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Chelsea Financial Services latest platform to cut fees

Joanna Faith
Written By:
Joanna Faith
Posted:
Updated:
27/02/2014

Chelsea Financial Services has become the latest fund supermarket to reveal its new charging structure ahead of new regulation due to come into force later this year.

The discount broker, which is powered by the Cofunds platform, will be cutting its headline annual charge from 0.5% to 0.4% from 6 April and reducing its associated platform fee from 0.25% to 0.2% on clients’ first £250,000.

Chelsea is not introducing any additional fees for telephone dealing, sending paper statements, or any exit charges, creating a clean and simple to understand model.

While Chelsea’s headline reduction from 0.5% to 0.4% will apply to clients with up to £250,000 invested with the broker, like competitors, those with more to invest pay cheaper charges, done on a tiered basis.

Clients will pay 0.35% on the next £250,000-£500,000, 0.3% on £500,000-£1m, and 0.25% on assets between £1m-£2m. Anything over £2m will not be charged.

Chelsea’s managing director Darius McDermott said: “There is always someone who will do a job cheaper, but that doesn’t mean they’ll do it better.

“It pays to read the small print that comes with some of the so-called low-cost deals which have been announced in the past few weeks. With Chelsea, there are no additional charges, just simple, predictable pricing.”

The changes are a result of new regulation due to come in from April this year banning the commission rebates fund supermarkets receive from fund managers.

In future, customers will pay a ‘service fee’ to the platform as well as an annual fee on any funds held, rather than one ‘bundled’ charge as they did previously.

Chelsea is the last of the large discount brokers to announce new pricing following on the heels of competitors such as Hargreaves Lansdown, Fidelity and Barclays Stockbrokers.

Reacting to the news, Holly Mackay of consultancy firm The Platforum, said: “This is a tricky move for Chelsea who have the Cofunds mouth to feed as well as their own – 0.6% certainly puts them at the expensive end of the market. We do like their research and investor newsletter but I’m not convinced that it’s worth the premium. As a platform without access to shares and an integrated SIPP, this restricts them to the less complex and confident investor who wants a helping hand in navigating the fund world. Quite how price sensitive their customers are remains to be seen.”

Price comparison table for leading UK platforms for non-advised investors

  £10,000 £20,000 £50,000
AJ Bell Youinvest £39.80 £59.80 £129.70
Alliance Trust Savings £140.00 £140.00 £165.00
AXA Self Investor £35.00 £70.00 £175.00
Barclays Stockbrokers £35.00 £70.00 £175.00
Bestinvest £40.00 £80.00 £200.00
Charles Stanley Direct £25.00 £50.00 £125.00
Chelsea Financial Services £60.00 £120.00 £300.00
Fidelity Personal Investing £35.00 £70.00 £175.00
Halifax Share Dealing £62.50 £62.50 £87.50
Hargreaves Lansdown £45.00 £90.00 £225.00
Interactive Investor £80.00 £80.00 £80.00
rplan £35.00 £70.00 £175.00
TD Direct Investing £35.00 £70.00 £175.00
The Share Centre £87.60 £87.60 £102.60
Willis Owen £73.00 £146.00 £365.00

Key: the three lowest cost highlighted in green and the three highest cost in red.
Source: The Platforum