Chelsea Financial Services unveils new charges
Following in the footsteps of fellow fund supermarkets, Chelsea Financial Services has revealed details of its new charging structure, following a change in rules that prevent platforms from taking a commission.
From 6 April 2014, investors with less than £250,000 will have to pay two separate fees – 0.4% to Chelsea Financial Services and 0.2% to Cofunds, which runs the company's platform. This gives investors a total fee of 0.6%.
Chelsea said this means all its clients will now pay less – it is currently charging 0.5%, while Cofunds currently charges Chelsea clients 0.25%.
However despite this saving the charges still looker expensive when compared with rival fund supermarkets.
Mark Polson, founder of specialist platform consultancy, The Lang Cat, said: “It’s well over the market – fund only investors could halve their costs by shopping around.”
Justin Modray, founder of Candid Money agreed: “Chelsea clients with up to £250,000 invested will pay a total 0.6% a year in broker and platform charges, that is £600 per £100,000 invested, which is far too expensive for an execution-only service. Most of our clients pay less than that while receiving full independent advice.”
Fidelity has recently confirmed a new charge of 0.35%, while Hargreaves Lansdown is charging 0.45% and Best Invest is charging 0.4%. But they aren't the cheapest - both Cavendish and Charles Stanley only charge 0.25%.
Get what you pay for
However, Polson added that investors need to be reminded that Chelsea’s fee is genuinely “all in”. “They need to be given credit for offering a simple, all-inclusive charge,” he said. There are no exit fees for example or charges for paper statements, telephone dealing or paying in cheques, all of which are often levied by some of the cheaper players.
Darius McDermott, managing director for Chelsea Financial Services said: "There is always someone who will do a job cheaper, but that doesn't mean they'll do it better. It pays to read the small print that comes with some of the so-called low-cost deals which have been announced in the past few weeks. With Chelsea, there are no additional charges, just simple, predictable pricing."
For more on fund supermarket fees, read our feature on comparing platform charges.
Describes the relationship between a client and a stockbroker or independent financial adviser whereby the broker or adviser acts solely on the client’s instructions and doesn’t offer any advice on which shares to invest in or financial products to buy and simply “executes” the wishes of the client, regardless if they are judged to be sound or wrong. Other types of broking service offered are advisory (whereby the client/investor makes the final decisions, but the broker offers advice) and discretionary (whereby the broker manages the portfolio entirely and makes all the decisions on behalf of the client).