How much will your platform charge you for dying?
Fund platforms could take hundreds of pounds in fees to put your affairs in order after you die, the Guardian has revealed.
According to research carried out by comparison website Comparefundplatforms.com on behalf of the newspaper, fees charged for probate services vary widely from one platform to another.
Hargreaves Lansdown for example will charge £36 for each stock held by the deceased customer, with minimum and maximum fees of £120 and £600 respectively.
Although Hargreaves' charge per stock is relatively high, several other platforms do not have an upper limit, meaning probate charges for investors with many stocks could add up.
BestInvest and TD Direct Investing both charge £12 per stock with a £60 minimum fee. Interactive Investor and Trustnet Direct each charge £10 per stock with neither minimum fees nor caps.
Rebecca O'Keeffe, head of investment at Money Observer's sister website Interactive Investor, says there are 'significant costs' associated with probate relating to the work necessary to arrange and carry out instructions with the lawyer or executor.
"Our probate charge is not a source of profit. The average number of investments held is six per customer, with a negligible number of customers holding more than 60 lines of stock.
"It is the minimum cost that is far more of an issue for investors, and it is actually those brokers who charge a high flat fee or a high minimum charge who are capitalising."
Other platforms charge a simple flat fee, although this also varies quite a bit. While Halifax Sharedealing and Iweb each charge relatively low flat fees of £12.50 and £25 respectively, Alliance Trust Savings charges £240 regardless of how much is invested or in how many stocks.
Alliance Trust Savings (ATS) managing director Patrick Mill says the firm aims only to cover its costs and not to profit from its probate charges.
The reason its flat fee is relatively high at £240 is partly because ATS customers tend to have larger than average portfolios that include other assets than simple funds, such as exchange traded funds and equities.
The average ATS customer holds approximately eight to 10 different stocks, meaning the flat fee works out to about £24 to £30 each.
Mill says: "We want to be very transparent and that's why we've gone for a flat fee structure.
"Actually it doesn't cost that much more for 20 lines of stock than for 15 lines of stock. There is a cost to doing a death claim, full stop, and then there is a marginal increase per line of stock."
According to the Comparefundplatforms.com research, platforms that charge nothing for probate work include Cavendish Online, Charles Stanley Direct, Fidelity and Rplan.
Mark Till, head of personal investing at Fidelity Worldwide, says the platform's single service fee covers all ancillary costs including probate.
"I suppose the thing that stands out to me is that the expensive part of opening an account everybody does for nothing. At exit, everybody wants to charge.
"I would argue it's more time-consuming to take a customer on than when they take their money away at the end.
"If you line up the number of... additional charges, there must now be a hundred different ways to pay your investment platform more money."
This article was written for our sister website Money Observer
The process of applying for the right to deal with a deceased person’s estate. If a person has left a will, they will usually have appointed a will executor. The executor then has to apply for a ‘grant of probate’ from the probate registry, which is a legal document that confirms the executor has the authority to deal with the affairs of the deceased. If a person dies without making a will, intestacy law applies (see intestate).
An interchangeable term for shares (UK) or stocks (US). Holders of equity shares in a company are entitled to the earnings and assets of a company after all the prior charges and demands on the company’s capital (chiefly its debts and liabilities) have been settled. To have equity in any asset is to own a piece of it, so holders of shares in a company effectively own a piece proportionate to the number of shares they hold. (See also Shares).