Well isn’t this nice? I haven’t done a pricing blog since…ooh, I don’t know, the last pricing blog which might well have been the last time abrdn changed its pricing, but equally might not have been.
Either way, it reminds me of the good old days after PS13/1 – remember that? – when everyone was unbundling their charges and we all raced to model the latest 0.05% cut as Platform A took on Platform B with those giant cotton bud things from Gladiators.
Those days are gone now, and of course the rack rate for platform charging is now only an indication of where providers sit; our most recent State of the Advice Nation report found that 60% of firms with £50m or more AUA had at least some special terms and by the time you get to firms with £1bn or more it’s 100%. 35% of small firms (under £25m AUA) have special terms in place. Special terms aren’t special any more – something to remember when headline-grabbing rack rates are being tossed around.
Anyway, it is good to see where providers are positioning themselves publicly, and where you see a change happening that’s always a sign of intent. So what do we make of abrdn’s latest sign of intent?
The first thing to say is that I read the news with a sense of deep nostalgia for the many-tiered absolutely box-of-frogs mad structure of the old Wrap approach. We’re now down to three tiers – like most good wedding cakes – from 487 or whatever it started out as. Who am I going to make jokes about now? (It’s Transact. Definitely Transact.)
OK, so here we go. You can find full details here, but broadly speaking we have a 0.05% reduction across the board except in the £500k – £750k range where it’s 0.15%. There are fewer tiers now too by a count of one.
So what does this do to the Heatmap Ov Destiny? You know heatmaps never died…they just went on Ozempic and pretended to enjoy it. Here we go:
Our rules of engagement – this is taken straight from Analyser which was updated yesterday with details of the new pricing. We did get a couple of days’ advance notice from abrdn this was coming, but we only did the work to add the new structure on the day; that’s how fast and responsive Analyser is.
I also need – in this age of paid-for social media – to say that abrdn hasn’t paid us to do this review; it’s just something that’s fun to do instead of watching telly in the Premier Inn I’m in right now.
I’ve taken just a few portfolio sizes – £100k up to £1m, and a stochastic scatter of other platforms; some known for price competitiveness and others not. You can get a full comparison in roughly 45 seconds from Analyser. Did I mention it’s really good at this sort of thing? It’s really good at it. You should totally subscribe if you don’t already.
At each portfolio size we assume 50% in a pension and the other 50% split evenly between GIA and ISA. All money is invested in a model portfolio with 20 regular mutual funds which rebalances quarterly; this is all to catch any wee additional charges.
So! New abrdn is actually 8bps cheaper at £100k than it was – 0.3% down from 0.38%, which puts it bang on Quilter, so to speak, and just 2bps more than Aviva.
The low cost guys like Fundment and the AJ Bell RIA do beat it by 0.1% and 0.08% respectively, but at £100k that’s £100 and £80pa respectively, so we’re not talking Necker Island money here.
As you head North through the portfolio sizes, abrdn starts to get a bit better than it used to – we’re talking 0.3% down from 0.37% at £250k and 0.25% down from 0.32% at £500k. This isn’t enough to be class leading but it’s competitive with other big names like Aviva, Quilter, Nucleus and Transact and that’s a big improvement.
At £1m though things really start to motor – 0.17% down from 0.27% which is competitive with AJ Bell, Aviva, Fundment and others who inhabit the green end of big-portfolio heatmaps. That’s a 10bps improvement, which for arithmetic fans is £1,000 a year – I know, right? I didn’t even use a calculator.
So there it is. I think this is quite a poky move from abrdn; not so much at the smaller end, but by the time you’re into core IFA client territory they have made a big enough cut to…do what, exactly?
For me, platforms like abrdn and Transact attract firms looking for a certain full-fat mix of service and functionality, but what stops firms taking it into consideration sometimes is that rack rate. It just looks expensive, and not everyone is comfortable going and asking for a deal from day one.
So Transact’s salami slicing over the years and abrdn’s less frequent cuts achieve one thing, I think – to try and position their platforms in such a way that firms looking for big, all the functionality, and extensive servicing capacity (even though service levels fluctuate over time and abrdn has some work to do in this regard) don’t just get put off at the first pricing comparison they see.
I have a moan. This is not unusual.
Abrdn is putting the change live now for new clients, but existing clients won’t benefit from it until 31/3/25 at the latest; hopefully a bit earlier in Q1 25.
This isn’t good enough, and the excuses about ‘large-scale development’ required for existing plans do not wash with me. As someone wise said, you can be sure that if there was a price rise they’d find the resource to do it. Not the end of the world, but not very Consumer Dutery, and disappointing.
So it’s plus 48 points for the price cut, and minus 18 points for the ‘new customers only’ thing, which still leaves them 30 points, which coincidentally is what a £250k portfolio costs on both Abrdn and Transact. Is life too weird or what?
Hope this was useful, at least in part. It was fun to do, and for as long as providers keep mucking around with price we’ll keep writing about it.
If you’re a subscriber to Analyser, you’ll find Abrdn’s new charging structure ready and waiting for your comparisons and due diligence.
If you haven’t yet succumbed to the allure of due diligence done properly, then Analyser is just a 14 day free trial away. Sign up here, and then contact the team to get it set up for your business.
