Will platform charges ever become a client issue?

The Money Debate wonders if we have found a candidate for graph of the year. The Platforum, analysing platform charges on Money Marketing accompanying Tranact’s charging shake up is well worth a click because it provides a simple outline comparison of platform charges by portfolio size. It also shows very clearly which platforms are on the cheaper side and which platforms are better for bigger and smaller pots given their charging structures. It may raise an awkward question or two for clients whose portfolios have grown to a size where a different platform becomes demonstrably cheaper. The question may not, quite, be at the point of crossover because of the expense and hassle – but if all things are equalised – does it suggest advisers should consider moving clients. Alternatively, does a well-run, well financed platform, with reasonable charges provide enough justification for IFAs in particular not to have to think about moving. And will we ever get to stage where clients will start to ask if they could be on a cheaper version or not?

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  • http://www.facebook.com/JohnAndrewBlackmore John Blackmore

    Clients ought to be asking more questions about all 3 parties – the platform, the adviser and the fund. To date the focus has been too much on clean share classes, rebates, superclean etc. I have funds invested and pay a platform fee of £48 pa which seems to me to be reasonable for the online carrier bag type service that I require. It is possible to pay several thousand pounds per annum to any one of a number of the major platforms and for a very small minority of clients this will make sense. The majority, however, are paying far too much for platform services that are either not needed or not used.

    Advisers often argue that the benefit that they receive ( not the client) makes these more expensive platforms worth while. Often these claims are made by those now trying to justify taking 1% pa as their fee for advice services.

    Over time I would expect the focus to move from share price to platform charges and to adviser charges – I would hope that greater transparency and free markets would bring the cost of all three down to more sensible levels