Best value platforms for large pension accounts
7 June, 2022
The competition is heating up
As platforms vie for investors' attention in the rapidly-expanding DIY market, AJ Bell has announced a reduction in some of their platform fees, dropping all charges on portfolios greater than £500k from 1 July 2022. AJ Bell currently charges a 0.10% platform fee on amounts between £500k - £1m and 0.05% between £1m - £2m, but these charges will be scrapped when the change comes into effect.
The new prices cover the total portfolio of an investor across multiple different wrappers, which is good news for those with substantial amounts already tucked into an AJ Bell ISA and/or SIPP account. And by scrapping the fees on larger portfolios, AJ Bell could see a new influx of wealthier investors altogether.
How do AJ Bell's new prices measure up?
AJ Bell's new fee structure favours those with large portfolios, saving someone with £1m in their account £500 each year compared to its previous charges. For that same £1m portfolio, Hargreaves Lansdown’s platform fees are over 3x more expensive, whilst Fidelity's are roughly double the price.
Those with smaller pots will not see any difference, however, as the 0.25% charge on the first £250k in an AJ Bell account remains unchanged.
It's worth mentioning that interactive investor's Pension Builder - which launched earlier this year - still comes in at circa 30% of AJ Bell's new price, highlighting that despite pricing innovation, fixed-fee models are still head and shoulders above the rest when it comes to value for large portfolios.
So as competition mounts in this expanding market, AJ Bell have thrown down the gauntlet, making the fees charged by its biggest competitor, Hargreaves Lansdown, look eye-wateringly expensive.
But don't forget that AJ Bell is still not the cheapest platform on offer for larger portfolios! Take a look at the table below for a round-up of the charges you can expect from some of the most popular platforms in the UK.
Total charges by provider
We've estimated the total charges you can expect from some of the most popular providers in the UK (including AJ Bell's old and new fee structure), taking into account platform charges, fund dealing charges, and the size of your investment portfolio.
*Our 'Total Charges' calculations are based on the following trade assumptions:
£200k portfolio - 5 fund trades distributed evenly across a 12-month period
£500k portfolio - 10 fund trades distributed evenly across a 12-month period
£1m portfolio - 15 fund trades distributed evenly across a 12-month period
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