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Huge Growth in Platform Investments

City of London

New research suggests that there has been a considerable growth in platform investments, but also that there is a disparity in charges and service levels.

Assets under administration on platforms have risen by an average of 22% per annum since April 2009. The research revealed two in five (40%) investors expect they will invest more via platforms over the next five years, while three in four (74%) UK financial advisers expect this growth will continue over the next 12 months.

The findings and analysis come from Rplan.co.uk, the online fund platform, which has commissioned a new white paper by industry expert Andrew Hagger of MoneyComms. This warns that there is a huge disparity between fund platforms used by self-directed investors, with the quality of service levels, competitiveness of charges and the tools available to users ranging from excellent to poor.

Of the 21 platforms reviewed, those who came out strongly included Fidelity, AXA Self Investor, Cavendish Online, Close Brothers, Hargreaves Lansdown and Rplan.co.uk itself.

The report had the following key findings:

  • annual cost of a £30,000 investment across 10 funds ranges from £75 up to £219 and averaged £138;
  • only two platforms clearly show the cost for a £15,000 investment over one year;
  • although 14 of the 21 platforms do not charge a fee for exiting, or switching, transfer-out and account closure fees of between £15 and £25 are common;
  • 14 out of 21 platforms offered neither alerts based on risk or performance of portfolios;
  • 14 out of 21 platforms do not display risk level and cost as part of their portfolio analysis tools;
  • nine out of 21 platforms do not offer model portfolios and 14 out of 21 do not offer virtual portfolios;
  • six providers took two days to respond to a question about rebalancing a portfolio;
  • only 12 providers gave fully correct responses over the phone to generic questions about ISA limits, cost of investing £10,000 in a specific fund, FSCS compensation levels and service fees.

 

Rplan.co.uk’s CIO Stuart Dyer said: “Andrew’s paper highlights the importance of matching investors’ portfolios with their risk profiles in a transparent and flexible way and ensuring they are kept up to date on how their investments are performing. This is crucial to delivering value for money for investors but it is a concern that delivery of such service levels is sporadic across the platform sector.”

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