This short document is a review by the lang cat of the Alliance Trust Savings (ATS) platform price changes, made in early 2014. We give an overview of the changes and offer some views on their impact.

Alliance Trust Savings Pricing Review

Price ShiftIts been a busy six months or so in the platform world with a seemingly endless parade of price adjustments. Some platforms are still trying to find their place in a relatively immature market, while recent regulatory reform has triggered widespread change. Some noteworthy examples include:

Cofunds removed its 40 fixed annual platform charge in late 2013, and its Cofunds Pension Account establishment and annual charges in April 2014, citing benefits of scale from its Legal & General ownership

Standard Life wholesale changes to its tiered AMC structure (including a 10bps discount for adviser firms placing over 20m of business) whilst retaining its famous level of complexity

Nucleus and Aviva both making clearly targeted cuts to their % costs for chunkier AUA

Aegon with the addition of a price cap to its ARC platform from May 2014

Why the quick round up? Well, theres a trend and we have to acknowledge that Alliance Trust Savings was bucking it by making a price increase. (See the table on the next page for the quantum)

Cards on the table; we are big fans of the fixed fee philosophy championed by Alliance Trust Savings, but we have also talked at length for many a moon about how inexpensive that approach makes its proposition look at higher fund values. With that in mind, perhaps its no surprise to hear of an upward adjustment being made. It costs to invest in future platform development and whilst no-one ever likes it when prices go up, we know the chaps up in Dundee are deadly serious about their long term future in the platform space. The money has to come from somewhere.

In February 2014 ATS announced that, following tax advice, it would no longer be including VAT in headline ISA, General Investment Account (GIA) and SIPP Inclusive Fee Option (IFO) wrapper charges. Thats reduced the impact of the price increase considerably as youll see in the following table.

Alliance Trust Savings commissioned the lang cat to write this document. They checked wed got the facts right on their proposition, but thats where it ends.

We picked the competitors for comparison, the views are our own and Alliance Trust Savings had no editorial control over content or influence on the figures.

At the lang cat we stake our reputation on our independence so we dont say here anything we wouldnt say if we werent being paid. Youll just have to trust us on that.

LetS be cLear

Portfolio size 20k 50k 75k 100k 200k 500k 1m 1.5m 2m 5m

AJ Bell 0.34% 0.26% 0.24% 0.23% 0.22% 0.21% 0.20% 0.19% 0.16% 0.10%ATS 0.49% 0.20% 0.13% 0.10% 0.05% 0.02% 0.01% 0.01% 0.01% 0.01%ATS IFO 0.60% 0.24% 0.16% 0.12% 0.06% 0.02% 0.01% 0.01% 0.01% 0.01%ATS 2014 0.63% 0.25% 0.17% 0.13% 0.06% 0.03% 0.01% 0.01% 0.01% 0.01%ATS IFO 2014 0.75% 0.30% 0.20% 0.15% 0.08% 0.03% 0.02% 0.01% 0.01% 0.01%ARC (AEGON) 0.60% 0.58% 0.55% 0.54% 0.49% 0.24% 0.12% 0.08% 0.06% 0.02%Ascentric 0.67% 0.36% 0.31% 0.29% 0.27% 0.26% 0.25% 0.20% 0.17% 0.13%Aviva 0.25% 0.25% 0.25% 0.25% 0.25% 0.23% 0.19% 0.18% 0.17% 0.16%AXA Elevate 0.40% 0.34% 0.34% 0.32% 0.32% 0.28% 0.25% 0.25% 0.25% 0.10%Cofunds 0.29% 0.29% 0.29% 0.29% 0.27% 0.25% 0.22% 0.20% 0.18% 0.16%FundsNetwork 0.48% 0.34% 0.31% 0.30% 0.27% 0.26% 0.25% 0.25% 0.25% 0.25%James Hay 1.92% 0.77% 0.51% 0.38% 0.35% 0.35% 0.25% 0.18% 0.15% 0.09%Novia 0.50% 0.50% 0.50% 0.50% 0.50% 0.45% 0.35% 0.28% 0.25% 0.19%Nucleus 0.35% 0.35% 0.35% 0.35% 0.35% 0.35% 0.30% 0.25% 0.22% 0.18%Seven IM 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% 0.28% 0.23% 0.21% 0.18%Skandia 0.50% 0.43% 0.40% 0.39% 0.34% 0.32% 0.28% 0.24% 0.22% 0.18%Standard Life 0.40% 0.40% 0.40% 0.40% 0.37% 0.32% 0.27% 0.21% 0.18% 0.13%Transact 0.56% 0.52% 0.48% 0.44% 0.38% 0.33% 0.28% 0.23% 0.20% 0.12%Zurich ZIP 0.45% 0.45% 0.41% 0.39% 0.34% 0.31% 0.29% 0.27% 0.25% 0.24%

Portfolio size Pre-increase Post-increase Change With VAT off New Change

ISA 48 90 87.50% 75 56.25%

ISA IFO 120 180 50.00% 150 25.00%

SIPP 162 186 14.81%

SIPP IFO 300 330 10.00% 275 -8.33%

iSa/Gia

the chanGeS

Casting our eye over this table its impossible to ignore the large expanse of green corresponding to the pre and post Alliance Trust Savings prices. Despite the price increase, ATS still smashes it for the larger portfolio sizes and are out in front for anything in the region of 100k and above. Sub 100k, it is given a

run for its money, in particular by AJ Bell and Aviva and starts looking expensive at lower portfolio sizes. On the face of it, thats the downside of the fixed fee approach. But if youre looking to keep customers on side as they accumulate wealthhorses for courses, we suppose.

