIA, at 0.3% for the Â£250k tranche (everything else is the same). Â£7.50 a trade for securities; fund dealing is free.
This is weird because platforms normally charge a premium for SIPP. ISAs are cheap and easy to administer; as are general accounts. SIPPs (at least basic vanilla funds-only SIPPs) are also pretty easy, but there is a bit more HMRC work to do for tax relief and whatnot. I don’t like differential pricing by wrapper, but then there are a lot of things I don’t like, such as my nose and my hairline, and no amount of huffing on my part changes those. But for a SIPP to be 10bps cheaper than an ISA is unique in this industry. For a very good reason.
TOM & JERRY PRICING
Now, all this means that the SIPP is well priced, beats Fidelity and HL, and that’s all fine. But platform pricing works on the Tom & Jerry principle. When Jerry hits Tom on the head with a frying pan, a bump comes up. When Tom presses the bump down, it pops up again somewhere else. That’s what’s happening here. To get the SIPP aggressively priced, Bestinvest has had to penalise ISAs (they have a smaller average fund size) and as a result it’s giving ground away to Fidelity and Charles Stanley here. I had to look twice – I thought there was a typo in this structure.
You’ll see it in the tables, but based on pricing alone you would struggle to make a case for paying 0.4% for an ISA when you can get it for 0.25% elsewhere. So if you like percentage based charging it’s probably BI for your pension, and Cavendish or Stanleys for everything else.
I’m not a fan of this. I’ve worked in proposition teams, and what often happens is you lose perspective as you try to outmatch the competition in areas your commercial guys have told you is most attractive. That drives your actions, and you end up with some funny results, and that’s what’s happened here, I think. Is there anything wrong with Bestinvest? Absolutely not. Is the SIPP good? Yes. Is the ISA good? It’s a wee bit overpriced. But it just doesn’t hang together, and I can’t help thinking that it’ll just end up changing it all to 0.3% soon enough. That would also get rid of the per-account charging, as from BI’s website it looks very much like it doesn’t aggregate your pension and ISA/GIA holdings for charge calculation. Most folk don’t have enough for that to matter, but it still sucks.
It’s worth mentioning that BI is going to convert clients to clean over time, which is good. I’m hoping that until they do, they will hand back not only the commission they get (0.5% from a 1.5% fund, typically), but also the platform rebate (0.25% or greater) in full. As you may remember, HL is going to sit on any element of that above 0.75%, which is not good. BI can score by playing it straight here.
And with that, I’m out of here. Have a good weekend y’all.