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Hargreaves Lansdown "playing hardball"
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If I were a shareholder, I would want higher profit, rather than higher profit margin. I am sure they do not have unprofitable accounts, just less profitable ones (£2 per month per fund per investor for doing nothing seems pretty good).
They already have a massive profit margin.illegitimi non carborundum0 -
I've just checked the actual effective platform charge I'm paying HL via commission and direct fees combined:
SIPP managed funds: 0.68% overall: 0.39%
ISA managed funds: 0.65% overall: 0.63%
These are weighted by my holding sizes for each fund, so it's a true reflection of what they are getting from me overall. For the managed funds the net cost to me is reasonably comparable to my work's group personal pension, which has 0.25% in advice and consultancy charges included.
Here are some sample net (after rebate) commissions HL is getting:
0.060 in fixed platform fee, Vanguard FTSE Developed World, AMC 0.30
0.775 Aberdeen Emerging Markets, AMC 1.75%
0.655 Threadneedle European Smaller Companies, AMC 1.5%
0.800 Old Mutual UK Smaller Companies, AMC 1.75%
0.587 Invesco Perpetual Distribution, AMC 1.38%
0.605 JPM Natural Resources, AMC 1.5%
0.805 Threadneedle China Opportunities, AMC 1.5% highest HL cut I saw
The highest one is of interest because HL is getting more than the fund management company. Old Mutual UK Smaller Companies is of interest because the total commission is 1.05%, the highest I saw. Next is 1.025% for Aberdeen Emerging Markets. Lowest commission is 0.7%. Lowest HL cut is 0.55%, which is the most common cut for the funds I hold, applying to 20% of them.0 -
If I were a shareholder, I would want higher profit, rather than higher profit margin. I am sure they do not have unprofitable accounts, just less profitable ones (£2 per month per fund per investor for doing nothing seems pretty good).
They already have a massive profit margin.
the context is that the total assets held on platforms has been rising rapidly over the last few years, and that's generally expected to continue. there's growth in both platforms used by intermediaries and direct-to-consumer platforms (such as HL's).
there may also be some smaller investors leaving (I)FAs and going to D2C platforms, due to reduced cross-subsidies of (I)FAs' smaller clients by bigger clients.
this is all about assets being moved. not about assets growing due to rising markets. (who knows whether the latter will continue?)
in this context, HL would be doing badly (from a shareholder's point of view) if they can't at least maintain their share of the growing D2C platform market. it would be foolish to maximize margins now, at the expense of not growing assets under administration.
so far, HL have been attracting assets at a very good rate, despite not being the cheapest under most circumstances. i'd expect them to cut prices if they have to. management has made it clear that they are about gathering assets.
the question is how far they'll need to cut prices. the greater transparency of RDR2 will presumably push them to cut a bit. but how much? most ppl are not as price-sensitive as many MSE-ers are
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They would lose many of the more price sensitive and astute investors, but in doing so they may also be removing those individuals who are taking advantage of the cheap trackers and so potentially reducing their average margin.
HL aren't cheap for trackers with their platform charge so they have probably already lost a number of customers (myself included) who have moved trackers away from them.
They've now announced that the pricing will be revealed on 15th Jan.Remember the saying: if it looks too good to be true it almost certainly is.0 -
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No they are not. They just limit the size of your tracker tax.illegitimi non carborundum0
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On most trackers, Vanguard being an exception, they've also been getting 0.1% - 0.2% from the AMC as well the extra £2 platform charge. Fidelity got the same but didn't make an extra charge.grey_gym_sock wrote: »i don't follow. if you have £48k in 1 tracker, and HL are charging £24 p.a., that's 0.05% - i'd call that cheap. do you expect them to charge nothing?
Will be interesting to compare the net cost for those examples when their new fees are announced next week.Here are some sample net (after rebate) commissions HL is getting:0 -
Ah I misunderstood. I thought you meant large tracker holding like £4,800 x 10.grey_gym_sock wrote: »i don't follow. if you have £48k in 1 tracker, and HL are charging £24 p.a., that's 0.05% - i'd call that cheap. do you expect them to charge nothing?illegitimi non carborundum0 -
Here are the residual AMCs after deducting all of the commission:Rollinghome wrote: »Will be interesting to compare the net cost for those examples when their new fees are announced next week.
0.730 Aberdeen Emerging Markets, AMC 1.75%
0.700 Threadneedle European Smaller Companies, AMC 1.5%
0.700 Old Mutual UK Smaller Companies, AMC 1.75%
0.600 Invesco Perpetual Distribution, AMC 1.38%
0.650 JPM Natural Resources, AMC 1.5%
0.700 Threadneedle China Opportunities, AMC 1.5% highest HL cut I saw
And a few more:
0.690 Invesco Perpetual Income
0.700 M&G Global Basics
0.660 Artemis Income Retail Acc AMC 1.50 rebate 0.125 com 0.840 net com 0.175
0.600 Cazenove UK Smaller Companies Class B Acc AMC 1.50 rebate 0.25 com 0.900 net com 0.650
0.500 HL Multi-Manager Income & Growth Trust Acc AMC 1.00 rebate 0.15 com 0.500 net com 0.350
0.391 Lindsell Train Global Equity Class A GBP Inc AMC 1.15 rebate 0 com 0.759 net com 0.759
0.600 Marlborough Multi Cap Income Retail GBP Acc AMC 1.50 rebate 0.10 com 0.900 net com 0.800
0.750 Marlborough UK Micro Cap Growth Acc AMC 1.50 rebate 0.150 com 0.750 net com 0.600
0.620 Newton Asian Income Inc AMC 1.50 rebate 0.20 com 0.880 net com 0.680
0.700 Old Mutual UK Smaller Companies Class A Acc AMC 1.75 rebate 0.25 com 1.050 net com 0.800
0.800 Standard Life Inv Global Smaller Companies Retail Acc AMC 1.70 rebate 0.10 com 1.000 net com 0.900
0.870 Standard Life UK Equity Unconstrained Acc AMC 1.80 rebate 0.1 com 0.930 net com 0.830
The last group is what HL described as the most popular funds for their SIPP customers in December 2013, in alphabetical order. Here are the rest of the funds they described as most popular in 2013 for all account types:
0.620 Newton Emerging Income Retail GBP Acc AMC 1.5 rebate 0.100 com 0.880 net com 0.780
0.620 Newton Global Higher Income Acc AMC 1.5 rebate 0.200 com 0.880 net com 0.680
0.500 HL Multi-Manager Special Situations Trust Acc AMC 1.0 rebate 0.15 com 0.50 net com 0.35
0.690 Invesco Perpetual High Income Acc AMC 1.50 rebate 0.25 com 0.810 net com 0.56
0.690 Invesco Perpetual Income Acc AMC 1.5 rebate 0.25 com 0.810 net com 0.56
0.625 JO Hambro UK Equity Income Class B Acc AMC 1.25 rebate 0.125 com .750 net com 0.625
It will be very interesting indeed to see whether fund managers are using the change to clean or super-clean pricing to increase their cuts.0
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