SCM Direct has tweaked the fees on its digital offering in response to the upcoming Mifid II rules as it launches a new Sipp account.
The company, headed by prominent anti-Brexit campaigner Gina Miller and her husband Alan, claims the changes to the platform will make it one of the cheapest digital wealth managers in the market.
Total cost for clients will be 0.98 per cent, compared with a “typical” wealth manager who would charge a total of 2.71 per cent, SCM says.
The pricing changes mean that for a £10,000 SCM Direct portfolio clients will pay less than rivals Nutmeg or MoneyFarm, setting the price at 0.60 per cent a year, excluding underlying charges and transaction costs.
The firm has also lowered the investment entry level to £10,000 from £15,000 for general and Isa accounts and added monthly contribution of £50. In addition, the firm’s portfolios can be added in a Sipp starting from a contribution of £18 a year and maximum charges of £60 including VAT.
To comply with MifidII rules which require the disclosure of all costs of investing, SCM Direct has partnered with technology provider Hubwise to host clients documentation and show details on costs, performance and portfolio notifications.
The new service will be live from today.
SCM Direct co-founder Gina Miller says: “Mifid II ushers in a new dawn of consumer protection and transparency. This regulation is no surprise, yet firms have been bleating and foot dragging about the expense and complexity of doing the right thing and letting people know how much they are truly paying.
“If a boutique firm like ours can today launch a fully complaint service, there are no excuses.”
The news of the re-launch of SCM Direct comes as the Millers recently exposed the challenges of keeping a wealth managers profitable and competitive, citing the recent increased losses of of rival Nutmeg at £9.4m for 2016.
In a blog post, the firm expressed concern that robo-advice models are also too heavily reliant on small accounts.
The Lang Cat consulting director Mike Barrett says becoming 10 to 15 basis points cheaper is a positive step for SCM Direct, but on a £10,000 investment that discount equates to just £10 or £15 a year.
Barrett says: “No one is going to change the investment landscape by saving people a few pounds per month.
“The Mifid points are interesting, but are not really a differentiator. As they point out, everyone will have to comply, and not many clients are saying ‘if only my robo was Mifid II compliant'”.