Experts expect Hargreaves Lansdown to retain its dominant position in the direct platform market following its pricing announcement last week.
The platform has revealed unbundled charges on its Vantage platform will be tiered from 45 basis points for assets under £250,000, representing most Vantage users. Platform charges then fall to 25bps for assets between £250,001 and £1m, and to 10bps for assets between £1m and £2m. There will be no platform charge for assets above £2m.
Fund price deals secured on Hargreaves’ Wealth 150 list of funds have an average annual management charge of 65bps, which includes 27 core preferential fund deals with an average AMC of 54bps.
The platform says average revenue per fund investment will drop from 0.63 per cent down to 0.45 per cent. It says investment in the new pricing structure will cost the firm £8m, with a further £9m costs relating to platform legacy rules. Hargreaves estimates it will need to add £3.5bn in assets over the next fiv12 1e years to remain revenue neutral.
The Platforum managing director Holly Mackay says: “Hargreaves has revealed itself to be the consummate master of managing the market’s expectations, with a lower administration fee than most analysts had predicted.
“Add that to its good service and FTSE 100 brand and I cannot see its dominant position being threatened. We think it will add the £3.5bn AUA needed to recoup lost revenues over the next eight to nine months.”
Barclays analysts Daniel Garrod and Tony Dang, who previously predicted Hargreaves’ charging would start at 70bps, say the lower than expected fee structure may reflect stronger competitive market pressures.
They say: “We believe this is a sensible strategy to pre-empt competition from discounters.”
Thameside Financial Planning director Tom Kean says: “This is a pretty senisble pricing structure from a very savvy organisation.”