D2C #heatmaps – Update

With ISA season upon us, it’s time for a quick refresh of the lang cat pricing #heatmaps. There’s been a bit of activity recently in the market, so it’s worth having a very quick Woody’s Roundup of what’s been going on;

  • Nutmeg complimented its ISA offering with the launch of a pension. Same charges apply.
  • TD Direct made a very welcome move by removing exit fees from its platform. Doesn’t affect our tables but we give them a double fist pump nonetheless
  • The hitherto comically cheap proposition from iWeb became less so as it increased its account opening fee from £25 to £200. (That’s 700% for the arithmetic fans) We’d previously ignored this charge in the tables as we focus as a rule on ongoing annual costs. However, a £200 fee is too large to ignore, so we’ve pulled this out in a ‘year 1′ row.
  • AXA Self Investor & Close Brothers have special offers running. We show these in the tables as year 1.
  • Willis Owen – who we’d lampooned in the past for being awfy expensive – became significantly less so with the launch of a new charging structure. Much, much more in line with the market. We’ll cease and desist from the Different Strokes jokes now and move onto someone else.

The links below take you to 2 files showing the most up to date #heatmaps, one for ISA and one for SIPP. Both show the annual cost of investing, displayed in both percentages and pounds. If you’d like tables that show only %’s or poonds, then please get in touch.

Latest ISA Tables_Merged

Latest SIPP Tables_Merged

As with any set of data, some house rules apply so it’s well worth having a quick read of the assumptions we make;

  • We look at ongoing core platform and wrapper costs. We don’t add in any initial costs. (except iWeb – keep up) These are few and far between and quite frankly are finicky to amortize (posh – convert) to an annual, ongoing basis.
  • We assume investment in funds. Tables looking at equity investment are available on request.
  • We assume the cost of making 5 full switches throughout the year, equating to 5 buy and 5 sell transactions.

If you’re a journalist, and would like to use these tables, then please do get in touch typically via either Mark Locke (07718424711) or Steve Nelson (07429404356) for comment or further content.

Launch a secondary annuity market and then you can go out to play

For anyone even skimming HM Treasury’s consultation paper on the launch of a secondary annuity market, the lack of enthusiasm in its presentation was palpable.

The press release and subsequent paper is permeated with the belief that ‘for most people, sticking with an annuity is the right thing to do’. It feels very much like a schoolboy who has grudgingly finished his homework so he can go and play with his friends. Whether George Osborne has friends is another matter but the point remains.

You’d be forgiven for thinking young Master George was acting under duress. And in a sense, he is.

It will have escaped no-one that our population is ageing. And that means the voting pool is ageing – the proportion of over 65s increased by 2 percentage points between 1987 and 2010. Add in the fact that this group is more likely to vote and quite a few of them have annuities and were a bit narked at missing out on the first round of pension freedom and ‘Hello, secondary annuity market!’ What do you mean, there’s a general election in less than two months? Really? Really? Well I never.

But here we are and it’s going to be one to watch; even if it does feel a little like the consultation paper equivalent of turning The Hobbit into a movie trilogy. At least the consultation might stick to the basic premise of the paper and not randomly introduce questions from other proposals.

The thing that really bothers me about the whole concept is the lack of a clear beneficiary. Correction; a clear beneficiary who isn’t actually being mugged but is unable to see it or who is taking time out of their busy schedule of tying young maidens to railway lines. That’s a pretty low risk activity on the Fife    Circle incidentally.

Should things proceed, the unholy trinity would consist of:
• The original annuity provider – who wants to make money
• The potential third-party annuity holder – who wants to make money
• The current annuity holder – who wants as much cash for their annuity as they can get

It doesn’t take an actuary to predict the inevitable carve up. The original annuity provider is in the strongest position – the have the power of veto. The annuity holder, not so much. While they can shop around for potential third-parties, there is no flexibility around the existing annuity provider.

One added concern is that investors looking to cash-out annuities are likely to be removed from an advice relationship; setting up the annuity may well have been the end of their perceived need for advice. Given all the additional costs being loaded into the process through underwriting, administration, re-assurance and so forth, it’s unlikely that annuitants with smaller to mid-size pots will take a further hit by paying for advice. While we’re on the subject – how likely is it that these consumers will understanding the scale or detail of costs coming out of their converted annuity pot?

