Investors could cut their investment fees by going to the gym or walking 10,000 steps a day under a new health-driven initiative by insurer Vitality.
Investors could save hundreds of pounds on platform fees by undertaking activities such as joining Weight Watchers and hitting their ‘goal weight’ under the scheme dubbed ‘Healthy Living Discount’.
Vitality already offers discounts for healthy living to holders of its life or health insurance policies, but it is now being rolled out to those who invest pension or Isa products.
For those who jump through all the necessary hoops, it is possible to get the platform charges down to zero.
Investors who lead a health lifestyle – measured using data from a fitness device like a Fitbit – can save on platform fees under Vitality’s Healthy Living Discount
However, even with zero platform fees, investing in this way is not necessarily the cheapest option.
To qualify, you need to sign up for either Vitality’s newly launched stocks and shares Isa, junior Isa or its retirement plan. These products are only available through a financial adviser – which could mean relinquishing up to 1 per cent of your investment to cover the intermediary charge.
You’ll also be required to have a VitalityLife or VitalityHealth policy with access to the insurer’s healthy living programme, which although offering their own benefits also mean further costs.
To gain points joining Weight Watchers, a gym or using a fitness device also costs money, although Vitality offer offers discounts or deals for these.
What’s more, customers need to provide the insurer data from a fitness device like a Fitbit to prove they take regular exercise.
So is it worth it? We take a look.
How does it work?
The initiative uses a points-based system.
Customers gain points in a number of ways including, completing an online health review, tracking their daily activity – walking, running, cycling, swimming, going to the gym or having regular health check-ups.
The fees for customers who are not Vitality members or those who currently have a Bronze status – less than 800 points – ranges from 0.5 per cent on a £30,000 or less investment to 0.15 per cent for those above £500,000.
The discount kicks in once a customer achieves ‘Silver’ status by earning 800 points. Here, the charge on a £30,000 falls to 0.4 per cent. The levy is stepped down further still at ‘Gold’ status to 0.25 per cent.
Platform fees are eliminated entirely if they are able to cross the 2,400 points threshold to obtain Platinum status.
This is by no means an easy feat.
To put this into context, visiting a gym three times a week for eight weeks would only get you 120 points. You’d have to lead an incredibly – and measurably – healthy lifestyle to have any chance of eligibility.
Remember, platform fees form a part of the overall investment cost, so fund charges still apply.
What about the funds?
Vitality has partnered with investment firms Investec Asset Management and Vanguard to launch two fund ranges through its newly-formed investment arm called VitalityInvest.
Investec heads up the suite of actively managed funds – those that seek to outperform a market index like the FTSE 100. The range includes a fund investing in UK companies and another with a global mandate to provide income periodically and some capital growth.
The insurer says the ongoing charge for these products is between 0.88 per cent and 1.03 per cent.
Vanguard is responsible for the range of multi-asset risk-targeted funds. These products are designed to replicate the performance of a benchmark index and each levy an ongoing charge of around 0.40 per cent according to Vitality.
The funds are available through the insurer’s stocks and shares Isa, junior Isa and retirement plan – all available exclusively through financial advisers.
A spokesperson for the firm said investors will be able to set up an Isa directly from autumn.
In addition to the Healthy Living Discount, investors who hold their cash in Vitality funds will receive an additional top up to their savings.
This scales from 2 per cent to 4 per cent every five years.
Vitality say a customer could receive £12,700 through the initiative assuming an initial investment of £30,000 grew by 4 per cent every year with fees deducted, to £79,900 after 25 years.
Is it worth it?
The biggest sticking point here is the money saving initiatives are only available through a financial adviser, so any investment savings would effectively be diluted, if not completely nullified, by the intermediary fee.
In theory, this cost could be dodged by waiting for the Isa products to be made available for direct purchases, but investors could probably find a similar yet cheaper products through another investment platform.
However, some may argue that the real value of the Healthy Living Discount is not monetary but in the healthy lifestyle the initiative encourages and rewards customers to lead.
Ben Yearsley, director at Shore Financial Planning, said: ‘Unless you have a VitalityHealth plan, there isn’t really any reason to choose this for your investments or pension as most investors would typically pay more for a restricted fund range.
‘Where it does get interesting is if you have a health plan with the insurer and you get to platinum level.
‘I’ve been a VitalityHealth member since late February and I’m borderline gold. I can’t see how I would get to platinum.
‘At platinum level you have no platform fees. That’s the power of cross selling and where the industry is trying to go. Offer clients everything instead of one part of their life.’