Alliance Trust Savings, one of the more popular investment “platforms” for retail investors, is to raise some of its charges, while reducing others, effective from the 1st February 2017.
On-line trading charges will reduce to as low as £7.99 per transaction (if you qualify for the maximum loyalty discount – or £9.99 for no loyalty discount). But postal or telephone trading charges will be increased substantially, although these will be offset by the introduction of a loyalty discount on those also so some customers may even pay less.
The main impact though will be the increase in fixed account charges which will raise from £7.50 per month for ISA and Dealing accounts to £10.00 per month (i.e. a 33% increase!). SIPP charges will also increase substantially.
The above increases will be partly offset though by the fact that the fixed charges will now include 4 on-line trades per year.
Charges are also being introduced for those customers who desire paper communications such as statements.
Comment: This is the latest in a number of changes made by trading platforms to their charges as the market is very competitive at present as volumes have been declining. Few on-line brokers are really making a decent return on their assets with major investments in new IT systems required, costs otherwise increasing and interest on cash at historic lows. Alliance Trust Savings has historically lost money but is expected to be profitable this year. These changes may well contribute to that. The company claims that it is still one of the cheapest services available in the market, particularly for larger accounts as it does not charge a percentage of the value of assets but a fixed fee.
There is clear encouragement to trade at least a few times per year, but those who do not (for example those who used the platform to purchase Alliance Trust shares itself some years ago) will not be at all happy. But otherwise these charges still look very competitive for larger portfolios.
More information is present here: http://www.alliancetrustsavings.co.uk/new-charges/
This seems to be basically tinkering, more in fixed charges offset by a slightly higher value of bundled trades. Barclays on the other hand are making a huge change by introducing an 0.1% charge on share portfolios up to £1.5 million. They are also reducing dealing charges, but for large portfolios it will only be a benefit for people who trade very frequently. The big question will be whether Hargreaves Lansdown do anything similar.