The consultation paper suggests that third-party acquirers could offer their own flexible drawdown or annuity to house the newly liberated fund. On the upside, this could mean a new prospect for distressed annuity providers. The downside is that we could be looking at an action replay of consumers opting for the (newly) existing provider rather than shopping around for the second time in rapid succession. If they shopped around the first time.

There’s a real prospect of consumer detriment here, more so than with any of the other freedoms, with the added risk of another rapid implementation. Done correctly it might meet a need for some consumers, albeit at a cost. Done poorly and it feels like legalised pension liberation.

It’s hard to see how, in the majority of cases, this will be the best route for the consumer in the long term. HM Treasury seems to agree (the consumer protection chapter could be boiled down to read ‘humped’) and the reaction so far in the trade press is pretty one-sided.

The outcome of the consultation process could be instructive, not to mention the outcome of the general election – one party’s hobby horse is rarely the successor’s highest priority – but we have to assume that it might happen. Electioneering aside, it seems as if a great deal of effort and attention is about to be devoted to something which the government is generously predicting to be a ‘niche market’.

the lang cat recruits Mike Barrett from Old Mutual Wealth

Yes, you read it right. Big news and great times for us. The below is the text of a press release that’s going out today. We are very excited, but we’re sitting down so you can’t tell…

The lang cat, Leith’s leading[1] independent platforms, pensions and investment consultancy is almost childishly excited to announce the appointment of Mike Barrett as Consulting Director.

Mike will join the lang cat team in mid-June having spent 18 years working in a variety of roles at Old Mutual Wealth, most recently as Platform Marketing Manager. The lang cat has employed a food taster for Mike to ensure no funny business between now and then from the Southampton bruisers.

His knowledge and experience of platforms, their users, and the regulatory challenges facing both will complement the existing lang cat team, especially with further FCA work in the area of platforms expected later this year. Mike will be based in the South of England and will be responsible for sharing the lang cat love throughout London and the home counties.

Mark Polson, principal of the lang cat said “Well, this is getting embarrassing. If people who actually know what they’re talking about keep joining, we’ll have to stop mucking around and do some actual work. Despite living in the sunniest place in Britain, Mike has a deep and highly creditable darkness in his character, and will fit in nicely.”

Mike Barrett said “The lang cat is a company I’ve admired for several years. The depth of insight their output contains puts them in a league of their own, and this is down to the quality of people in the team. I’m really excited about joining.”

Tom Hawkins, head of proposition marketing at Old Mutual Wealth said “We thank Mike for his strong contribution over the past 18 years and wish him all the best for his future career with the lang cat. His responsibilities as platform marketing manager will be taken on by the existing proposition marketing team.”


[1] Probably





Under penalty of death

(Mark writes: this is Terry’s very first blog as a feline at the lang cat – we’re chuffed to have him here. You can email him at

After last week, we’ve now had two budgets in a row, and a not really in autumn statement in between, that have changed the savings landscape forever. Last year’s budget was the biggie; delivering no less than an actual revolution in the pension system…and not only that, a huge shot in the arm to the Isa market. The subsequent not really in autumn statement and this year’s budget have built on the core theme of encouraging savings and making them easier to access. Approaching April, the go-live for pension freedoms is almost upon us and for a few months now it has quite rightly been getting massive national coverage as the implications have filtered through to the mainstream media such as the BBC.

GYMBOA, but at a cost

Now, cast your minds back to 3rd December last year when the not really in autumn statement took place. Two of the additional measures announced were the ability to pass on pension savings tax free on death, and, any ISA savings passed over on death can retain their tax free status.

In adviser platform land, providers have already been stripping out GYMBOA (Getting Your Money Back Out Again) costs from pensions, because advisers wouldn’t wear them, and because it was one avenue left to compete on price when cutting core charges became unsustainable. However, some do still remain (when using equity trading instruments in particular) and watch this space for more on that at a later date.

However, with direct platforms things are a bit different and some rather hefty and more obvious GYMBOA costs are still the norm.

But it’s the charges on  passing on ISA savings that has sparked a heated debate at the lang cat port authority. We’re a bit grumpy about it.

Plain English (sort of) example time:

Mr Johnson dies with an ISA holding of £18K. Mrs Johnson also has an ISA holding of £18K. What were the odds? Regardless of that year’s ISA allowance and future contributions, Mrs Johnson now has an existing tax-free holding of £36K, meaning the combined amount can benefit from tax-free growth in an ISA wrapper.

