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The Platforum: How Transact’s new costs stack up against rivals

Ian-Taylor-2012-700x450.jpg
Transact chief executive Ian Taylor

Analysis by The Platforum shows how Transact’s new pricing structure compares with the charges of some of its rivals.

Transact announced today it is overhauling its charges to reduce costs by almost 15 per cent for an average portfolio of £180,000.

The changes mean that for portfolios between £60,000 to £180,000, the rate has been cut from 0.425 per cent to 0.325 per cent, and from £180,000 to £300,000 it has dropped from 0.375 per cent to 0.325 per cent.

A 0.5 per cent charge on funds under £60,000 will remain if there is less than £300,000 held in total.

For funds above £300,000 there is no change and 0.325 per cent will apply up to £600,000, when it will drop to 0.2 per cent for the next £600,000.

The Platforum has analysed platforms’ charging structures based on 20 per cent of the portfolio changing over the year, using in-house tax wrappers and with 20 trades per year.

The data is also based on the use of clean share classes, with 50 per cent of the portfolio held in an Isa and 50 per cent in a Sipp, all held in mutual funds.

The Platforum data shows the new pricing structure makes Transact cheaper than Ascentric for portfolios between £100,000 and £200,000 and cheaper than Standard Life for portfolios of over £180,000. 

The charging structure also brings the platform into line with Ascentric’s charges on a £300,000 portfolio.

Under its old charging structure, Transact was the most expensive platform for assets of between £150,000 and £300,000.

Transact remains cheaper than Nucleus and Standard Life for portfolios of around £800,000 and above. 

The Platforum managing director Holly Mackay says: “The impact of Transact re-jigging its pricing  will not be felt by former Platinum clients with portfolios in excess of £300,000. This is an exercise to address competitiveness for those customers in the sub-£300k bracket.

“I do not see this as a dramatic jump and should not lead to any hysteria about pricing wars. This is just a strategic decision to improve competitiveness for mid-sized clients.”

The Platforum Transact charges graph 700
Source: The Platforum

Click here to view enlarged version

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. I take it that ATS ( Alliance Trust & Savings) were not included because it would be difficult to show £48 pa graphically ?

  2. Richard Wareham 22nd April 2013 at 3:52 pm

    Agree with previous comment in that the really cheap platforms have not been included. Costs for all platforms will continue to come down and this is just the start. Only a few will remain ultimately at level non-tiered prices that are pretty much on a par.

  3. The main problem is in not having so many lines and colours that you can’t make anything out! So we’re always limited to how many we can usefully represent.If I could, I’d stick the whole lot on one chart.

    We tried to pick some of those platforms which are typically viewed as an either/or alongside Transact. Groups such as Alliance Trust would be more likely used alongside Transact for a particular customer type – I don’t think ATS would classify themselves as a potential Transact substitute. They’re more likely to be used as a complement.

    I guess the other point is that although we see pricing converging, the underlying assumptions still make a huge difference eg transactions, tax wrappers AND (today) funds included/rebate deals. The ultimate impact of funds on total cost to client will be played out over the coming months.

    So I do remain nervous of headlines professing that one platform is categorically cheaper than another – can be true but is so often customer portfolio dependent. Any marketeer worth their salt can produce a portfolio where they’re ‘the cheapest’.

    And then there’s the value story but that’s another question altogether.

  4. It is a pity that based on what Justin Modrey said on his MM Blog today someone hadn’t thought to put a line for Hargreaves Lansdowne’s retained fees so everyone could see that best advice might be to set up with Transact and then if you want to invest alone, dissapoint your adviser as agent.

  5. Price and Value.

    Let’s also focus on the latter before making a choice. Real world use of a platform needs to be acknowledged and recognised.

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