AJ Bell investors see charges rise as Sipp exit fees are scrapped

AJ Bell will make a number of changes to its fees and charges from 1 January 2021, it revealed in its company results today. 

Many of the changes will benefit customers, including the scrapping of Sipp exit fees, while others will mean extra costs such as an increase of the cap on charges for shares, investment trusts and ETFs.

The FTSE 250 company also confirmed it had enjoyed a 21 per cent increase in revenues and a 29 per cent rise in pre-tax profits for the 12 months to end of September, largely thanks to a rise in dealing activity during the pandemic.

AJ Bell, and other platforms, has benefited from a rise in dealing activity during the pandemic

An AJ Bell spokesperson said: ‘Pension drawdown is becoming increasingly popular following pension freedoms.

‘The removal of those charges will ensure customers only pay our low platform charge of up to 0.25 per cent a year whether they are growing their pension or making withdrawals.’

The full list of changes being introduced from 1 January includes:

Pension drawdown charges removed  

• Currently there is a charge of £25 + VAT for one off tax-free lump sum or income drawdown payments
• Currently there is a charge of £100 + VAT for regular drawdown payments or lump sums  

Sipp exit fees scrapped 

• Currently there is a charge of £75 + VAT to transfer a Sipp to another provider, either as cash or in-specie

In-specie transfer fee reduced  

• Currently there is a charge of £25 to transfer each holding in-specie (without it being sold) to another platform. This is being reduced to £9.95 in line with its charge for buying and selling shares online

Charge cap on shares, trusts and ETFs increased 

AJ Bell will increase the cap on the charge for shares, investment trusts and exchange traded funds, though the charge will remain at 0.45 per cent of the amount invested. This will be applied on the following products:  

• Sipp and Junior Sipp – £10 per month (currently £25 per quarter) so the cap will rise from £100 a year to £120 a year

• Stocks and shares Isa, Lifetime Isa, dealing account – £3.50 per month (currently £7.50 per quarter) so the cap will rise from £30 a year to £42 a year

• Junior Isa – £2.50 per month (currently £5 per quarter) so the cap will rise from £20 a year to £30 a year

Charges will also be taken monthly instead of quarterly from the new year. There is no change to custody charges for funds.

Making the most of a bad year 

The company reported positive figures for the 12 months to end of September, with the bulk of activity taking place during the global coronavirus pandemic.

The company results suggested this resulted from more people staying at home, becoming more aware of the economy and changing markets and therefore trading more – or in many cases, for the first time. 

AJ Bell confirmed it has seen a 21 per cent increase in revenues, of £126.7million, compared to its 2019 figures. Meanwhile, it also enjoyed a 29 per cent rise in pre-tax profits to £48.6million.

Total assets under administration were up 8 per cent, with platform net inflows up 15 per cent to £4.9billion.

The platform also saw a record increase in its customer base while its customer retention rate remained high at 95.5 per cent. 

Record dealing activity  

Analyst Rob Murphy, managing director of Edison Group, said:  ‘The market volatility of 2020 has been particularly favourable to the company, driving record dealing activity.

‘However, as the pandemic seems to be entering its final stages following the announcement of promising early vaccine data, the question is now, how can AJ Bell continue to grow through 2021? 

‘Already this week, the company has announced widespread changes to its online fee structures which will come into force on 1 January 2021. 

‘While this might increase revenues generated from its online assets under administration in the short-term, customer churn could well increase.

Especially since, among other fee changes which were intended to benefit customers, the company has decided to remove its Sipp exit fee – something which could further incentivise holders of those accounts to leave the YouInvest platform.’