Cheapest Sipp: build yourself a low cost DIY pension article
Options
Comments
-
Good news thnx, but why don't CS (and others) make this clear?!0
-
HL just reports an incorrect annual fund charge and claims a discount on that inflated price, when the after discount price is really the one that the fund manager offers to everyone who has that fund class.
AXA Framlington says that the ongoing charge for this ZI fund class is 0.57% (page 3). HL claims on its page that the ongoing charge is 0.7% and that they offer a 0.13% discount by offering discounted units.Chickereeeee wrote: »I dont believe so. There are two cases with HL:
1) They have a new fund class/ which has lower charges (eg ISIN: GB00BGLC5L23)
In this case HL is 0.7% is misleading investors about how much AXA Framlington normally charges for this product. AXA Framlington's ongoing charge for this class ZI product is 0.57%.
There is a real fund class Z that has an ongoing charge of 0.70%. That class is available for example via Charles Stanley, which appears not to offer class ZI. I checked a few other places and they also don't offer class ZI but that doesn't mean that no other places offer it. AXA Framlington said in a phone call that it's up to the platforms which classes they want to offer.
There's a change that HL really is offering a class that is only available via HL even though AXA Framlington says that it's at least potentially available to others but that still doesn't excuse HL falsely describing the ongoing charge for the class as 0.70% when it's really 0.57%.There are some where HL appears to offer an actual discount on the fund class that is paid out to customers.
HL says that the ongoing charge for class W of Newton Asian Income is 0.82% and that they offer a saving of 0.13% on that. Morningstar says that the ongoing charge for class W is 0.82% so in this case HL appears to be entirely correctly correctly describing the fund's ongoing charge and the 0.13% rebate it offers on that charge.Chickereeeee wrote: »2) The use the normal share class and offer a rebate (eg ISIN:GB00B8KT3V48)
This class is available for example from Fidelity with a 0.075% rebate vs the 0.13% rebate available via HL, though the platform charge difference means that the Fidelity version may well end up cheaper overall. III offers it with no rebate at all, just the standard 0.82% OCF.
Thanks for providing an example of each of the types that I described, one where HL misleads about the actual provider charge for the fund class and the other where it doesn't.0 -
dunstonh or anyone, do you happen to know of a place that offers class ZI of the AXA Framlington Managed balanced fund, other than HL? Or a comparable discount on class Z? It appears that it's possible and it would be good to give an example of one.0
-
Because obfuscation about prices is routine industry practice in some spots and because it's been standard for years to have the annual charge and the higher cost including some extra charges, previously known as the Total Expense Ratio (TER) with investors being used to that. TER and OCF probably have slightly different definitions of what is included.ikan_bilis wrote: »Good news thnx, but why don't CS (and others) make this clear?!
It's just part of learning, confusing initially but you get used to it.0 -
There's a change that HL really is offering a class that is only available via HL even though AXA Framlington says that it's at least potentially available to others but that still doesn't excuse HL falsely describing the ongoing charge for the class as 0.70% when it's really 0.57%.
HL were claiming they had negotiated the lower fund charge, obtained by having a new fund class, because of their volumes/marketing or some such tosh, which were not available elsewhere. I could never really see what was in it for the fund managers, and 'give us a lower price and we will push your product to our punters' seems a bit low-rent (I guess they were called fund supermarkets).
I suspect the funds that have the rebate (second example I gave) on a normal class rejected HL's approach and HL fund the rebate from their own pocket?
C0 -
Chickereeeee wrote: »HL were claiming they had negotiated the lower fund charge, obtained by having a new fund class, because of their volumes/marketing or some such tosh, which were not available elsewhere. I could never really see what was in it for the fund managers, and 'give us a lower price and we will push your product to our punters' seems a bit low-rent (I guess they were called fund supermarkets).
I suspect the funds that have the rebate (second example I gave) on a normal class rejected HL's approach and HL fund the rebate from their own pocket?
