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Next please – Fidelity joins the new world

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So yesterday Fidelity showed the best of British pluck and joined the huddled masses of direct platforms in our Tables Of Repentance – obviously the only reason a provider declares its new pricing is to get a spot therein. Happily for you, and for us, Fiddy went down the simple(ish) route, and here’s what happened:

  • Assets under £250k are charged at 35bps (0.35%)
  • Funds over £250k are charged at 20bps (0.2%) but crucially this applies to the whole pot. (That’s what we call a ‘stepped charge’, sports fans)
  • This charge is capped at £2k, so if you’re lucky enough to be a Fidelity millionaire, you won’t have to cough up any more than this.
  • No additional transactional charges (trading, exits et al) other than £9 for share dealing.

But enough! We know you. We know you shun the bullet point. We know you are drawn inexorably towards pretty-coloured heat maps much as a Canadian mayor is drawn towards Columbian marching powder. We hear you. We’re here for you. You know this.

But first, the usual disclaimers . We’ve assumed 10 fund trades per year (5 buy/sell instructions) for those who charge, and we’re only looking at ongoing charges so any initial fees aren’t included in our squishing. ISA first in percentage terms!

Obvious stuff first. You can get 10bps cheaper at Charles Stanley up to about £200k, no prizes for working that out. But apart from those fine fellows, Fidelity is very competitive at lower fund values and only really starts to struggle at the higher end – when the fixed fee Jets start to undercut all the percentage-based Sharks by harnessing the unquestionable but majestic power of rudimentary arithmetic.

We’re told that mentioning Hargreaves a lot aids our search engine rankings, so we’ll add that Fidelity undercuts the Bristol massive by at least 10bps till the tastier £1m+ fund values. It also has some good-looking fund deals, but we’ll reserve analysis of that until we have everyone’s full list in March.

Having disposed of ISAs, let us now open our hymnals at SIPP. Percentages first natch:

A similar story to the ISA space. Very, very competitive at lower fund values, with the addition of the Charles Stanley SIPP wrapper fee here meaning Fidelity sneaks out in front for assets just over circa £50k. Again, Fidelity undercuts Hargreaves by the same amount, what with the percentages being the same and everything. (Rudimentary mathematics is definitely winning today)

As with most propositions in this space, there are a few quirks. Fiddy isn’t going to move people over to clean share classes en masse; this is going to be up to individuals to switch so far as we can tell. I wonder if providers have assessed how big the demand from clients will be for comparative cost assessments on share classes? It was definitely something that caused – and still does – issues for some advisers with some advised platforms. Still, I’m happy to put this down as something hidden by a SEP field and leave it there.

Fidelity also has a quirk for investors wanting to hold exchange-traded instruments (investment trusts, shares, ETFs and so on). Legacy IT issues mean that it’s an either-or choice within the ISA wrapper; you actually get a separate ISA depending on whether you go for those or for funds. And ISA regulations mean you can only have one each year, so if you use Fidelity for one or the other you’re committing yourself for that tax year. Fidelity tells us that this is getting fixed when they bring in a new platform system, and that next to no clients seem to care at the moment. Probably some self-fulfilling prophecy stuff there, but good to be aware of.

CONCLUSION

There’s a lot to like here. The charging structure is clean, easy to explain and very attractive for smallish investors. We like the fact that the charge is capped as the inherent inequity of percentage-based charging is a point we’ve made many, many times before. And it’s worth pointing out that the cap is half of HL’s.

Another plus point, in contrast to HL, is that admin charges apply holistically across your investments, so there’s no per account charging shizzle going on.

Significantly less cool is Fidelity’s refusal to switch existing clients into the new share classes and structure- this has already attracted criticism, and we’d add our puny voice to that.

As with the AXA blog there’s not a great deal to add at this stage. We expect more price announcements shortly as the rest of the market get their ducks in line pre-April (and one of the biggies – Barclays – to announce next week). We also look forward to getting more scientific once further details of fund pricing emerge. We’ll be all over that in due course like the proverbial cheap suit.

Let us know what you think of the latest big beast’s announcement below. But for now it’s the best of British to the Fiddy chaps, and we await the inevitable war of words with interest.

Additional reporting (well, most of it) by @langcatsteve. Go team.

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About Mark Polson

lang cat founder and boss. Expert on all things platforms, pensions and investments. Prolific writer and public speaker, even when people ask him not to be. Knows more about Scandinavian black metal than you, and isn't afraid to prove it.