Alliance Trust Savings is a subsidiary of investment trust company Alliance Trust Plc. The business was set up to provide a savings plan option for Alliance Trust Plc shareholders, who still make up 40 per cent of clients.
In total, 50 per cent of assets under administration in the direct book is in investment trusts. The firm sold its full Sipp book to Curtis Banks in 2013, allowing further focus on the platform. Chief executive Katherine Garrett-Cox spoke that year of sensing the business shifting “up a few gears from being seen as a complete black hole to something where there is huge intrinsic value sitting here”.
The RDR arguably plays to its strengths. All funds on the platform are in clean share classes and its fees are easy to understand and typically low for larger accounts.
ATS has become known as the platform pioneer for fixed fees – a relative anomaly in the advised market today. While the majority of its £5.63bn (as at March) is in the direct platform space, business through advisers is growing steadily with price a major consideration in platform adoption.
Advisers often tell us about the low costs of using the platform and the transparent charging structure – to date, the marketing message has been all about price.
The challenge will be to improve the functionality, which is limited compared with many peers, such as the ability to manage model port-folios. The website can be awkward to navigate and customer service is willing but occasionally slow to answer calls. The platform will move in 2015 to technology provider GBST, which also supports elements of James Hay, AJ Bell and Funds-Network. This should provide an improved user experience to all.
Aegon says it will join ATS in offering fixed fees in 2015 and Interactive Investor also trades off this message in the non-advised space. If this USP is to be diluted, the functionality improvements offered by re-platforming will need to be tangible.
Equally, low cost will not necessarily be the top priority for new self-directed investors or existing investors looking for somewhere to consolidate. Our research into the direct platform market shows brand resonates more strongly with consumers than price. The challenge is clearly to juggle the two and crack the broader value-for-money question, rather than fighting to be cheapest with a charging structure which rivals claim is likely to be unsustainable.
Holly Mackay is managing director of The Platforum
Our Take on Price
ATS’s fixed fees make it very cost-effective for large portfolios, particularly buy-and-hold investors who can make use of the standard fee models. For smaller accounts the flat fees can bite and the price rise at the start of the year raised the level at which ATS comes into its own. A client with an inclusive Isa and Sipp with £100,000 (above average) pays 42.5bps annually.
ADVISER VIEW: Neil Liversidge
Through its flat fee structure, ATS is able to offer good value, particularly for higher-net-worth clients which is generally the kind of customer we use it for.
It has also developed its proposition over the past few years and improved the level of service it gives to advisers.
Neil Liversidge is managing director at West Riding Personal Financial Solutions