In the back
[ PLATFORMS & PENSIONS ]
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John Blowers expects platform
fees to fall in the long term – but in
the short term they appear to be
leaning towards the example set by
the most expensive provider
Follow
the leader
I
’m no economist, but I am very
surprised about what has just
happened with pricing in the
platform market.
Interactive Investor (ii) recently
announced a change in its pricing,
which is set to increase costs to
customers, however it has tried to
spin it.
There is a genuine argument to say
that ii’s pricing has always been a little
too low, as it has used price as a key
weapon in attracting new customers.
But with a series of acquisitions
under its belt – and more planned
– it seems confident enough to start
testing the waters with a higher-
priced offering.
I always assumed the market
leader, Hargreaves Lansdown (HL),
would be the firm to crack first
and reduce its pricing as it is by
some margin the most reassuringly
expensive player in the market.
FE TRUSTNET
Since I first encountered
HL back in the late 1980s,
I have been amazed at its
phenomenal growth, from
small-time fund broker to
investment powerhouse
It has stubbornly stuck to its guns
on pricing and its customers seem
to have come to terms with the fact
that the overall service justifies
the premium over other platform
providers.
And they have got a point. HL
is now an established and strong
brand – an organisation you’d be
happy to entrust your life savings to
– and that’s worth a lot in the peace-
of-mind department.
Investment powerhouse
Since I first encountered HL back in
the late 1980s, I have been amazed at
its phenomenal growth, from small-
time fund broker to investment
powerhouse. At the time of writing,
it is the 38th largest company on
the FTSE 100 with a market value of
almost £11bn.
To put that into context, HL is
more valuable than Whitbread,
British Airways parent IAG
and almost double the size of
investment behemoth Standard
Life Aberdeen.
The value of the HL business
has been driven by the premium
pricing that it has been charging
and what is potentially worrying to
private investors is the market seems
to be moving towards its pricing
levels, rather than, as anticipated,
the other way around.
I like to look at HL and ii as the
pricing “bookends” in the platform
market. As both of their pricing
models now have some complexity,
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