A wee roundup of some of the recent moves in direct platform pricing land. Pretty much everyone is in now bar one or two of the white labels who are working out what to do in the Land of Glorious Transparency which is what we are living in and all that.
First up, Chelsea went last week with a highly aspirational 0.6% tiering down VERY SLOWLY to, well, less than that. We didn’t write it up last week because frankly I was in a bad mood and no good would have come of it. So what to say of a proposition which is pricing itself at nearly twice the going rate? Well, there’s no point being coy. This is really expensive. But it is an all-in price – no extra anything for trading, offline work, transfers out, probate valuations or anything like that – so that maybe takes the sting out a little. Chelsea reckons that clients like its fund research, and well they might. Do they like it 140% more than, say, Charles Stanley’s fund research (just to pick someone else who starts with C)? Only the Shadow knows…
What was really interesting about the Chelsea announcement was that we got to see the sausage being made a little bit – your 0.6% gets split between Cofunds (the custodian and dealing engine behind the scenes) who gets 0.2% and Chelsea FS itself which gets 0.4%. So you can decide whether you like the website to the tune of Â£40 per Â£10k you have there, or not. We will see this happen repeatedly with propositions using Cofunds, IFDL Investordirect and other ‘engines’; Chelsea has just been a bit more upfront about it.
I guess most things in Chelsea are pretty expensive. There’s a joke in there about Russian oligarchs, but it’s probably best not to make Russian jokes at the moment. And, as you’ll see in a minute, we got better jokes.
Moving on, Strawberry Invest has already shifted its charges down by 0.05% or 5bps at the first two tier points in its charging structure (the silly Â£10 flat charge remains). This is 3 weeks after launch, and main man James Priday tells us that Strubres has smashed its projections early and as it hits certain, undisclosed, internal milestones the plan is to cut charges further. I’m underwhelmed by this, which will sound grouchy and unfair, so sorry about that James. But to be monkeying with the structure 3 weeks after launch without being very clear what your milestones are smacks of bad planning or bad customer insight. If the first 3 weeks could have got you to a milestone in any part of your scenario planning then launch at 0.35%, not 0.4%. This doesn’t matter to real people, just me probably, but as someone who used to help design propositions for a living it’s just niggly. Anyway, Strubres is now cheaper than it was.
It’s worth mentioning that if you do invest with Strawberry, you’ll get to see one of those Chelsea-style splits between Prydis Wealth Management (the IFA business who set it up) and IFDL (Investment Funds Direct Limited) who provide the engine Strawberry runs on. I think it’s 0.2% to IFDL and 0.15% in the new structure to Prydis.
And finally for this episode, we have included Willis Owen, who also use Cofunds and have broken out the split for us. This time it’s 0.5% to WO, and a princely 0.23% to Cofunds, which is (and we quote) ‘specially negotiated’. Yeah, well, not all that specially, chaps. Chelsea got you beat by 3bps there. Anyway, this is nonsensically overpriced and needs taking out behind the woodshed. 50bps revenue for a white label is simply not available in the market, and any provider who can’t get next to that can expect to get a sharp shoeing right in the AUA. Although you do get a nice magazine about ISAs, and there is a special offer where they’ll waive the whole shooting match until 31 March. When @langcatsteve told me about that I asked ‘2015 or 2016?’ No, 2014. So WO is an excellent home for the next three and a half weeks; thereafter you could cut your charges by 2/3 without trying very hard. In the words of the late, great Gary Coleman – ‘whatchoo talkin’ ’bout, Willis?’
That was the joke, by the way.
We still have a few stragglers to round up, which we’ll do soon. But our; next big challenge is to start factoring in share/IT/ETF trading charges. We’ve got some ideas about how best to do that, but if you have any of your own then fire them in in the comments section below.
Before we go, the finance wires have been hot in the last few days about exit fees needing to be proportionate. We chipped in in What Investment. The pressure is building on HL; we aren’t giving up on them or anyone else with those charges, and neither should you.