Hargreaves and Share Centre take £1.5bn of JPMAM retail accounts

Asset managers continue to offload retail savings schemes to platforms

Hargreaves Lansdown and The Share Centre have become the beneficiaries of more than £1.5bn worth of retail accounts from JP Morgan Asset Management as fund giants continue to abandon administration of savings schemes.

Hargreaves Lansdown takes on approximately 33,000 retail managed fund clients worth a total £765m. It had already acquired JPMAM’s Sipp client accounts in 2015.

JPMAM chief executive for EMEA Patrick Thomson said the company is ceasing administration of Isa accounts and felt Hargreaves was best placed to take on clients holding its Oeic managed funds. “Hargreaves Lansdown is a household name and we are pleased our clients will have the opportunity to access a more comprehensive range of services following this transfer,” Thomson said.

JPMAM decided to go with The Share Centre for its clients directly accessing investment trusts with the retail stockbroker landing an extra £750m through the transaction.

Retail operations not core to asset managers

Asset managers don’t see retail operations as their core expertise and the outsourcing of retail clients to investment platforms is a “recurring theme”, according to Fundscape editorial director Gavin Fielding.

Hargreaves has already been the beneficiary of Witan Investment Trust’s internal savings scheme this year landing £420m of assets.

Fielding said: “The fund managers can’t achieve economies of scale or the breadth of a whole of market retail direct platform, and it’s a competitive market with cost overheads that will have gone up post Mifid II.”

Costs of holding investment trusts on platform

Association of Investment Companies communications director Annabel Brodie-Smith said The Share Centre is smaller than some of its rivals but is “investment trust friendly”. The platform had assets under administration of £4.9bn in its Q4 2018 results, a fraction of the £85.9bn held by Hargreaves at the end of the same period.

Brodie said of the changing landscape for retail investors: “In the past, you would go to JP Morgan and invest in an investment trust savings scheme or an Isa and they would administer that for you. Now investors are going direct to platforms, holding their whole portfolio there, obviously they’ve got choice of whole of market and they’ve got all their investments in one place so they can look at it at a glance.”

The Share Centre is one of the most expensive D2C platforms for a portfolio made up entirely of investment trusts in an account that trades four times a year, according to Lang Cat analysis done for the AIC. In contrast, for monthly drip feeding of savings, The Share Centre ranks as one of the more cost effective. Although, in both scenarios, Hargreaves Lansdown comes out more cost effective.

In a press release announcing the changes, JPMAM head of investment trusts Simon Crinage said: “After careful consideration, we concluded The Share Centre would be best placed to offer a comprehensive, high quality client service, with an array of features and functionality which will provide an optimal outcome for JPMorgan investment trust clients.”

Platform charges for investment trusts on The Share Centre versus Hargreaves

PlatformCore chargesPensionTransaction costs for trustsRegular investing chargeAutomatic dividend reinvestment fee
Hargreaves Lansdown0.45% pa (Isa capped at £45, Sipp capped at £200, no charge for GIA.)No additional charge£11.95 a trade reducing to ££8.95 and then £5.95 depending on the number of trades.£1.501% (min £1, max £10)
The Share Centre£57.60 charge for Isa (£4 + VAT per month).

£21.60 charge for GIA (£1.50 + VAT per month).

£172.80 pa (£12 + VAT per month)£7.50 for deals under £750 or for frequent dealing accounts (with £96pa admin fee), 1% above.0.5% (min £1.00)0.5%
Source: AIC/Lang Cat

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