So far, so good. But…

…what we are specifically concerned about are the costs associated with moving the holdings to a different ISA, which Mrs Johnson may well want to do. The average UK ISA pot size is £16K*. For those who charge (and to be fair some don’t) £25 per line of stock is a typical charge to re-register off. Plain old withdrawal or transfer tends to come in at around £25 for the whole policy.

*HM Revenue and Customs 2014 (stats from 2011/2012, the most recent available).

In the name of fairness, I’ve generously added 12.5% to the 2012 average pot size, to give the £18K figure. If Mr Johnson had 10 lines of stock – pretty common these days, especially with providers encouraging diversity – the overall re-registration cost is going to be a whopping £250, or in other words 1.4% of the total holding.

This is not small beer. If Mr J had held the investment for five years, paying 0.35% as a platform charge and the average value over that period was £14K, he’d have paid around £245 in platform charges. So the account closing costs in this example doubles the overall charges taken on the account. Is this right? Does it really cost the provider £250 to close the account and cede the holdings?

A further issue is that although £25 per line to re-register is standard, it’s usually much less costly to sell down and transfer. This provides a cost-based dilemma to consumers because they might decide to transfer because it’s so much cheaper, when staying in the market is what they’d really have preferred.

So, dear providers, here’s a thought. Why not stop charging people to GYMBOA whatever the circumstance? O.K, so that is perhaps not going to happen overnight but there is an opportunity to at least remove these charges from policies that become the ownership of a deceased spouse. It is just the right thing to do but, surely, it’s also fair to allow inherited holdings to be consolidated free of cost bias.

Gordon Bennett, that was poor

Confucius say, “Success depends upon previous preparation, and without such preparation there is sure to be failure.”

Having ignored these wise words; Natalie Bennett, leader of the Greens, has no doubt crawled into a hole to hide for a while and lick her wounds.

This morning she was quizzed on the radio about some figures on Social Housing. She ummed, ahhed, coughed and spluttered and generally made a bit of a pillock of herself. It was truly awful. If you’ve not listened to the interview and you get a kick out of schadenfreude, set your cringe-o-meter to high and have a listen here

So, why am I blogging about the misfortune of Ms Bennett? She has nowt to do with platforms, pensions or investments.

Preparation is the answer. It doesn’t matter what the subject and it doesn’t matter who’s interviewing you. It could be Paxo, it could be an intern on a community radio station. If you’ve not prepped, you (and worse still the company you’re representing) risk coming across as ill-informed and irrelevant.

I’ve had to prep many execs and company spokespeople for interviews over the years. Some recorded, some live. The best spokespeople are always prepared. They accept that they are there to make their company look good. They accept they might be asked awkward and uncomfortable questions. And they accept that they need to do their homework – not just on the topic de jour, but on all the toxic stuff that you hope never to have to answer.

I suspect Natalie Bennett might be doing one of two things today: Accepting she was to blame for being utterly unprepared and taking personal responsibility, or firing her PR adviser whose job it is to ensure she doesn’t come across as Kermit the frog…. (a green Muppet… Geddit?)

D2C Platforms – the lang cat heatmaps

If you’ve come to this page looking for the latest lang cat D2C pricing tables, then you’ve hit an extraordinary stroke of luck. (Or just followed a link sent by us. Whatever)

Attached below are 2 files showing the most up to date lang cat #heatmaps for D2C investment, one for ISA and one for SIPP. Both show the annual cost of investing, displayed in both percentages and pounds. As with any set of data, some house rules apply so it’s well worth having a quick read of the assumptions we make;

  • We look at ongoing core platform and wrapper costs. We don’t add in any initial costs. These are few and far between and quite frankly are finicky to amortise (posh – convert) to an annual, ongoing basis.
  • We assume investment in funds. Tables looking at equity investment are available on request.
  • We assume the cost of making 5 full switches throughout the year, equating to 5 buy and 5 sell transactions.
  • There are a few special offers on the go at the moment – namely for the upcoming ISA season. We include these along with a note of the terms.

The tables will be updated on a regular basis, typically whenever a provider makes a change to its pricing model or if we make a change to our assumptions.

If you’re a journalist, and would like to use these tables, then please do get in touch typically via either Mark Locke (07718424711) or Steve Nelson (07429404356) for comment or further content.

