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Platforum: The gap between clients and platforms on fixed fees

When given a choice between a fixed-fee or a percen­tage-based charging model, investors prefer fixed fees.


Platforum’s consumer research reveals when presented with a scenario for a £20,000 lump sum with either a 35 basis points or a £70 fixed-fee platform charge, active private investors are more than twice as likely to say they prefer a fixed-fee model.

While there is investor appetite for a fixed-fee model, we have not seen assets flow en masse to these providers. Among adviser platforms, Alliance Trust Savings is the only one to offering fixed fees. It ranks fourteenth among adviser platforms based on assets under administration. (It would be remiss not to mention Aegon’s charge cap for larger accounts, which looks a lot like a fixed fee).

Among direct-to-consumer platforms, Interactive Investor, which operates on a fixed-fee model, acquired TD Direct Investing last year. The combined entity will be the second-largest D2C platform in the UK and means that, in 2017, we will see a scale player offering a fixed fee.

Shareholder struggles

But platform shareholders may shy away from fixed-fee models. Many of the costs platforms incur are charged as a percentage of assets, including technology and administration, FCA levies, pre-funding and importantly the cost of putting things right when they go wrong. Some of these could no doubt be renegotiated but percentage fees protect shareholders against escalating costs.

Flat fees are most appealing on larger portfolios. Platforms tell us there is usually an expectation that clients with larger portfolios will get better service.  Cheap and transparent flat fees may not be sustainable for platforms, and clients with larger portfolios will not get the level of service that ad valorem fees could buy.

A platform boss, paraphrasing George Orwell, put it this way: “For advisers, some animals are more equal than others.”

Heather Hopkins is head of Platforum. platforum_rgb

She can be reached at



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There are 3 comments at the moment, we would love to hear your opinion too.

  1. The investor may base their decision on the bases that over the long the investment will grow

    • Heather Hopkins 7th April 2017 at 1:18 pm

      You are absolutely right. The scenario isn’t perfect and it n fact as mentioned In the article despite this apparent preference for fixed fees, we have not seen assets flowing to flat fee providers. I will be watching III as they become the first fixed fee scale player. We. An monitor whether investors shift assets.

  2. For a long term buy and hold investor with a sizeable portfolio, percentage based fees look increasingly poor value when considering how little the platform actually needs to do.

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