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Clubfinance offers 50p share dealing service

(Updated with correction) Discount broker Clubfinance has launched a low-cost Frequent Trader service for investors who pay a 0.35% annual charge.

 
Clubfinance offers 50p share dealing service

Discount broker Clubfinance has launched a Frequent Trader service charging investors just 50p per share trade.

The low-cost offer is part of an ambitious growth plan aimed at luring investors away from bigger rivals such as Barclays Stockbrokers, Hargreaves Lansdown, Selftrade and TD Waterhouse, which charge around £12 a trade.

The company, based in Hemel Hempstead, Hertfordshire, says it will make its money from an annual platform fee of 0.35%, with a minimum charge per quarter of £25.

This flat fee applies to investors in funds too, enabling the firm to waive all initial charges and rebate all the annual commission it receives from fund managers on 1,800 of the 2,500 funds on its platform. This reduces the annual management charge on most funds by a third or a half.

David Scrivens, a director who helped found Clubfinance 10 years ago, said the company makes its profit from 0.1%, or less than a third, of the 0.35% fee. The remaining 0.25% covers administration and the cost of the platform, which is provided by north-west stockbroker James Brearley.

The 50p per share trade covers the Crest settlement charge.

Scrivens said: ‘Value for money is at the core of what Clubfinance does.’ He added: ‘Frequent Trader is particularly competitive for investors making a lot of share trades, but if you do the maths, someone trading as little as a dozen times a year could benefit.’

The company reckons that investors with share portfolios of £30,000 doing one trade a month on average will save money with Clubfinance.

Comparisons with other fund supermarkets are less clear cut and depend on how much rival discount brokers rebate annual commission. However, figures from Clubfinance suggest that an investor with £125,000 in funds held on a platform that does not rebate the ‘trail’ commission, would save £125 a year on its platform.

The annual fee means that, unlike some platforms, there are no additional fees for holding investment trusts, exchange traded funds (ETFs) or tracker funds.

The Clubfinance website offers an ISA (individual savings account) and a general trading account and aims to add a Sipp (self-invested personal pension) later in the year.

Scrivens co-founded the business with Philip Roden. Both are chartered accountants with experience in corporate finance. The firm will start to market Frequent Trader next month and hopes to attract £400 million from investors by the end of next year. 

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