James Hay overhauls pricing structure

Conway-Alastair-James Hay-2014James Hay has overhauled its pricing structure across a number of product ranges, set to favour the largest investors.

The firm has increased charges for the lowest tiered investment brackets and decreased the fees for the higher band by 0.04 percentage points.

For its Modular iPlan portfolio the firm has introduced a new tiered structure for the annual investment centre platform with charges starting at 0.25 per cent on the first £300k investment (previously the first £500k charged 0.18 per cent) and will then reduce fees in stages to 0.01 per cent on investments over £1.5m (previously at 0.5 per cent).

Changes to James Hay IPS Managed Portfolio Service will start from 28 April, while for Modular iPlan changes will take effect from 31 May.

The headline charge for Modular iPlan will reduce from £195 to £175 for investments up to £200k and will be waived completely for investments over £200k.

The new Modular iPlan pricing structure will remove the £50 fee for contributions and the £50 per cash transfer-in fee but will replace them with an adjusted platform charge.

Taken altogether, the new pricing structure will result in an average annual increase of around 0.036 percentage points.

Additional changes are applied to the fees levied for Sipps in drawdown and will only be applicable to those customers using capped drawdown. These will increase from the current £100 to £150. A drawdown closure charge has also been added at £100.

On the additional Sipps charges, the firm says: “This new pricing structure remains in line with James Hay’s guiding principle that only those customers using certain product features and services should pay for them. Those who do not, will not cross-subsidise those who do.”

Currently over 250 adviser firms use James Hay on a regular basis while around 740 firms use it in combination with other platforms, and mainly for its Sipps.

James Hay chief executive Alastair Conway says the new pricing structure will result in a “modest” increase for “most customers” and are a result of “a bit of correction coming in the market”.

Conway says even after the changes, the firm is still 5 basis points below the market average.

James Hay’s £500,000 portfolio will charge 0.23 per cent, while the industry average has a charge of 0.30 per cent, according to the Lang Cat.

In November IFG Group, James Hay’s parent firm, said the platform was to review its pricing structure for 2017 on the basic the Bank of England’s cut in interest rates will hit its second half revenue this year by more than £1m.

Conway says the platform will continue to invest in its technology but will not go through “a massive replatforming” like a number of other players in the market, such as Old Mutual Wealth.

He says: “We are focused on getting the basics right and have put service top of the list. It’s important to note that these changes have very little impact on our competitive pricing position against our peers. We are still well priced – especially for our core market, where we are still 5 basis points below the market average.”

Source: James Hay

Mixed Portfolio

SIPP – Lang Cat standard tables

Source: The Lang Cat