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AJ Bell goes live with Lifetime Isa

AJ Bell launches Lifetime Isa but hits out at “unnecessary” exit charge

Bell-Andy-2017-CUTAJ Bell has launched the Lifetime Isa on its direct platform with the broker’s advised platform set to follow later this year.

The move marks the fifth provider to offer the new Isa product.

The Lifetime Isa, which was launched in April, is currently available on direct platforms Hargreaves Lansdown, The Share Centre and Nutmeg.

Advised platform Transact also offers the Lifetime Isa.

The annual custody charge is 0.25 per cent, which equates to £12.50 for an annual £5,000 Lifetime Isa contribution.

The platform claims its new offering is cheaper than the three existing stocks and shares Lifetime Isa options in the market.

GBST offers platforms Lifetime Isa blueprint

A spokesman says AJ Bell’s adviser platform plans to launch the product later in the year “to fit on other existing functionalities” at the platform such as its model portfolios.

He says: “We are launching a Lifetime Isa on both our advised and direct to consumer platforms. Demand is currently higher in the direct market so that is where we are launching first. We will launch on the adviser platform later in the year as part of a wider programme of improvements.

“There are a number of digital enhancements we are making to the adviser platform that will make new business processing and managing portfolios – such as dealing and reporting – quicker and easier for advisers.”

The Lifetime Isa went live on 6 April, with those between 18 and 40 able to pay in up to £4,000 each tax year, with contributions qualifying for a 25 per cent Government bonus towards their first home or retirement.

Danby Bloch: In praise of the Lifetime Isa

Money can be withdrawn tax-free to buy a first home, from age 60 or due to ill health, but a withdrawal for any other reason will incur a 25 per cent exit penalty.

AJ Bell chief executive Andy Bell says despite the Lifetime Isa being a “valuable product”, the exit penalty is “too high and unnecessary”.

Bell says: “Many people are still not saving enough, if anything, and the Lifetime Isa may be a catalyst for some younger people to start the investing journey. Almost half of our customers have told us they intend to use it as part of their long term savings so we are expecting it to be popular.”

Annual cost comparison of stocks and shares Lifetime Isas:

Provider Platform charge Investment charge Total Annual cost on a £5,000 LISA
AJ Bell + Vanguard Lifestrategy 0.25%* 0.22% 0.47% £23.50
Nutmeg Fixed Allocation Portfolio 0.45%** 0.17% 0.62% £31
Hargreaves Lansdown + Vanguard Lifestrategy 0.45%* 0.22% 0.67% £33.50
Nutmeg Fully Managed Portfolio 0.75%** 0.19% 0.94% £47
Share Centre Positive portfolio 0.00% 1.94% 1.94% £97

*On Lifetime Isa investments up to £250,000

**On investments up to £100,000

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