Hubwise recognises the huge pricing disparity in how platforms charge for their services and has taken innovative steps to change its own pricing for the benefit of the sector.
Historically, platform pricing is complicated and costly. The headline charge, calculated on the value of assets under administration, swings by up to 30bps (basis points) from the highest to the lowest [a 150% difference] and the monetary levels at which lower prices are applied, i.e. the trigger points, vary considerably. There are also other considerations like minimum charges, additional charges for different instrument types (assuming exchange products like ETFs, Investment Trusts and Equities can be traded on the platform) and product fees.
A range of comparison tools have sprung up to assist users with understanding how the choice of a platform will impact their client, given a particular set of circumstances. However, when a new platform enters the market or an established platform looks to shake things up, these comparison sites may well be a barrier preventing widespread adoption as they are all geared to assessing current pricing models.
Hubwise sees things differently and Angus Macdonald, CEO of Hubwise, says:
“At Hubwise, we have a vision of charging for work done, applying fair and transparent pricing across the board which will promote financial inclusion for all. Our revised pricing is the first step towards that vision.”
New Pricing Structure Release
As of Saturday 1st July 2017, Hubwise has released a new and simple pricing structure:
Platform fee of 20bps will be capped at £40 per product per month, resulting in no further charges above client assets of £240,000
Replace trade execution fees for UK listed investments with a £1 settlement fee
“We have been forced to stay with the conventional charging matrix – basis points charges on assets under administration – in order to feature in those all-important comparison tables. But we can start our journey by introducing a fee cap (why should someone with the same number of holdings in their portfolio pay more just because the value of their holdings is greater?) and revised fees for trading and settlement can reflect the savings we achieve by using modern technology, rather than just replicating the pricing models used by our competitors.”
As a result, Hubwise is now one of, if not the, most competitively priced platforms in the market.
Price is important but many platform users will cite other ‘obstacles’ to adoption. CEO Angus Macdonald says:
“The most common phrase we hear is, ‘While the price is important, we need a service that is reliable and easy to use.’ With a team dedicated to service excellence, software with unrivalled levels of STP and automation that dramatically reduces the administrative burden faced by users of the Hubwise solution, there are numerous benefits for both the users and their clients.”
Hubwise’s long term goal is to not only disrupt the market in terms of price but service as well. Hubwise have had initial feedback from Terry Huddart, Market Insight Manager at The Langcat, on their revised pricing. “They understand they are one of the few platforms to offer a low cost solution irrespective of the value of assets held (green all the way) for ISA and GIA accounts. They are also a low cost option for pension products where the assets held are £75,000 and above. We are looking forward to seeing the full analysis when this is released in the next few days.
Hubwise has chosen this path as a result of listening to the RDR. The management team at Hubwise felt that where there was genuine hope of a simple and efficient process to swap platform providers, that has not materialised and the regulator has done little to remedy the situation. The new Hubwise pricing, with a reasonable cap and significant savings on dealing, will allow and encourage the IFA to move their customers with ease and at competitive prices. Even when charging the client for their time to assess a move, there is an immediate saving – added to all the other benefits that Hubwise brings, it will be difficult to justify not moving.
What does the future hold for Hubwise?
“As we continue to grow, we want to educate the market; bring down the custody fees, reduce the maximum cap, explain how bespoke models should be charged slightly differently to bulk investments and pass to the adviser firms the settlement charges (at cost) so they can include them as part of their service charges. The underlying investor should no longer be impacted as charges will be applied for the work done, at the same time we also need to ensure we don’t create a barrier to those investors starting out on their wealth journeys.”