(IFO: Inclusive Fee Option)

the arithmeticAny pricing analysis requires some assumptions behind the scenes. Here are ours and they apply to both our ISA/GIA and SIPP calculations:

weve assumed investment in the same range of clean shares and as such, weve just accounted for wrapper and platform charges

as some competitors have switching charges weve assumed a moderate level of fund dealing

weve ignored any day one set up fees, focusing on ongoing charges from year 2 onwards

Weve presented the results as heatmaps. The price leaders at each portfolio size show as green, while the most expensive show as red. In the middle, all kinds of arithmetical wizardry ensures that the colours shade nicely to make the relative price differentials easy on the eye.

What we absolutely do not mean is that green is ok from some kind of FCA viewpoint or an otherwise arbitrary measurement. Its just for your visual enjoyment.

Its a similar story here, albeit in this instance with slightly less of the green further down. ATS remains on the pricey side at lower fund values, particularly at 50k and below, with the likes of FundsNetwork, Nucleus and Aviva ahead of it on the grid.

SiPP

PoundS and Pence

Portfolio size 20k 50k 75k 100k 200k 500k 1m 1.5m 2m 5m

AJ Bell 0.94% 0.59% 0.52% 0.44% 0.32% 0.21% 0.20% 0.19% 0.16% 0.10%ATS 1.19% 0.47% 0.32% 0.24% 0.12% 0.05% 0.02% 0.02% 0.01% 0.01%ATS IFO 1.50% 0.60% 0.40% 0.30% 0.15% 0.06% 0.03% 0.02% 0.02% 0.01%ATS 2014 1.31% 0.52% 0.35% 0.26% 0.13% 0.05% 0.03% 0.02% 0.01% 0.01%ATS IFO 2014 1.38% 0.55% 0.37% 0.28% 0.14% 0.06% 0.03% 0.02% 0.01% 0.01%ARC (AEGON) 0.60% 0.58% 0.55% 0.54% 0.49% 0.24% 0.12% 0.08% 0.06% 0.02%Ascentric 1.42% 0.66% 0.43% 0.38% 0.32% 0.28% 0.26% 0.21% 0.18% 0.13%Aviva 0.40% 0.38% 0.37% 0.36% 0.36% 0.28% 0.22% 0.19% 0.18% 0.16%AXA Elevate 0.64% 0.44% 0.40% 0.37% 0.34% 0.29% 0.25% 0.25% 0.25% 0.10%Cofunds 1.04% 0.59% 0.49% 0.39% 0.27% 0.25% 0.23% 0.20% 0.19% 0.17%FundsNetwork 0.48% 0.34% 0.31% 0.30% 0.27% 0.26% 0.25% 0.25% 0.25% 0.25%James Hay 1.92% 0.77% 0.51% 0.38% 0.35% 0.35% 0.25% 0.18% 0.15% 0.09%Novia 0.50% 0.50% 0.50% 0.50% 0.50% 0.45% 0.35% 0.28% 0.25% 0.19%Nucleus 0.35% 0.35% 0.35% 0.35% 0.35% 0.35% 0.30% 0.25% 0.22% 0.18%Skandia 0.50% 0.42% 0.40% 0.39% 0.34% 0.32% 0.28% 0.24% 0.22% 0.18%Standard Life 0.55% 0.55% 0.55% 0.55% 0.52% 0.48% 0.42% 0.36% 0.33% 0.28%Standard Life (Core) 0.45% 0.45% 0.45% 0.45% 0.42% 0.38% 0.32% 0.26% 0.23% 0.18%Transact 0.90% 0.66% 0.57% 0.51% 0.42% 0.36% 0.29% 0.24% 0.20% 0.12%Zurich ZIP 0.82% 0.60% 0.51% 0.46% 0.38% 0.32% 0.30% 0.27% 0.25% 0.24%

Portfolio size 20k 75k 100k 200k 500k

AJ Bell 188 390 440 640 1,050

ATS 2014 261 261 261 261 261

ATS IFO 2014 275 275 275 275 275

ARC (AEGON) 120 415 540 990 1,215

Ascentric 284 323 380 640 1,400

Aviva 80 277 365 715 1,415

AXA Elevate 128 303 368 688 1,448

Cofunds 208 368 390 540 1,250

FundsNetwork 96 233 300 540 1,300

James Hay 384 383 380 700 1,750

Novia 100 375 500 1,000 2,250

Nucleus 70 263 350 700 1,750

Skandia 100 300 390 680 1,600

Standard Life 110 413 550 1,040 2,400

Standard Life (Core) 90 338 450 840 1,900

Transact 180 428 510 840 1,800

Zurich ZIP 164 383 460 760 1,600

Were a big fan of looking at charges in real money and here we have a cut of the SIPP table that does just that. Now, bear in mind that the ATS price increase is around 25 for the standard trading option. Compare this to the effect of percentage-based charges, especially at higher fund values.

At 500k, the difference is at least several hundred pounds a year and around 2k at the highest point (compared to Standard Life).

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about the lang cat Were a small but no

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the LanG cat viewA price increase is always difficult to communicate but in our view ATS has emerged relatively unscathed. On the face of it, its now even less competitive at the lower end of the range. But then, it always was. Its all about the fixed fee philosophy and the longer term benefit of that for customers with a focus on wealth accumulation.

The change in position on VAT has helped to mitigate the impact for ISA/GIAs and in SIPP land the removal of VAT on the