Platform reforms are changing the landscape for fund investors

I realised on Wednesday morning that there is a chance I have been in this business too long. I woke with a sense of excitement rather as children sometimes do at Christmas. Why? Because I was really looking forward to finding out how Hargreaves Lansdown (HL), Britains best-known online investing platform, was going to change its pricing structure to comply with the new set of Retail Distribution Review rules.

Would there be a flat fee? Would it be simple? Would it be transparent? Would my mother understand it? Would it cost me less? Would the change be as disruptive to the market and as exciting as Hargreaves Lansdown itself was when it first launched all those years ago?

Oh dear. The key lesson for me is that if you ever allow yourself to get excited about possible innovation in the financial industry, you will be sorely disappointed. Days later, Im still a tad irritable about the whole thing.

The system isnt as bad or even as rapacious as it could be. HL is very solvent and service-orientated and most people dont much mind what they pay them. But the new structure just isnt particularly interesting, innovative, inexpensive or simple.

The booklet I got in the post this week from HL has a promising title: Changes to the Vantage Service explained. The rest is less promising. It contains 17 pages explaining the changes to the charges. They addled my brain.

The upshot is that if you are a traditional fund investor you will pay HL a bit less overall, but if you are a passive investor or if you have a thing for individual stocks and investment trusts (as I do), you will pay a bit more.

Im none too keen on the treatment of investment trusts (although there is a good new regular investment service) and the tiered charging based on the value of your investments. I had really hoped that it might take transparent flat-fee pricing mainstream. Instead, like the rest of the ad valorem obsessed industry, HL has claimed that this structure is fair.

It isnt remotely fair; it doesnt cost that much more to administer large accounts than small, so making those with large accounts pay more effectively forces them to subsidise the less well off. We dont need stockbrokers to redistribute wealth in this manner: thats what we have governments for.

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Platform reforms are changing the landscape for fund investors