Latest ISA Tables

Latest SIPP Tables

It’s all getting real – Hargreaves puts its vest(ing) on

I’ve always liked those moments when big, abstract concepts become real and commercial. A-Day was like that – it was fun debating what was going to happen, but much more fun when you started to see how providers, advisers and clients were going to relate to it in real life.

An important step towards this stage (or stage towards this step if you prefer, doesn’t matter) happened today for the NEW GOLDEN DAWN OF PENSION FREEDOMS with big Bristol beasts Hargreaves Lansdown announcing a £295 plus VAT (£354) charge for stripping your fund completely in drawdown.

Let me qualify. Clients who transfer into a HL drawdown plan and strip the fund within a year will be expected to stump up. Those who are Vantage SIPP clients already and move into drawdown won’t (says our man in the thick of it in BS1). Provisions are in place (use your best ominous voice for this) for those who either try to leave a peppercorn amount in their plan to avoid the charge, or who transfer to a Vantage SIPP, flip to drawdown quickly thereafter, and then get their money out.

HL has also removed its ‘standard’ drawdown charges, meaning you no longer get charged £354 on the way in, £12 to change your income, or £30 for ad-hoc withdrawals (all including VAT).

Now, we don’t like exit penalties here at the lang cat, and we’ve poked HL with a stick numerous times in print on that basis. But this feels OK to me, and here’s why.

First, it’s not an exit penalty (despite Money Marketing’s headline to the contrary). It’s an admin charge. This looks remarkably like the immediate vesting pension (IVP) market of the 90s and early 2000’s, where a time and effort charge was applied to those who wanted to bounce their pension in and out of a provider.

(One of the potential outcomes of the new freedoms is a re-emergence of the IV market as people try to turbocharge their access by side-stepping cumbersome lifeco systems, especially in the non-advised space. We view that as a potential area of concern; something we’ll be writing more about soon.)

Secondly, HL is playing it with a pretty straight bat in that this is only aimed at those using them for ‘clearing’ and not for genuine longer term customers. Whether their provisions to combat those who try to game the system are good enough, only time will tell. So that feels OK – and the removal of their other drawdown charges is very welcome.

If you’re Hargreaves, you’re the most visible and accessible direct pension and investment provider in the UK. That means people will try and use you for all sorts of pension matters, and not give much thought to whether it’s economic for you.

In one sense – who cares? In another, HL has every right to levy a charge.

Is £295 plus VAT the right amount? I don’t know. But I do know that HL has now established a price anchor in the direct market, and others with similar capabilities will most likely now feel more able to declare their hand.

We remain of the opinion that HL charges very fully for what it does, and that its £25 a line exit fees need dragged out behind the woodshed and killed with an axe. A charge for immediate vesting is not the devil’s work.

It’s all getting real, sports fans. We’ll keep you up to date with what happens next…


Worldwide press release. 9 February 2015. The lang cat, (probably) Leith’s leading independent platform, pensions and investment consultancy is delighted – no, scrub that – tumescent to announce three new additions of financial services misfits to its burgeoning ranks. 

Terry Huddart will join the lang cat Market Intelligentsia team on 16 March. He will be tasked with extending the lang cat’s infamous capacity for market insight and rudimentary arithmetic, complementing the current combination of adding, subtracting and dividing with the crucial skill of timesing. Terry brings with him a whole heap of baggage having worked for various reputable financial services companies over the years, and Nucleus.

Shona McCowan joins the team at the end of February. Shona will be Mark Polson’s PA. It’s important at this time of tremendous growth that the principal of the lang cat feels important enough to warrant special attention. Shona’s main task will be to stroke Mark’s already-inflated ego and keep him out of mischief, and/or prison. Shona joins from a seven year stint at Aegon UK where she was a PA for industry luminaries, Nick Dixon and Steven Cameron. The lang cat has agreed to fund an experimental medical treatment to expunge Shona’s memory of her recent work experiences.

Jeff Salway is an award winning financial journalist and current Financial Services Consumer Panel member. He is also Welsh. Despite these obvious character flaws, the lang cat has still reluctantly agreed to take Jeff on for a couple of days a week. We’re hopeful that Jeff will be able to help the lang cat write better and stuff. 

Mark Polson, principal of the lang cat, said: “It remains a source of pleasure, pride and consternation to me that so many high quality misfits are willing to drag their sorry carcasses into the lang cat on nothing more than a promise of poor conditions and sustained and relentless personal abuse. Mind you, the coffee’s not bad so, y’know, swings and roundabouts and all that.”