C
When funds moved to unbundled pricing, a number of them didnt reduce their charge by the amount of the commission that was being paid. So, they left scope to offer superclean pricing to a number of platforms without it impacting on their profitability.
It should be noted that to get superclean, you normally have to promise a certain amount of business going their way.
HL were in the press today supporting commissions for the DIY market when both Labour and Conservative seem intent on removing commissions from the DIY market and moving it to fee basis.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
HL were in the press today supporting commissions for the DIY market when both Labour and Conservative seem intent on removing commissions from the DIY market and moving it to fee basis.
Commissions for DIY? I thought we'd already got rid of all of that nonsense.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
I think stuff like annuities still have commission DIY. It would be a good idea to abolish it.gadgetmind wrote: »Commissions for DIY? I thought we'd already got rid of all of that nonsense.0 -
HL doesn't pay, the fund manager does. In those cases the fund manager rebates part of the annual charge via HL. Platforms can negotiate discounts like that and could and did before as well.Chickereeeee wrote: »I suspect the funds that have the rebate (second example I gave) on a normal class rejected HL's approach and HL fund the rebate from their own pocket?
An example of this is Aberdeen Emerging Markets Equity. Near the start of 2014 the bundled version was available from HL under these terms:When funds moved to unbundled pricing, a number of them didnt reduce their charge by the amount of the commission that was being paid. So, they left scope to offer superclean pricing to a number of platforms without it impacting on their profitability.
SEDOL 3322819
Class: not noted, probably A
AMC 1.75%
Rebate/Loyalty Bonus 0.25%
Commission paid by Aberdeen: 1.025%
Commission kept by HL: 0.775%
Net AMC 1.50%
Net TER 1.69%
Potential net AMC/TER if all commission rebated 0.725% / 0.915%
When I first checked new pricing the unbundled version was:
SEDOL 3322756
Class I
AMC 1.0%
Rebate/Loyalty Bonus: nil
Commission 0.275%
At that pricing the fund manager was making more from the "unbundled" form than from the "inclusive" one.
Now the same name fund is available under these terms in inclusive form:
SEDOL B0L0ZR0
Class D (apparently D2)
OCF 1.99%
Rebate/Loyalty Bonus: 0.75%
Net ongoing charge 1.24%
And the unbundled form is:
SEDOL B7884X5
Class R2
OCF 1.24%
Rebate/Loyalty Bonus: nil
Commission paid to HL: unknown
So it appears that Aberdeen is now charging about 0.25% more for this fund than they used to, at least when buying it via HL, unless HL is somehow keeping commission from the unbundled form and not disclosing the fact. It also appears that some of this came at the cost of squeezing HL's commission down.
Sources: my notes of the charges and commission in the past.0 -
And for the FCA to make it mis-sale by default to sell an annuity to a person without providing an illustration of what they could get from keeping money in cash while deferring their state pension and paying out an income equal to state pension plus proposed annuity during the deferring time.I think stuff like annuities still have commission DIY. It would be a good idea to abolish it.
I haven't yet noticed someone here reporting being sold an annuity close to state pension age after 6 April 2015. When that happens I will recommend that they make a mis-selling complaint seeking redress of the difference between annuity income and increased state pension if they were not told of the option to defer their state pension. If that complaint is rejected I'll suggest that they take the matter to the FOS and ask the FOS to refer it to the FCA for the FCA to consider the clearly adverse outcome for the customer and whether explicit regulation is required.
We don't have to just sit back and accept widespread abuse of annuity customers by annuity vendors.0
Categories
- All Categories
- 343.2K Banking & Borrowing
- 250.1K Reduce Debt & Boost Income
- 449.7K Spending & Discounts
- 235.3K Work, Benefits & Business
- 608.1K Mortgages, Homes & Bills
- 173.1K Life & Family
- 247.9K Travel & Transport
- 1.5M Hobbies & Leisure
- 15.9K Discuss & Feedback
- 15.1K Coronavirus Support Boards