Winners and losers in platform shake-up

TD Direct was bought by ii in June 2017 and customers will move from TD Direct's percentage-based fee model, which means investors with large portfolios pay more, to ii's flat fee structure on 11 December. Former customers of Trustnet Direct, Telegraph Investor, The Motley Fool and SharePrice, all of which used ii's technology before, will also move over to ii in December after the platform acquired those businesses last month.

TD Direct and Trustnet customers could save hundreds in annual fees in fund holdings but customers with large share-only portfolios, who trade less frequently, will pay more.

TD Direct and Trustnet customers with large fund pots pay less

ii is increasing its annual account administration fee from from £20 to £22.50 a quarter, resulting in an increase in the annual fee from £80 to £90. TD Direct and Trustnet Direct customers with large portfolios held in funds will benefit from the switch due to their charging structures. TD customers currently pay 0.30 per cent on the first £250,000 of fund holdings in annual fees and 0.20 per cent on the value of funds above that to a cap of £1,500. It means that fund portfolios worth £500,000 cost £1,250 a year in annual fees. An investor with that size fund portfolio will pay £90 in annual fees under ii's new flat pricing model.

Trustnet Direct customers also moving to ii currently pay 0.25 per cent on assets held to a cap of £200, meaning a potential saving. 

ii's annual administration fee covers the cost of two trades per quarter. Under ii's old pricing model, which expires on 11 December 2017, customers had to use those free trades within the quarter or lose them but investors will be able to save up their free trades and use them throughout the year under the new system. ii charges its fee per customer instead of per each account held.

ii will also offer joint accounts for the first time under the new service. It will charge separately for a joint account and a customer's individual accounts, meaning that customers who hold sole General Investment Accounts (GIAs) and a joint Individual Savings Account (Isa), for example, would pay two sets of admin fees. 

Source: Boring Money

Source: Boring Money

TD Direct and Trustnet customers with small pots pay more

But while fixed fees are useful for investors with larger pots, the new charging structure will be less appealing for those still building their wealth. If you only have a few thousand pounds to invest, percentage-based fees can be lower than the minimum annual fee of £90. And that cost will be a significant chunk of your investment costs. 

For example, a customer with just £10,000 of assets held in funds would only pay £30 in annual fees under TD Direct's current pricing model. 

And TD Direct customers with large share portfolios, and those who rarely trade may also end up facing higher costs on the new platform. Until December, TD Direct customers pay no administration charge for a share portfolio held within TD Direct’s trading account as long as it was worth more than £15,000, or at least £5,100 if within its Isa. Under the new system, all customers will pay a minimum of £90 a year.

ii argues that buy and hold share investors will still benefit from the trading credits and reduced cost of dividend reinvestment and regular investing under the new system.

Trustnet customers with very small accounts would pay more too. The platform's minimum fee currently stands at £20, lower than the £90 all ii customers will pay each year, regardless of the size of their assets.

Motley Fool, SharePrice and Telegraph investor customers all paid flat fees already and will continue to do so. 

Large traders will pay more 

Most ii customers will continue to pay its £10 fee to trade funds and shares. However the the platform will, from December, charge more for large value trades. Trades under £100,000 will cost £10 but those between £100,000 to £500,000 will cost £40 per trade and transactions worth more than £500,000 will be charged £70. ii says it needs to charge more to cover the operational costs of placing higher trades, but adds that only a tiny fraction of their deals are above £100,000, with the average trade size around £10,000.

TD Direct customers will pay more to trade funds than under the TD price model. Until now, TD customers have benefited from free fund dealing but after moving to ii they will have to pay £10.

TD Direct frequent traders will pay less and ii traders more

Current ii customers who trade frequently will pay more. The cost for frequent traders (who trade more than 10 times a month) will rise from £5 to £6 and they will now have to trade that amount on average in the previous three months. Previously, any ii customers trading more than 10 times in a month immediately started paying £5 for any further trades for the rest of that month.

TD Direct frequent traders will benefit. TD customers trading more than 10 times an average in the preceding three-month period are currently charged £8.95 per trade. They only receive a £5.95 frequent trader rate if they trade more than 20 times in the preceding three months.

And TD Direct customers who trade infrequently will pay less than before to trade equities. TD Direct customers currently pay £12.50 per trade if they traded less than 10 times a month on average over the past three months. 

Like the standard charges, the new ii frequent trading charge will differ based on the value being traded. If the amount traded is under £100,000, the rate will be £6. If it is between £100,000 and £500,000, it will be £36, rising to £66 for trades more than £500,000.

Trustnet Direct customers already paid £10 for all trades and frequent dealers (the price for all trades after the first 10 in any calendar month) paid £6.

Sipps cost more for ii customers

The annual administration cost for a self-invested personal pension (Sipp) will increase to £120 (£100 + VAT), up from ii's current rate of £96 (£80 + VAT).

The new service will charge £120 (£100 + VAT) to use flexi access drawdown or capped drawdown, which is much less than ii's current rate of £204 (£170 + VAT).

To take an Uncrystallised Funds Pension Lump Sums (UFPLS) will cost £60 (£50 + VAT) per payment, which is more than ii's old rate of £48 (£40 +VAT). But the new service will not charge investors to take ad hoc income, a service it previously did not offer.

International dealing costs rise

ii customers will pay more under the new pricing structure in foreign exchange (FX) costs. ii customers currently pay 1 per cent FX fees. These will rise to 1.5 per cent on foreign trades up to £25,000, falling to 0.25 per cent for trades up to £600,000. But ii customers will benefit from the extension of TD Direct's service to hold and settle up to nine different currencies, which should reduce the need to convert currency.

To trade US shares under £100,000, investors will pay the standard online or frequent trader rate and over this amount, they will pay 0.03 per cent of the trade value plus FX fee. To trade other international shares under £25,000 will cost £20, or £16 under the frequent trader rate. International shares above £25,000, will cost 0.08 per cent of the trade value.

ii reduces exit fees but TD Direct customers pay them for first time

TD Direct was one of the few platforms not to charge a transfer fee if customers wanted to leave. ii has chosen not to replicate this feature on the integrated platform. But it has cut the fee to leave the platform from the previous amount of £15 to £10 per line of stock, when an investor has been with the platform for more than a year.

This transfer fee will be waived until September 2018 for all current customers of TD Direct Investing, Telegraph Investor, Trustnet Direct and SharePrice if they want to leave.

Dividend reinvestment fees reduced 

ii has cut its dividend reinvestment rate from £1.50 to £1 per transaction, with a minimum dividend value of £10.

Dividend reinvestment is a very valuable tool for investors as over the long term reinvesting your dividends can enhance both the capital growth and income potential of your investments. It is also an easy way to get more shares of the funds or company stock you already own.

ii’s new rate is competitive. Many platforms do not even offer dividend reinvestment and those that do typically charge £1.50 per stock, such as Selftrade, or a percentage rate like Hargreaves Lansdown which charges 1 per cent or The Share Centre which charges 0.5 per cent. 

ii has cut the cost of regular investing, which has fallen from £1.50 to £1 to buy investments, subject to a minimum £25 transaction per month. 

For more on which platform may suit your needs, check out our broker comparison tool.