Charles Stanley platform assets up 15% despite fee hike

Charles Stanley Direct rivals Hargreaves Lansdown with platform charges at 0.35%

Charles Stanley’s platform business grew 15% last year despite bringing its pricing closer in line with more expensive rival Hargreaves Lansdown.

The wealth manager touted growth in this area of the business in its fourth quarter update, noting that Charles Stanley Direct ended the year with assets under management of £2.7bn. However, it did not specify net flows for this segment.

Instead it reported that its execution only services, which includes the platform business, recorded net outflows of £100m last year, taking AUM down from £8.3bn the year prior to £8.2bn. But the group said this was chiefly down to redemptions from its bigger traditional voice-brokered services business.

The online D2C platform’s growth in AUM outpaced its discretionary fund arm, which expanded by 6.5% after taking in net inflows of £500m.

Last year Charles Stanley Direct decided to hike fees from 0.25% to 0.35% on both funds and shareholdings and raise charges on portfolios below £250,000 to 0.40%, moving closer to the benchmark set by Hargreaves Lansdown of prices between 35 to 45bps.

At the time, managing director of Charles Stanley Direct Magnus Wheatley said the higher prices were necessary in order to protect its growing customer base from fraud and other cyber security threats.

On the whole, Charles Stanley saw new client inflows of £300m in the fourth quarter and £1.4bn for the year. New client money in 2018 was just £200m higher than the £1.2bn outflows.

Tilney final results

Charles Stanley’s results were published alongside Tilney’s final results. Tilney saw “strong” new gross business flows of £2.9bn last year, taking AUM to £24.4bn which managing director Jason Hollands pointed out is a “record level” for the business.

But it is unclear what proportion of these were related to its platform business Bestinvest. Tilney is a private company and therefore is not required to provide a breakdown of flows by service.

Bestinvest’s charges are on par with Charles Stanley Direct for portfolios under £250,000 but are cheaper for portfolios between £250,000 and £1m (0.2%).

Tilney’s execution-only services make up 13% of AUM, a smaller portion than Charles Stanley’s comparative services which are about 34% of AUM. Bestinvest has circa £3.3bn in AUM after factoring in other execution-only assets and assets housed in the group’s Oeic range that is available via the platform.

However the group’s net flows at the end of the period were £549m, down 5.3% on the year prior.

Chief executive Chris Woodhouse said that like other wealth managers Tilney’s AUM was not immune from volatile markets in the fourth quarter of 2018 but said this had been mitigated by strong relative performance in discretionary investment mandates which make up 76% of the group’s assets. Woodhouse said that discretionary assets were negatively impacted by 5.9% on average during the quarter, better than the MSCI WMA Private Investor Balanced Index which lost 7.95%.

He added that in the year the wealth manager was able to complete a major systems upgrade and add to its talent pool through new hires and acquisitions.

“Tilney has a truly scalable platform for future growth, and I believe is exceptionally well-positioned to capitalise on the opportunities ahead.”

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