When asked to comment on the imminent departure of one of his key members of staff, David Ferguson, Chief Executive of Nucleus, said: “Terry who? Life companies are rubbish. Did you know we have #bigplans and Terry McDermott wasn’t part of them?”


Life is harder now (in investment outsourcing, anyway)

Earlier this week the lang cat and CWC Research launched Never Mind the Quality, Feel the Width, a new, in-depth study of the outsourced centralised investment proposition (CIP) marketplace.

The report is made up of qualitative adviser and industry interviews by CWC Research, alongside quantitative analysis by the lang cat of a range of discretionary fund manager (DFM), multi-manager (MM) and multi-asset (MA) portfolios.

You can read the abbreviated version of the report yourself for free (see link below), but in a nutshell, it uncovered concerns over both due diligence, with no real sense of advisers using a definite rationale in portfolio selection, and demonstrating relative suitability of the various outsourcing options, with very little variation between MM/MAs and DFMs in terms of cost, outperformance and holdings.

But probably the most important point to come out of the whole exercise was the difficulty we had in getting any sort of comparable data at all. Although fund managers are arguably more transparent than DFMs, different ways of reporting information meant it took forever to wrangle the data to a stage where we could pin down consistent like-for-like comparisons. If it’s that difficult for us, what hope is there for an adviser, with all the other demands on their time?

It’s maybe not a surprise that advisers don’t display consistent usage patterns when they can’t access the data they need to make informed decisions. This is one area where providers of outsourced investment solutions really do need to step up.

At the launch, a couple of providers, quite sensibly, asked what they can do about it. The answer is obvious. Buy the report, which alongside the in-depth, detailed, no holds barred, data analysis sets out clear action points for fund managers, DFMs and platforms.

But apart from that, as an industry, clearly we all need to agree how we can disclose information in a consistent way before we are compelled to do so by the regulator. After all, making life easier for advisers isn’t a totally selfless activity for a provider, is it?

The free, downloadable abbreviated version of the report is available here.


Nothing to do with buses

Hello again. You know what they say; platform pricing changes are like buses. You wait ages for one to come along and then…

Actually, no-one says that. It’s a rubbish analogy. And the buses around here are pretty good.

Anyway. Yes, only a week ago we were digesting the pricing changes made by Ascentric, and now Transact has come along and given us more to think about with a tweak of its own. Some corners of the trade press got in a bit of a fankle trying to articulate the complexity of the charges so let’s have a bash at laying it out:

  • Previously, Transact charged 0.325% for the first £600k, 0.2% for the next £600k and 0.075% for the balance above.
  • That was unless your portfolio was lower than £300k, in which case the first £60k was charged at 0.5%.
  • This £300k threshold is changing to £180k on 1st April.

That wasn’t so bad, right? The net effect of this is that mid-market portfolios will be seeing a bit of an annual saving. Specifically, £105 per year for everyone between £180k and £299k. Because maths.

Also reducing – on 1st March – are dealing costs:

  • The buy commission on fund dealing is halving to 0.05% for portfolio values up to £1 million. Portfolios above this will see no charge as the tranche for free trading is reducing from £2m to £1m
  • Equity trading costs are reducing too. Deals will now cost £3.75, £1 and 50p for standard, phased and regular transactions respectively. (Down from £7.50, £1.25 and 75p)

So, how do these changes affect our heatmaps? Usual house rules apply. We assume ongoing platform and wrapper charges only, investment in funds and the cost of 10 switches for those who unbundle and charge explicitly.

Remember too that our blogs show a subset of providers and portfolio levels. Subscribers to our annual Advised Platform Guide will get the full whack in our next round of updates.

SIPP first:




Given that the change to core pricing is a tweak at a very specific tranche as opposed to a wholesale change, it’s no surprise that this has a minimal effect on our tables. Just the one cell of each in fact, with 5 basis points coming off both tables at the £200k mark.

So, it’s not the most exciting change for our heatmaps but we know that Transact will be just fine with that. Transact unapologetically holds a premium price position, differentiating on high quality service (we do hear many good things, particularly about the quality of the people) and holding no truck with racing to the bottom of pricing tables. What it does do from time to time though, like here, is apply some of its profit into reducing customer charges.

Transact, unlike many of its peers, has a clear narrative and knows exactly what it does for its price. More power to it.


A bus in Leith. Probably on time too.