According to research by Investment Week, none of the main D2C investment platforms allow clients to upload and action externally created portfolios.
Neil Woodford may have a hard time executing his attempt at a comeback to the investment world, given his subscription-based portfolio model is unsupported by major retail platforms, Investment Week has found.
In April, Investment Week broke the news of former fund manager Woodford's plans to attempt yet another comeback to financial services, this time through the launch of an ‘active strategy' platform.
Under the plans, the disgraced fund manager teased the construction of a portfolio platform. This would include the creation of three portfolios to begin with – one income and growth, one income and one growth – which could be customised and tailored by the investors themselves.
Neil Woodford teases launch of 'active strategy' platform
Subscribers to Woodford's platform – called W4.0 – would also have access to his views and insights, as well as to any rebalances and position changes made to the portfolios by the ex-manager himself.
However, the way Woodford said this would work is by subscribing to W4.0 for an undisclosed sum to gain access to the portfolios and download them as they are, or customise them according to investors' needs before download.
Subsequently, Woodford claimed investors would be able to action these portfolios through their existing investment accounts, including ISAs, SIPPs, platform or brokerage accounts.
In his initial announcement, he said: "Because we are not bound by the constraints of fund launches or minimum sizes, I can share more strategies, more ideas, and more updates than would ever be possible in a traditional fund structure.
"At its heart, W4.0 is a community platform — a place for investors who believe in research-led, long-term investing. I will be there too, sharing insight through video, writing, live sessions, and active discussion groups."
However, it seems that Woodford's plans may not be as straightforward as hinted in his newsletter, and they may even be impossible to pull off.
According to research by IW, none of the main D2C investment platforms allow clients to upload and action externally-created portfolios.
AJ Bell, Hargreaves Lansdown, Fidelity and eToro all told IW that the way Woodford has pitched for subscribers to 'copy' over his active portfolio would not be possible.
The only platform that could not ascertain whether such a feature would be available or even feasible for its business was interactive investor.
Compliance questions loom over Woodford's portfolio platform plans
AJ Bell said "there is no way for people to upload or automate the process to copy another portfolio through". If investors wanted, they would need to copy the Woodford-made portfolios manually, executing each trade individually.
Fidelity and Hargreaves Lansdown also said that such a feature was not available nor possible on their respective platforms either.
eToro does offer a ‘CopyTrader' tool, where investors can copy the portfolio of other investors on the platform and automatically trade when the original portfolio trades, however this is not available for copying mandates from external sources or platforms.
eToro's UK managing director, Dan Moczulski, told IW the platform "does not support auto-importing or executing portfolios built on external platforms". As with the other retail platforms, if eToro clients wished to follow Woodford's trading advice, then they would need to place each trade themselves one by one.
If investors want to use the portfolios created by Woodford on his W4.0 platform and replicate them themselves on their respective accounts, this will come at a cost.
Almost all the investment platforms mentioned in this piece will charge platform fees based on the sums invested – which, for the five biggest names in the UK mentioned above, will range between 0.1% to 0.5%, depending on the type of account, assets and provider.
Additionally, placing trades individually has extra charges, as platforms will either levy a fee per trade or depending on the number of trades made.
For instance, AJ Bell has a £1.50 dealings costs for funds and £5 for shares (down to £3.50 for frequent dealing); ii charges £3.99 for UK and US shares as well as funds, ETFs, gilts and bonds, and £9.99 for international shares.
Fidelity's trading costs range between £1.50 and £30, depending on the trades and how they are placed (online or over the phone); whereas HL's charges are based on the number of deals, from £11.95 for up to nine deals a month to £5.95 for 20 or more deals.
The only firm that seemingly does not charge any platform nor trading fees is eToro.
One could argue that Woodford could replicate his strategies on any such platforms to make it easier for investors to access and copy them, but that would go against the subscription-based model he has set out for W4.0.
As such, potential W4.0 clients would not only have to pay to access Woodford's portfolio selection, construction and views, but also incur additional charges – sometimes significantly so – to replicate the ex-fund manager's strategies.
Such a process would make it burdensome for investors who will need to manually replicate Woodford's portfolios – as well as rebalance them any time he does so on his platform – but also incur several charges they may not need to pay should they stick to other investments or portfolios already available on their respective platforms.
Woodford 4.0: Why he must leave retail investors out of latest comeback plan
This situation could considerably hinder Woodford's ability to make his portfolio platform viable and successful, but when asked by IW whether this could dampen his attempted comeback to the world of investment, he declined to comment.
Additionally, there is still no update from the Financial Conduct Authority on whether any enforcement action will be taken against Woodford and/or Woodford Investment Management (WIM).
The regulator issued a warning notice against both Woodford and WIM in April 2024, as its investigations on the matter had completed.
According to FCA procedure, the former manager and his eponymous firm had around 11 months to provide representations and engage with the watchdog to either accept or challenge its findings.
If a settlement cannot be achieved, the matter is handed back to the FCA's regulatory decisions committee, which decides whether to issue a formal notice or not.
If it does, Woodford and WIM will have the opportunity to challenge the FCA's findings and decision at the upper tribunal, which usually takes more than a year to deliver a judgement on the matter.
