Investment platform charges can be a murky area, with direct comparisons made difficult by a lack of clarity on what’s included, what’s not, and what’s included at a premium.
And yet, generally speaking, costs are the first thing every customer wants to know. Virtually everyone – from both sides of the telephone – is familiar with the following exchange:
“We’ve got a rare opportunity that’s just come up in your area that can help you to revolutionise your-“
“Well it all depends on your individual circ-“
“Ball park figure?”
“I couldn’t possibly-“
“Less than £1million? More than £1?”
“Ah well you see…”
…And on it goes.
With our in-house investment platform solution VisionWealth however, things work a little differently.
Firstly, let’s back up a bit: what is an investment platform?
Very simply, it is a piece of tech that lets you hold and view all of your investments in one place. Fund platforms have become increasingly popular among retail investors in recent years, as it eliminates the messiness and admin headaches of holding each fund in a separate account (with fund managers that don’t talk to each other).
Our own investment platform, VisionWealth, is powered by innovative ‘challenger’ platform provider Hubwise securities. And it’s their recently announced new charging structure that’s got the industry experts (Citywire, Professional Adviser, Fintech Finance, The Lang Cat) talking.
Here’s a breakdown of how it works (adapted from a report by The Lang Cat – leading platform comparison website):
- The main platform charge is an ongoing custody fee of 0.2% – capped at £40 per month. This effectively translates into a charging cap for amounts exceeding £240,000.
- …It’s important to note that this applies on a per account type basis. i.e. If you have a mixed wrapper portfolio with £100k in an ISA, £200k in a GIA and £700k in a pension then you’ll get a charge of 0.2% taken off the ISA and GIA and £480 taken off the pension.
- The pension wrappers cost an additional £114 (£95+VAT) per annum and Offshore Bond is an additional £250 per annum.
- Fund switching is included with no additional charges.
- ETI (Exchange Traded Investments) trading is low – £2 for individual trades and £1 as part of regular subscriptions or bulk buying.
How do these investment platform charges stack up against industry norms?
The Lang Cat sums it up as follows:
“We place the market average platform holding at a shade over £100k. Our tables show that Hubwise are keenly priced here, under the market average for both individual wrappers and mixed portfolios.”
They go on to say that:
“As you move up the food chain, this difference becomes starker, with Hubwise a double-digit number of basis points below the market average.”
In short – for smaller investment amounts, the charges are broadly in line with (if not slightly more competitive than) industry averages, but as the fund value increases, the platform really starts to pull away from the pack.
But why is this? And, more importantly, how is Hubwise (and therefore, VisionWealth) able to offer such competitive prices?
Hubwise Chief Executive Angus McDonald explains:
“We do not have huge operational costs because we have designed the system so that the more assets we have on board, the more profit there is. We do not have massive overheads. To run the platform with £500 million or £10 billion I need the same number of people. With most platforms, the more assets that come on, the more the technology creaks.“
We at Thomas Heald are delighted to be able to say that we have assisted in the design of the functionality of this groundbreaking technology. We were also among the earliest adopters of Hubwise’s bespoke platform services.
Investment platform innovation: More than just an attractive price tag
I’ve talked myself blue in the face somewhat in recent weeks about the benefits of the new VisionWealth eSwitch facility, so I’ll spare you yet another sales pitch on that front. If you’re reading this cold however and don’t know what I’m talking about, by all means head over to my recent post explaining what it is and what it does (and most importantly, why it’s excellent).
I’ve also made quite a song and dance about the client dashboard redesign.
The bottom line is, while Hubwise are as robust and established as the next big player in the investment platform industry, they’re currently going through an exciting period of expansion. Exciting, because it means that we at Thomas Heald get to offer our clients the latest innovations in advisory wealth management technology.
It boasts an attractive client portal with a clear visual breakdown of your portfolio(s); access to a vast universe of funds for advisers to recommend; a range of tax wrappers from ISAs to SIPPs; a Capital Gains Tax analysis tool that helps your adviser calculate the most tax-efficient means of switching/withdrawing/re-balancing your investments, plus the aforementioned communications facilities and record-keeping functionality…
All in it makes for a pretty impressive piece of kit.
Our due diligence is second to none, and is externally audited each year to ensure that we are always recommending the best solutions for our clients, and upholding our regulatory duties as independent advisers. If our research shows that, for a given client, the VisionWealth plaform is NOT the right solution for them, then we will say so (and advise the client to go with the product that best meets their needs.)
However, now that Hubwise is starting to break the mold in the investment platform arena, the other platforms (especially those heftier ‘household names’ with significant overheads to shoulder) are starting to realise that there’s a serious contender in their midst.
Please be aware that with any form of investing, your capital is at risk. The value of your investments can fall as well as rise, and you may not get back the amount originally invested. For more information about investment risk, click here.