Hargreaves Lansdown has been commended by digital wealth manager Nutmeg for removing its exit fees, deemed a punishment to investors wishing to change providers.
Martin Stead, Nutmeg CEO, says, “Hats off to Hargreaves Lansdown! for finally following Nutmeg’s lead!”.
He describes exit fees as a “barrier to competition” and a punishment to investors unhappy with existing providers and wishing to seek lower costs elsewhere.
Hargreaves Lansdown announced the removal of exit charges on Thursday and called on rivals to follow suit.
Interactive Investor is another wealth manager to remove exit charges, which it did in July.
The UK wealth manager’s account closure fee was previously £25 plus VAT. A total of nine charges have been ditched, as part of what Hargreaves calls a “simplification of its fee structure”.
Danny Cox, head of communications at Hargreaves Lansdown, said: “Our new tariff is simple, transparent and great value for money. From now on, online clients will simply pay a platform service fee, and for their share deals, and nothing else.
“We continue to support a ban on all exit fees, provided this is industry wide and not just confined to platforms, which would distort the market.”
Commentators believe the move puts pressure on the likes of St James’s Place to scrap their own fees which come under fire for being punitive to clients.
Martin Stead concludes that Nutmeg, “calls on St James’s Place and others to eradicate their outrageous exit charges once and for all.”
Stead states that Nutmeg have never charged exit fees and believes the robo-adviser can expect to attract a number of Hargreaves Lansdown thanks to the move.
While Nutmeg’s robo-advisory offering largely appeals to beginners to investment, Hargreaves Lansdown’s DIY platform is more likely to attract the more active investor with some knowledge and confidence to pick their own stocks and funds.