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No Exit – Stockbrokers And Their Transfer Fees

February 9, 2016

By Consulting Group

Across the stockbroking industry consumers are faced with complex charging structures, which has made it difficult to calculate the expected cost of an individual’s investment activity.

One specific charge, often tucked away in the ‘additional fees’ section, is the ‘transfer out’ or ‘exit fee’ cost. This levy was traditionally implemented to reflect the cost of manually transferring and re-registering stock, however, as highlighted in the FT article ‘Digital transfers increase pressure over platform exits’ technological advancements have rendered this fee almost redundant. In 2015 tech provider Altus claimed that eight of the biggest direct-to-consumer providers carry out live electronic transfers (up from 2 at the end of 2013).

Instead of the providers reducing or removing transfer fees, they remain ever-present and can have a significant impact on the cost of trading. With most providers charging a fixed fee per holding transferred, it costs a typical investor, holding eight assets, up to £280 to transfer an ISA to another provider. This practice effectively ‘locks’ in a user and acts as a major barrier to switching. Out of the 19 execution-only stockbrokers researched only Fidelity, IG and TD Direct offer free transfers out.

Large numbers of potential equity investors are deterred from investing  due to a lack of knowledge and understanding, exacerbated by complex pricing and ‘hidden’ charges such as exit fees.

Better tools to compare broker charges, such as our BrokerCompare product need to include the transfer out costs to help people understand the impact these additional charges can have.

Of course, there has been good work on simplifying fund charges and these still make up a large percentage of costs, but removing the initial layers will help make investing less complex and even trigger its growth. Unravelling fees will allow traditional stockbrokers to compete with alternative investing methods such as algo investors which leverage themselves on transparency and cost.

The table below demonstrates the cost of transferring an ISA account across providers

Company ISA Transfer Cost
(Per Holding unless stated)
AJ Bell £25
Alliance Trust £100 + VAT (flat rate)
Barclays £30
Bestinvest £25
Charles Stanley £10
Equiniti Shareview £35
Selftrade £15
Fidelity FREE
Halifax £25 (max £125)
Bank of Scotland £25 (max £125)
iWeb £25 (max £125)
Hargreaves £25
HSBC £15
IG Markets FREE
Interactive Investor* £15
Telegraph £15
SVS £15
TD Direct FREE
Share Centre £25

*Interactive Investor waives transfer-out charges for up to ten lines of stock (£15 per line of stock after that), if you choose to leave within a year of opening your account.

If you are interested in understanding how your business can improve its pricing, product proposition or consider how algo can be included in your business proposition, then contact us at info@blackswanpartners.co.uk

 

How Finance Firms Can Get a Handle On Twitter Handles

August 3, 2015

By Consulting Group

Black Swan Partner’s Investment Week article highlighted the slowness of financial services to implement meaningful twitter strategies, and to use the platform as an effective means of customer engagement.  But, as demonstrated by a number of fund managers, insurance brokers and share dealing platforms, Twitter presents a significant opportunity for these companies and usage varies from firm to firm.

Personal Twitter Handles

CEO of Aberdeen Asset management Martin Gilbert (@MartinGilbert83), and Seven Investment Management co-founder Justin Urquhart Stewart, (@ustewart) use personal twitter handles to tweet a mixture of business content alongside private commentary.  Both accounts are an interesting follow and present a good balance between personal touch and corporate messaging.  Martin Gilbert is often re-tweeted by @AberdeenAssetUK and @7IM_Adviser regularly inform followers of Justin’s business updates as well as tagging his personal account.

Whilst across the industry the number of company Twitter handles is increasing, firms still appear uneasy at the prospect of providing employees with their own business-linked accounts.  This is not unique to the financial services; employees in a variety of industries tweet in a professional capacity from personal accounts.  In Black Swan Partners experience, fear of non-compliance is the main driving factor behind firms preferring individuals not to operate business-linked accounts.

Corporate Twitter Handles

AXA Wealth has taken steps to provide a number of its employees with their own personalised, but AXA branded accounts, from which they can post predominantly work related content.  From a marketing perspective this makes the brand more personable and promotes the context of interacting with individuals on Twitter rather than a corporate.

For employees that operate in public facing roles, liaising with magazines, television and the radio, personalised corporate accounts are an effective way of leveraging the personal aspect of Twitter, but maintaining the corporate brand.  These accounts can be run by the individual or they can be operated by the marketing team via tools such as Hootsuite, CrowdControlUK or OKtopost, which allow access to multiple accounts.   If an employee leaves the company, the twitter handle can be changed and the follower numbers retained.

AXA

 Best Approach

Corporates need to balance a range of issues, including compliance, messaging and existing media presence of individuals before determining the right strategy. We believe the most important point is to have the conversation and proactively decide what to do rather than let social legacy dictate how your brand moves forward across multiple channels.

 

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