This week, Charles Stanley Direct hiked its headline platform fee from 0.25% to 0.35%. The company blames the increase in charges on the tech investment required to provide a top service (having scooped the Platforum Best Direct Platform for Customer Service award earlier this year).
That is at a time when end-investors are becoming more cost-conscious and it runs against the trend of pricing developments in the market.
We think it’s commercially the right move for the company. Charles Stanley is a premium brand and the D2C service is reasonably well established. It no longer needs to lead on price.
Also, like other traditional wealth managers, Charles Stanley still has too many execution-only relationships with private clients who are serviced by stockbrokers at the end of telephones and the aim is to to coax them over to the more efficient digital service. The old model doesn’t make sense for the company – or clients who will pay far less for the digital service even at the new fee level.
However, investment brands need to be careful about keeping their promises. Price changes are entirely under their control – unlike poor investment performance, for which clients might give them the benefit of the doubt.
Clients don’t like paying more… but ultimately they are likely to stay put. Switching is usually too much effort and moving to a cut-price alternative with less digital functionality is less appealing than it was even a couple of years ago, when apps were just a ‘nice to have’ and cyber security was less of a worry.
This week, we hosted a webinar discussing our latest reports on the D2C market including consumer research and recent pricing changes. Subscribers click here to view.