Freetrade Pro

For an extra £9.99 a month on top of Plus would @Duncan and @adam consider making FX free.

This would be a very attractive feature for a high net worth customer and help draw in those with larger holdings.

It would also defend against FX free offerings from competitors.

The goal of attracting high net worth individuals sounds sound.

However, as far as I can see, £9.99 p/m for free FX sounds like financial suicide, with bankruptcy around the corner, while subsidising high net worth individuals.

I’m not even sure £99.99 p/m would cut it.

I understand FX costs are a pain in the back side. And taxes too. I’m not particularly fond of them either. Nevertheless, paying them assures the maintenance and development of an infrastructure which, though imperfect, allows access to very relevant services.

Access to a reduced FX would be more balanced I believe. Say 0.35 or even 0.30. That would be a very generous discount for an extra £9.99 p/m I think. But even this option is not exempt of challenges.

Proceed with caution

6 Likes

The FX does not come at free cost to FT. At £10, it is equivalent to FX fees currently charged on £2000 trades. FT will then have to subsidise FX when one trades above that which is a significant variable cost. There is also a risk of encouraging more day trading behaviour as opposed to long term investing.

Reducing the FX fee may be more a realistic option. and even then there needs to be a minium investment balance threshold in products that are long term in nature such as SIPP and ISA, which also provide revenues for FT

4 Likes

I doubt many FT users are consistently transacting over £20k /month in US stocks so I can’t see that being popular.

I still doubt many HNW individuals would be attracted by that either, that’s still a minimum of £6.7k -£10k/month for not a great rate.

Degiro charge 0.1% (+trading costs - which round to 0 in these scenarios) and Trading 212 charge 0.15% at no monthly cost and these are mature platforms.

I do think free is probably not on the cards, I think a more reasonable long term expectation (when FT need to pursue FT+ profitability) is swapping out the 3% interest on cash for a reduced 0.1%-0.15% FX (or similar).

2 Likes

I can’t think of much worse than adding more payment options as soon the name Freetrade will be a joke. :joy: As much as it may suit some to have this I would have thought subsidising the richer customers was not a great PR move and lets be honest if the FX would be better by paying 9.99 a month then maybe FT isn’t actually the best broker for you.

I may be wrong but I would guess the bread and butter of FT is people who want simple, clear and easy trading. People who don’t use the forums and just click and buy once a month for example. If not they would go with other providers. I only use my FT above others now most of the time as I love the simplicity compared to Etoro for example. I may actually end up transferring old accounts across due to these reasons eventually.

The more features and options/payment structures then you suddenly become just another platform. It is a very hard line to balance that I guess those at the top have the actual data on to react to what is the best move going forward.

4 Likes

Yes that is the bread and butter - but if your model is to subsidise commission free with FX fees on higher net worth customers… those customers might look elsewhere.

I don’t have the data to hand so can’t make a call on what price point would be sensible, or how many freetraders trade >£2,200 a month.

My point is if those individuals are paying many hundreds of pounds on FX they may move elsewhere and FT will lose the opportunity to keep them with their Plus, SIPP and FX income.

And yes FX doesn’t need to be free if you pay £X a month, but it could be lowered to the true cost.

1 Like

I totally understand the rationale behind the idea but my point is it is then making a very simple policy complicated and a need to monitor changing customers etc. This could be a rabbit hole not really worth going down. :+1:

People trading over 2,200 a month really should probably be with a more complex broker I would of thought.

The end result is that if you make it cheaper for the high rollers then that cost needs to be put elsewhere and that means those lower down the pecking order picking up part of the tab. If you were to make only the high rollers pay extra in another way then surely it is a pointless idea.

The last thing FT need to do is charge more for their base and then lose them. People are constantly trying to find ways of avoiding paying for Plus at the moment so god knows how bad the fallout would be if they passed down some more costs to the lower spenders.

I guess it is all down to who FT want as their base and what they think is long term sustainable and the current model seems to be pretty popular.

1 Like