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Platform price war: Barclays Stockbrokers enters the fray

by Max Skjönsberg on Jan 27, 2014 at 09:03

Platform price war: Barclays Stockbrokers enters the fray

Barclays Stockbrokers has become the latest execution-only platform to unveil a new unbundled charging structure, following announcements from Hargreaves Lansdown and Fidelity in the last two weeks.

Barclays has matched Fidelity's headline rate, offering a platform administration fee of 0.35% per annum for clients with up to £500,000. Clients with more than £500,000 will pay no further charges above this level.

Barclays said the average fund manager annual management charge (AMC) under the new structure would be 0.68%, down from the current1.32%.

Meanwhile, Barclays Stockbrokers said a new minimum fee of £35 meant that those with less than £4,000 in funds may pay more.

Fidelity unveiled a banded pricing structure last week, which was as follows:

  • £0 to £250,000: 0.35%
  • £250,000 to £1 million: 0.2% (on all investments in all accounts, not just investments over £250,000)
  • More than £1 million: no charge

This compares to Hargreaves’ tiered platform charges of:

  • £0- £250,000: 0.45%
  • £250,000 to £1 million: 0.25%
  • £1 million to £2 million: 0.1%
  • From £2 million above: no charge

Barclays 0.35% matches Fidelity, although the bank undercuts both its rivals by introducing a no fees cap at £500,000 rather than £1 million or £2 million.

Barclays Stockbrokers has also announced it will convert existing fund investments held by clients to clean share classes, where available and where the combined cost of the clean AMC and the fund administration fee is lower than the current bundled share class.

Alastair Thaw, director at Barclays Stockbrokers, said the new pricing structure aimed to be simple and clear for clients.

‘We are introducing what we believe to be a clear, simple and fair RDR [retail distribution review] funds pricing structure. The retail distribution review has encouraged a more competitive marketplace, however we recognise that the changes can be confusing. Investors need clear and simple information about the price they are paying and we have designed our pricing structure with clarity, simplicity and fairness at its heart.’

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14 comments so far. Why not have your say?

Ian Lees

Jan 27, 2014 at 09:46

Price War . . .last man standing switch of the light . . .and lock the Door ! It looks like clients CAN NO LONGER be confident in their Wrap Provider like Fidelty or Barclays or Slow Funds . . .because they appear to be in deep distress . . .the kind of Pensions providers . . . .Connaught ( s ) for ISA's and investments ? I looks like it would be best to leave funds in the insolvent banks . . .at least up to the £ 85,000 maximum limit -in each Independent bank.

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Stevie Boy

Jan 27, 2014 at 10:34

Not sure I agree Ian. I cant help but feel that, as an adviser and investor, this is very good news. The three names here are big, well established company's each with £bn's under management. Why must they be in distress?

Clean share classes, lower AMCs, and competitive platform/admin charges are all to be welcomed as is the transparency. The investment industry, and that includes many advisers, have had it too good for too long.

I accept that these providers (and investment houses) cannot be judged on fees/cost alone but it is a huge step in the right direction and makes comparisons much easier - Hargreaves taking flak for their new other charges for example.

Surely a case for (cautious) optimism

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Grumpy OAP

Jan 27, 2014 at 11:01

Ian

I'm intrigued by your thinking here as I may have missed something significant.

Why do you think these companies are in distress?

Why do you think you are better leaving cash at your bank? Are you familiar with the client money and client asset rules?

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Ian Lees

Jan 27, 2014 at 11:25

@Stevie Boy . . . having funds or assets under management in the past Does not mean they now have these funds. For example Equitable Life and Scottish Widows - both big strong , financially secure companies - who had the Kodak Effect - refused to change. As a consequence of cross subsidising their various parts of the company - the With Profits funds were used up. Equitable Life went bust over twenty years ago and is still paying out - Compensation as a result of failures in thei rcompany - failures in their finances. Scottish Widows were unable to attract new business and even with LloydsTSB purchasing Clerical Medical and gifting tit to Scottish Widows internally - they are still basically insolvent - unable to pay out bonuses . . . and waiting to be sold to anyone wish in to buy " the name ". Unfortunately the Brand name is not what it used to be - the difference between perception AND REALITY. Frud insider dealing and the failures of their Edinburgh Actuaries . . . and Corporate negligence . . .makes this company highly irresponsible , dishonest in their dealings . . . .and very high risk . . .for any potential investor ( whether in Auto Enrolment personal pension or any of the old high charges pension schemes ( including Pensionbuilder - designed to kid on it was unit linked but was in fact with profits - the insolvent fund).

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Stevie Boy

Jan 27, 2014 at 11:42

Cant argue there Ian however you are referring to the old, sleepy, lazy life assurance companies. Their model was (and still is as far as I know) opaque, antiquated and outrageously / deceptively expensive for clients.

