Charles Stanley Direct increases charges despite global downward trends

Today Charles Stanley Direct has announced an increase in its lowest tiered price, from 0.25% to 0.35%. The price increase will take effect from September 10th this year. The platform has historically been one of the cheapest mainstream open architecture platforms in the UK.

  • AJ Bell Youinvest will typically be amongst the lowest-cost mainstream investment platform for buy-and-hold investors
  • % charging models remain the norm, accounting for 84% of DIY investments managed online
  • The average headline administration fee for fund ISAs on the 10 largest platforms charging on a % basis is now 0.34%

Boring Money MD Holly Mackay comments,

“Charles Stanley Direct remains broadly competitive but moves to the middle of the pack and loses its position as the platform which would predictably always be amongst the lowest three on price for most portfolios.”

The move puts the spotlight on AJ Bell Youinvest which picks up the position as cheapest mainstream provider for many buy-and-hold investors, who want choice of multiple fund ranges, ISAs and pensions, with a 0.25% administration fee and a £1.50 dealing fee for funds.

 

Price comparisons – illustrative annual administration charges

Boring Money compared major platforms on price across three types of portfolios, looking at groups that allow investors to choose their own funds and shares.

  • Portfolio 1 – someone contributing £200 per month into an ISA
  • Portfolio 2 – a £30,000 ISA invested in a mix of funds and shares
  • Portfolio 3 – an investor with £30,000 in an ISA and £50,000 in a SIPP holding a mix of funds and shares

Customers have evidenced value assessment ahead of price to date...

 On the one hand, customers evidence a certain price inelasticity when it comes to investment platforms, with Hargreaves Lansdown clearly one of the priciest options yet still topping the charts when it comes to inflows. With a headline fee of 0.45% Boring Money readers rate it a modest 3.3 out of 5 when it comes to value for money but nonetheless 78% of customers would recommend it to others[1]. Boring Money MD Holly Mackay comments, “Whilst there will always be those who want to pay the lowest available fee, most DIY investors we talk to make a value assessment, with service and convenience being weighed up against cost. The industry focusses more on a few basis points differential than the vast majority of consumers.”

 

But the winds of change are upon us…

On the other hand, the winds of change are upon us. Robin Hood is a US trading app which charges no brokerage fees and currently only makes money from interest on cash.  Last week Fidelity announced two fee-free ETFs. And the FCA’s recent value assessment work in the asset management sector is seen by many as an inevitable price depressant. 

A recent survey of 17 CEOs conducted for Boring Money’s UK Digital Wealth and Robo report found that 64% of CEOs and Directors of UK DIY investment businesses predict that prices will fall over the next five years.

 

ENDS

 

Notes to editors

Portfolio assumptions:

Portfolio 1

  • £200 contribution per month
  • Start at £0
  • All in ISA
  • All in funds
  • Used regular investing charge where available
  • Calculated charges on deposits: assumed no investment growth and no impact of charges on investment

Portfolio 2

  • £30k lump sum
  • All in ISA
  • £20k funds, £10k shares
  • 2 fund transactions and 2 share transactions
  • £2,000 per transaction
  • For Charles Stanley Direct I’ve assumed that the investor isn’t charged the stocks and shares platform fee for 2 months of the year, since they’ve traded – I assume that the £24 annual minimum is £2 per month

Portfolio 3

  • £80k lump sum
  • £30k in an ISA
  • £50k in a SIPP
  • £60k funds, £20k shares (£10k shares each in ISA/SIPP)
  • 4 fund transactions and 4 share transactions
  • £3,000 per transaction
  • Charges include VAT

 

www.boringmoney.co.uk is an independent research and content business which provides information, tips and Best Buys to consumers. The business conducts regular research with industry providers and consumers and looks at the developing DIY investment market from both the customer and provider perspective. Boring Money holds test accounts with over 25 providers and also holds regular focus groups and interviews with consumers to ensure regular input and feedback from the user perspective.

 

Founder Holly Mackay has worked in the investment industry for 19 years and is supported by a team of 10 researchers, analysts and marketing execs. www.boringmoney.co.uk is not regulated to give personal financial advice, nor is it regulated by the industry watchdog.

 

For more information please contact:

 

Cara Whitehouse or Holly Mackay

cara@boringmoney.co.uk / holly@boringmoney.co.uk

020 3871 2524

 

[1] Amongst all 1,275 platform reviews left on Boring Money, the average Value for Money score is 3.6 out of 5. The average recommend score is 67%.