Query about how Stocks and Shares ISAs work

ceilingfish

Hi Chaps,
I have been looking at investing in a stocks and shares ISA and I'm a little bit unsure of what my options are. I can get a Stocks & Shares ISA from my current bank, but I can also get one from Hargreaves Lansdown. It seems that the charges will be different, but will I also have a different set of funds available to me through the different accounts? If so, is this a general rule for Stocks and shares ISAs? Do different accounts have access to different sets of funds?

It's my first time with stocks and shares so I just wanted to understand exactly what I was doing before I put my money somewhere unfortunate!

Tom

dunstonh

I can get a Stocks & Shares ISA from my current bank

Expensive and poor quality with limited options available.

It seems that the charges will be different

Correct. If you buy from a bank you are being sold to under a sales process where the sales rep has to be paid. If you buy from HL (who are IFAs) then you are buying under "execution only" where they act on your instructions. This reduces the liability to them as you cannot complain to the FOS. Plus its a bit of a factory line so you dont need an expensive FPC3 qualified individual to process the work.

but will I also have a different set of funds available to me through the different accounts?

They are not accounts. You must not think of them that way. The bank will have it's tied funds available. HL, like all IFAs, will have access to the whole of market.

If so, is this a general rule for Stocks and shares ISAs?

Yes. There are potentially around 50,000 different types of investment you can place in an ISA. The ISA is a container for those investments. Some containers will restrict what you can put in them (like the bank) whilst others will offer a large range of an almost unlimited range.

It's my first time with stocks and shares so I just wanted to understand exactly what I was doing before I put my money somewhere unfortunate!

HL will not give you advice. You pick the funds, you accept the liaiblity if you mess it up. The bank actually is not much different in that you pick the fund but they limit the options to match your risk profile. The bank accepts the liability for bad advice. The third option, which you havent covered, is to use an IFA for advice which gives you the whole of market access but allows the IFA to build the portfolio and take the liability.

Typically execution only is the cheapest method (HL a good example here), The IFA giving advice is next and the bank is last.