HL, Fidelity and Barclays have the benefit of slimmed down, more nimble business models, superior IT capability (something missing from virtually every life company I can think of) and are much more responsive to customer needs.

With exception of Pru and Weselyan I cant think of another life company with a growing WP business. Even L&G now struggling I believe (WP wise - although considerably more progressive in many other areas)

Fidelity and Barclays have benefit of own "in house" funds which they should be able to use to pass on increased "value" to customers. HL seem to have the faith and trust of the public / diy investor so will be interesting to see where this goes. Shame Barclays have a thoroughly rotten reputation.

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Ian Lees

Jan 27, 2014 at 12:51

@Stevie Boy - I find it interesting that a new claim comes out from HL, then Stranded Life ( four reductions in charges over the last year or so ) Co Funds Fidelity and Barclays . . .does this means each client should continuously transfer their funds . . to the lowest common denominator ? or should they look to good advisers with set and transparent charging structure ? I vote for the good adviser and good product provider.

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Len Murray1

Jan 27, 2014 at 13:19

I'm thinking about moving my SIPP from HL to another provider because of their new charges, but there's a balance between charges and ease of use. However, one thing that stops me is that I've no personal experience of providers other than HL - I don't want to get less service just to save a few quid.

What I'm effectively doing though is giving several hundred thousand pounds worth of SIPP money to a company I know little about and have never used.

Anybody out there have any practical experience of using either Barclays Stockbrokers or Interactive Investor ? Interactive Investor is my main contender at the moment, but I don't want to read in the newspaper that II have gone bust and my SIPP money has vanished.

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Grumpy OAP

Jan 27, 2014 at 13:22

Len

Why do you think your SIPP money would vanish if your provider went bust?

Your investments are held in trust.

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DRM

Jan 27, 2014 at 20:14

According to my copy of Barclays "Your guide to the RDR" the 'Fund Administration Fee' is 0.35% PLUS VAT hence presumably 0.42% total ?

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Mr Paul White

Jan 27, 2014 at 22:45

@Len Murray1 - You say service, but surely all you have is a "low-cost" SIPP. Do you mean functionality of the platform, because my understanding is, not a lot of "service" goes into this type of product and everything is done by the investor online?

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Len Murray1

Jan 28, 2014 at 01:05

Paul, by service I just mean website functionality - I know the good and bad bits about HLs website, how to get it to do what I want, and under what conditions it collapses in a heap.

Grumpy - I know with HL that client money is ringfenced. I wasn't sure whether that applies to all providers as I've no experience of them. I wasn't absolutely sure how secure the ringfence actually is.

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Ian Lees

Jan 28, 2014 at 09:04

What is the betting that RBS, Edinburgh's Robbing Bank of Scotland - will come out with . . . . . even lower charges ?

But would you seriously want to " invest " in these product providers ? It is not as if there are any Regulators carrying out any checks or balances - or looking after consumers interests ? or any firm of . . . . Auditors . . . .conducting ANY Professional or Accountancy . . . .Audits ?

So no controls no proper mechanisms - and no control form Sir Tom McKilliop or ANY DIrector or Chairman or FCA - so the talk about " lower charges " is fundamentally flawed - innapropriate but a convenient distraction to the real problems . . . .cheating clients fraud and Corruption at the highest levels - and the lack of any Regulation form the BBA Bank of England or David Cameron . . . .UK plc . . . . Carry on Regardless . . .

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Grumpy OAP

Jan 28, 2014 at 09:53

Really Ian

You demonstrate a worrying lack of knowledge and understanding of what a platform does. The clue is in the "supernarket" nomenclature.

Platforms sell products (ie funds) from other providers; some may sell some of their own, mauch as Tesco or Sainsbury's have their own brand of baked beans.

You are only "investing" in these product providers if you buy shares in their company (eg 10 shares in Hargreaves). The funds that the likes of Fidelity run are quite separate legal entities and are very different animals from the pension funds from the likes of Equitable Life.

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Ian Lees

Jan 28, 2014 at 10:07

@ Grumpy . . .as well as bad spelling mistakes - you appear to have no knowledge of what a platform does. A Platform offers funds at prices usually at a significant discount - to allow Independent Advisers ( IE Whole of Market ) - and Restricted Advisers and Tied Agents - to promote their Principal's offerings - to their client. Wrap Platforms - are administration facilities - requiring Financial Advisers - to provide advice, on products funds and returns - and the service of advice and recommendations. Your "Supemarkets" ( or Soup Markets or Super markets ) are a different operation altogether - who flog products like soup to insurance . . . . to beef burgers and horsey burgers - without disclosing their content - do not provide the contract terms of their policies - before you buy !

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