The ISA whilst amazing value is a high cost for someone starting out.
But from a FT investor perspective they also provide a predictable income for the company.
To make it easier for beginners FT could offer credits for having an ISA which could be used to for instant orders in the first year.
This exposes them to instant orders which they might learn to prefer, and encourages them to be a more active user.
Even something like one free order a month would be a nice idea and an extra incentive.
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Although great idea from a consumer point of view (more for less is always better!), it’s a bad idea from a business pov and not one I’m inclined to agree with either.
As you said the ISA is ridiculously good value for money especially considering it’s not % based, but giving away free instant trades would discourage people signing up for Alpha.
Personally it would make more sense for Alpha to provide some kind of deal e.g. First month for a discount etc. But even then I wouldn’t expect this until Alpha is more established as being a success.
Trying to tie a perk from one into another is never a great idea, and if people really struggle to justify spending £3/pm for an ISA then maybe FT just need to advertise the advantages in a clearer fashion to those who might not understand the value.
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Perhaps giving options is the way to go - allow the user to choose between a flat fee and a % - while demonstrating with a few examples what the charges would be. Probably only allow them to change once per year (beginning of tax year perhaps?)
Another option would be to charge % with a maximum charge of £x - in that way both investor types would benefit.
I think Alpha should be separate to this - to me that would be a subscription that offers fancy insights, instant trades, watchlist etc
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I agree with this approach. % up to £3 per month. Would encourage more to start with an ISA and allow the gradual ramp up of charges. Freetrade win as even a small percentage charge is better than no charge as users currently choose between free or £36 per year…
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Agreed from both a user perspective and an investor perspective. FT’s argument is that the cost to FT of an ISA is £36/year but there must also be a cost of free accounts as well. I’d rather be paying FT something than nothing but at £3/month it makes no sense for a small investor.
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That was what I was thinking…
Credits for limit orders would attract small fish that will eventually grow in to big fish that will appreciate the value of premium features.
I’d leave the ISA pricing where it is: the story is simple and clear, and I’d guess the price level is good value for the average ISA account size.
Most of the solutions we’re discussing here - eg a percentage fee with a flat rate cap - add complexity on both the backend and to the messaging. It might be better to spend the effort on comms that helps customers understand whether they should/n’t get the ISA/stick with the GIA.
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I agree the ISA fee is fine. The fact it includes stocks with no dealing charges and the platform fee is essentially low, flat and not a percentage of the portfolio value is already a huge advantage over competitors.
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