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AJ Bell breaks off Sipp deal with TD Direct

Uncertainty over deal with Interactive Investor prompts AJ Bell to sever ties


AJ Bell and TD Direct are to sever a joint arrangement which will see AJ Bell stop providing Sipp services to customers with TD Direct from December.

TD Direct has written to investors advising them AJ Bell will no longer be providing Sipp services, ahead of the deal to acquire TD Direct by Interactive Investor which completed yesterday.

In the letter, seen by Money Marketing, TD Direct says: “TD Direct and AJ Bell have recently reviewed the joint arrangement we have in place for helping our customers make plans for their retirement.

“As a result the current arrangement between TD Direct and AJ Bell, under which AJ Bell provides Sipp trustee and administration services and TD Direct provides investment services for the TD Sipp, will end in December.”

AJ Bell says the acquisition by Interactive Investor has been a factor in the joint partnership ending.

A spokesman says: “Given the uncertainty created by the announcement of the acquisition of TD Direct by Interactive Investor we took the decision to terminate our Sipp administration service for the TD Sipp.”

Interactive Investor chief commercial officer Alex Kovach says: “The current arrangements will continue until December. During this period customers can continue to use their Sipp as normal.

“Looking ahead Interactive Investor wants to improve the Sipp services its provides to TD Direct customers.”

The firm will offer a new Sipp in conjunction with Barnett Waddingham.

Kovach adds: “Our aim is to have greater control over the Sipp service we offer, ensuring it is easy to use, digitially-enabled, fairer in terms of pricing, and very competitive on drawdown charges.”

Customers can continue to trade using their current platform and switch to the new TD Direct Sipp. Alternatively, they can stick with AJ Bell as their Sipp provider and transfer their investment services to AJ Bell’s Youinvest platform. There is also the option to move to a Sipp provider of their choice.

No transfer fees will be charged whichever option is selected.

However, both the new TD Direct Sipp and the AJ Bell Sipp offer different charging structures and services.

For example, the current TD Sipp has an account fee of 0.25 per cent, paid twice a year, up to a maximum charge of £200 plus VAT a year. The new TD Direct Sipp will charge an annual account fee of £100 (+VAT), while the AJ Bell Youinvest Sipp has no account fee at all.

However, while there are no fees to trade funds with TD Direct (on either their current or new Sipp) there is a £1.50 charge with AJ Bell – although its custody fee for holding funds is cheaper.

Online share dealing rates are cheaper with AJ Bell, but there is a custody fee to hold shares exchange-traded funds and investment trusts, (capped at a maximum of £100 a year). There is no corresponding charge at all with the new TD Direct Sipp.

Kovach says: “The current pricing reflects current TD charges. We will be introducing new pricing in the next few months.”

Customers have until 30 September 30 to select which option they want. Those who take no action will remain within the AJ Bell Sipp, and will have their assets transferred to their Youinvest platform.

The Lang Cat principal Mark Polson says: “Both AJ Bell and Barnett Waddingham are reputable Sipp providers.

“I’d expect the majority of investors who actively make a choice to stick with their platform provider. This is what they’ve chosen originally, not the company that provides the third party administration.

“Investors are creatures of habit and tend to care most about the trading environment.”

Informed Choice managing director Martin Bamford says: “This highlights the benefit of advice: investors are on their own when it comes to weighing up complicated charges and calculating what’s best for their circumstances.

“Much will depend on the value of their Sipp, the type of assets they hold, and how frequently they trade.”



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