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Exit fees and why platforms shouldn’t be like mobile phones

Just a very quick blog as I haven’t posted in the last week; been out and about touring, talking about auto-enrolment rather than platforms. Just for giggles. To mix it up. What a rock’n’roll life I lead, etc.

Anyway, we jack-in-the-boxed in the Telegraph as part of a story on exit fees on platforms; something which has enraged lots of our correspondents on these pages (and thanks for keeping commenting, we love it). Why we are calling platforms ‘fund shops’ though, I have no idea.

For the record, I think a small consideration to cover admin expenses when you transfer out in specie (so moving the asset itself rather than selling down and transferring in cash) isn’t unreasonable. Systems exist now (through Origo Options for pensions and the TEX initiative for mutual funds) to automate re-registration of assets from one platform to another. The development of this hasn’t been free, and there is still admin involved. A reasonable cost might be in the region of £1 per line of stock. Where automation exists, the cost is pennies. Where it doesn’t, it’s more.

The thing is that some platforms don’t play nicely with the automated services. Maybe they can’t integrate it, maybe they’re grumpy, who knows? But for sure there is no reason – ever – to charge £25 per line of stock as too many platforms are doing. Time to knock this on the head.

So why the mobile phone reference? Nothing to do with exit fees in this case (though I could make something up, probably). But I’ve noticed that a few of our commenters have had some success in contacting Hargreaves Lansdown and negotiating better prices than the advertised 0.45%. 0.2% with a cap seems to be cropping up, albeit I have no proof beyond what folk have written in the comments section.

If this is true, I’ve got a big problem with it, and not just for our friends in Bristol. The RDR is about transparency. Why? Because our industry sucks at it. We aren’t like other industries; we’re much more dangerous. We have a history of screwing people, and we can’t be trusted in the eyes of the regulator (and many investors) so we don’t get to have commercial fun like the mobile phone guys or the home insurance guys. We need to be clear and above board, and that goes for price as well as more grungy stuff around client money and fair dealing.

I think doing retention deals like this is a TCF issue. Investors don’t all have to be treated the same. It’s fine to offer large investors a better deal, say. Or it’s even fine(ish) to have exit fees as long as they’re not a major barrier to leaving. But you can’t give one investor a much better outcome than another just because they phoned up and had a moan. There should be no ‘retention team’. The deal is the deal and everyone needs to live with that. This ain’t no mobile phone contract.

Rant over. We’ll be publishing another set of tables in the next couple of days; this will include Close Brothers, Strawberry (the new platform set up by an enterprising IFA with IFDL inside), Clubfinance, and some thoughts on VAT on fees in light of HMRC’s recent guidance.

I’m also really chuffed to say that one of our correspondents has written a guest blog for us on what matters to him. It’s the best thing we’ll publish this year. So thanks to Ivan and look out for his contribution going live, probably tomorrow.

/ Blogs

Impact of poor service

/ White papers

The Impact of Poor Service

We provided the research for a report, in conjunction with Parmenion, which reveals how far short of expectations many adviser platforms are falling. The research found that over the last 12 months, 88% of advisers needed to apologise to at least one of their clients on behalf of a platform, and that poor service delivery from platforms impacts 91% of advisers every day.

Impact of poor service

/ White papers

The Impact of Poor Platform Service

We provided the research for a report, in conjunction with Parmenion, which reveals how far short of expectations many adviser platforms are falling. The research found that over the last 12 months, 88% of advisers needed to apologise to at least one of their clients on behalf of a platform, and that poor service delivery from platforms impacts 91% of advisers every day.

/ White papers

Answering the Call

Service means a lot of things to a lot of different people. It’s so subjective it can be hard to put your finger on. This paper aims to challenge the status quo and inertia that’s built up in the sector for many years.