// How do platform exit charges stack up?

21 Mar 2019

Here we drill down into who charges and who doesn’t in the platform world.

Following the recent release of the FCA’s Investment Platforms Market Study final report, the regulator has launched a consultation on the exit charge issue which will consider either a ban or cap on platform exit fees. The potential ban on the charging of exit fees by platforms will, the regulator believes, improve competition and make it easier for investors to switch platforms. Here we drill down into who charges and who doesn’t in the platform world.

With a wide variety of exit charge combinations, it’s impossible to understand the potential cost for each platform without some complicated spreadsheet analysis, which is why we launched the exit charge calculator. Below we look at exactly how platforms charge and the impact of those charges for two different portfolios.

D2C platforms

Roughly half of the D2C platforms charge an exit fee. Of those that do charge exit fees, they come in several guises. Some platforms charge based on the number of investments some charge a flat fee by product and some charge both by product and number of investments (see table below).

No exit feeExit fee 
Aegon Retiready AJ Bell YouInvest £25 per investment;
£75+VAT for the SIPP
Aviva Consumer Platform Alliance Trust SavingsGIA £60+VAT;
ISA/JISA £100+VAT;
SIPP/JISA £150+VAT*
Barclays Smart Investor Bestinvest SIPP (in cash) £75+VAT;
SIPP (in specie) £125+VAT
Cavendish OnlineCharles Stanley Direct £10 per investment;
SIPP £125+VAT
Chelsea FinancialEquiniti Shareview £35 per investment
Close BrothersHalifax Share Dealing £25 per investment;
SIPP £90
Fidelity Hargreaves Lansdown£25 per investment;
GIA/ISA/JISA/SIPP/JSIPP (in cash) £25;
GIA/ISA/JISA/SIPP/JSIPP account closure £25+VAT
Financial Discount Direct iWeb £25 per investment;
SIPP £90
Fundsnet Selftrade £15 per investment
Interactive Investor Strawberry Invest ISA £25+VAT;
SIPP £75+VAT
Santander Investment Hub SVS XO £15 per investment
True Potential Investor The Share Centre GIA/ISA/JISA £25;
SIPP £125
Vanguard
Willis Owen

* SIPP exit charge of £150 plus VAT (capped at 1% of transfer value or annuity purchase price), if the client is aged over 55 and the plan was taken out on or after 1st Feb 2017 there is no charge.

Using the two portfolios outlined below, the tables below show the range of exit charges an investor could face if they wanted to switch.

Portfolio 1 – The portfolio uses three products: a GIA, ISA and a SIPP with £5,000 in the GIA and ISA, and £10,000 in the SIPP. There are 10 investments in the portfolio.

Portfolio 2 – The portfolio uses three products: a GIA, ISA and a SIPP with £25,000 in the GIA and ISA and £75,000 in the SIPP. There are 25 investments held in the portfolio.

Portfolio 1 
PlatformExit charge
Alliance Trust Savings£372
AJ Bell YouInvest£340
Halifax Share Dealing£340
iWeb£340
Hargreaves Lansdown£340
Charles Stanley Direct£250
The Share Centre£175
Bestinvest£150
Selftrade£150
Strawberry Invest£120
Portfolio 2 
PlatformExit charge
AJ Bell YouInvest£715
Halifax Share Dealing£715
Hargreaves Lansdown£715
iWeb£715
Charles Stanley Direct£400
Selftrade£375
Alliance Trust Savings£372
The Share Centre£175
Bestinvest£150
Strawberry Invest£120

What we found is that portfolio composition can make a big difference to the exit charges they may incur. In particular, there is a big difference between those that only charge a flat fee and those that have a per-investment charge.

For portfolio 1 with 10 investments the exit charges range from £120 to £372. The flat-rate exit charges on Alliance Trust make it the most expensive platform at £372, followed by a raft of platforms with combined flat rate and per-investment exit charges such as Hargreaves Lansdown whose exit charge comes in at £340.

The cheapest platforms for portfolio 1 are Strawberry Invest, which has low flat rates, and Selftrade which only charges a per-investment exit charge. This contrasts with portfolio 2 (25 investments) where Alliance Trust still costs £372, but is now cheaper because platforms like Hargraves Lansdown have a per-investment exit charge. As a result, it’s now the most expensive at £715, alongside AJ Bell.

Advised platforms

For the advised platform universe there are twice as many platforms that don’t charge an exit fee as those that do. The types of charge include per-investment, a flat fee by product and a combination of a flat fee and per-investment charge.

No exit feeExit fee 
7imAJ Bell Investcentre£25 per investment;
£75+VAT for the SIPP
Aegon ARCAlliance Trust AdvisersGIA £60+VAT;
ISA/JISA £100+VAT;
SIPP/JISA £150+VAT*
AscentricHubwise£10 per investment;
SIPP fee for transfer out will not
exceed previous year’s fee
Aviva Advised PlatformJames HayGIA/ISA £50+VAT;
SIPP £150
CofundsNovia£15 per investment
Credo WealthRaymond James£25 per investment
ElevateSuccessionSIPP £75+VAT
Embark
FundsNetwork
Nucleus
Old Mutual Wealth
Standard Life Wrap
Transact

* SIPP exit charge of £150 plus VAT (capped at 1% of transfer value or annuity purchase price), if the client is aged over 55 and the plan was taken out on or after 1st Feb 2017 there is no charge.

Portfolio 1 
Platform Exit charge
Alliance Trust Advisers£372
AJ Bell Investcentre£340
James Hay£270
Raymond James£250
Novia£150
Hubwise£118
Succession£90
Portfolio 2 
PlatformExit charge
AJ Bell Investcentre£715
Raymond James£625
Novia£375
Alliance Trust Advisers£372
Hubwise£310
James Hay£270
Succession£90

Using the same portfolios, the following tables show the range of exit charges an investor could face. For portfolio 1 from £90 to £372 and for portfolio 2 from £90 to £715.

Once again, the composition of an investor’s portfolio can make a huge difference to the potential exit charge. The platform with the highest exit charge for portfolio 1 is Alliance Trust costing £372. However, for portfolio 2 it is mid-table with an unchanged £372.

Platforms that include a per-investment charge are more expensive, for example, AJ Bell Investcentre at £715, up from £340 for portfolio 1. The adviser platform that has the lowest exit charge for both portfolios is Succession which has a flat rate charge for the SIPP only of £90.

To find out how exit charges could affect your or your clients’ portfolios, try out our handy exit charge calculator.  It’s free and on the fly (no static and irrelevant heatmaps here). What’s not to like?


Photo by Baher Khairy on Unsplash

Tim Burrows
tim@fundscape.co.uk
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