What is a platform fee?
A platform fee is the charge made by the service that holds and administers your pensions and investments, usually a percentage of their value each year, and it is separate from both the adviser charge and the funds’ own charges.
The FCA’s 2020 evaluation put average portfolio charges, platform and funds together, at 1.1% a year for advised clients, on top of an average ongoing adviser charge of 0.8%.
What a platform does
A platform is the account your investments sit in: it buys and sells funds, holds them in your name, produces statements, and wraps them in an ISA, pension or general account. Advisers usually use a small number of platforms. Some are open to anyone; others only through an adviser.
How platforms charge
- A percentage of value, often tiered so the rate falls on larger amounts.
- A flat fee, a fixed pounds amount each year or month, sometimes per account.
- Dealing and exit charges on some platforms, though many now have none.
Flat fees tend to cost less on large pots and percentage fees less on small ones. The crossover depends on the platform.
Adding the layers together
With advice, you typically pay three layers: the ongoing adviser charge, the platform fee and the fund charges. Some arrangements add a fourth, a discretionary or model portfolio fee. The firm must show you the total in pounds and as a percentage (COBS 6.1ZA). See total cost of advice.
Related definitions
Sources
- FCA, Evaluation of the impact of the RDR and FAMR (December 2020)
- FCA Handbook, COBS 6.1ZA — Information about the firm and costs and charges
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