Fund supermarkets.

Reaper

dunstonh wrote: »

I suspect their SIPPs will come down in price as they are expensive at the moment.

Thanks for the response but this bit doesn't make sense to me. The HL SIPP is the cheapest by my reckoning (which is why I have one) and Martin says the same in his article.

EDIT: Mind you I just re-read Martin's article and it needs an update. He says "Decent cash interest rates. If you are keeping money in cash, the interest rates are very good for amount over £7,000". Actually the rate is 0.08% net :rotfl:

Jake'sGran

Rollinghome wrote: »

Cavendish Online, Alliance Trust , Clubfinance, or Hargreaves Lansdown , depending on what you need.

Details http://www.candidmoney.com/actionplans/actionplan3.aspx

I have not heard of some of the ones in the first paragraph and Alliance Trust is not usually described as a funds supermarket. I have only ever bought Investmest Trust from them. What you need to be looking for is a broker who discounts the initial charge levied by the the companies they buy the funds from such as Hargreaves Lansdown or The Share Centre. HL are generally considered to be the most competitive. They give extra units with the initial fee and also rebate a small amount of the annual commission they get.

Fidelity is a first class company but they don't usually rebate the initial fee except in special circumstances e.g. the current offer period for their China Special Situations Investment Trust. NB Investment Trust are different to Unit Trusts or OEICS.

dunstonh

Thanks for the response but this bit doesn't make sense to me. The HL SIPP is the cheapest by my reckoning (which is why I have one) and Martin says the same in his article.

Martin is not a financial adviser and doesnt have access to the data we have. If you buy say Inv Perp High Income fund on HL's SIPP, it will cost you 1.5% p.a. I can get that fund (and others within fund supermarkets cheaper than that). HL's SIPP is really a fund supermarket pension. So, compare it to other fund supermarket pensions and its ok but it's hardly discounted at all (annual charges are not discounted - only initial). It was cheaper for a while but things move on.

jamesd

Reaper, HL's SIPP isn't necessarily cheapest. It typically is for smaller pension pot sizes and early years and I have about 20% of my pension pot in it at the moment. You can pay say £100 for an execution only buy of a pension from some other IFA and then the 0.5% of the fund annual charge that is included at HL isn't charged at all.

Say you had £10,000 to put into Invesco Perpetual High Income and you could get a pension that removed 0.5% of the annual charge for a one-off fee of £100.

Year 1 HL: 1.5% fund charge, costs you £150
Year 1 X: £100 fee plus £100 from 1% fund charge

Year 2 HL: 1.5% fund charge, costs you £150
Year 2 X: £100 from 1% fund charge

Cost so far: HL £300, alternative £300. But the alternative is costing you £50 less a year so you're ahead for all future years. If you're investing less money it takes longer to get ahead.

You don't pay £100 per fund, it's a charge for the whole pension setup. The charge will depend on the IFA you're buying from and the pension you're buying.

If you want just a plain FTSE All-Share tracker it'd be harder for dunstonh to compete because HL offers one at 0.27% TER. But the Invesco Perpetual fund has a long record of outperforming a FTSE All-Share tracker so cheaper isn't necessarily best.

Dunstonh, can you match that FTSE All-Share tracker rate on execution only terms somewhere? Or with an ETF rather than fund?

The article Martin has here isn't right or wrong, it depends on what you're investing in and with how much money, as it often does with investment products.

HL is a very good starting point for many people, with a very wide range of investment options, though, and I'd usually suggest starting out with it just because it's so easy to get started with and do some learning when starting out. It can also be a lot easier to buy the HL SIPP at a competitive price than to buy an alternative at a very low price from another IFA. This also helps to make it a good one for Martin to suggest: the certainty that the deal will be decent, if perhaps not the absolute best for a particular person. Just getting people started is half the battle and HL makes that very easy.

Linton

Jake'sGran wrote: »

Fidelity is a first class company but they don't usually rebate the initial fee except in special circumstances e.g. the current offer period for their China Special Situations Investment Trust. NB Investment Trust are different to Unit Trusts or OEICS.

They do for their online service:
Quote from their website:

"
Online savings

• the typical initial charge is just 1.25% representing a saving of over £200 compared to buying direct from the fund company*
• low cost online switching - typically 0.25%**
• even greater savings on selected funds when you become a Fidelity investor"

dunstonh

If you want just a plain FTSE All-Share tracker it'd be harder for dunstonh to compete because HL offers one at 0.27% TER. But the Invesco Perpetual fund has a long record of outperforming a FTSE All-Share tracker so cheaper isn't necessarily best.

Dunstonh, can you match that FTSE All-Share tracker rate on execution only terms somewhere? Or with an ETF rather than fund?

We have access to the Fidelity Moneybuilder UK index tracker at 0.1%. All the blackrock CIF trackers at 0.2% and they have very low tracking errors as well as covering most sectors (including emerging markets). HSBC and L&G trackers are on there but they are not as good.

The main gain will be on managed funds where part/all of the trail can be rebated which is something HL dont do.

At the moment, HL are really the only largescale IFA that can handle the traffic that Martin sends their way. However, with the platforms gearing up for post RDR allowing smaller firms to compete on a level playing ground, choice should increase.

Rollinghome

Reaper wrote: »

That is an alarming thought. Does that mean the end of execution only discount brokers? Surely not. I'd better go and read up on what these new rules are.

Certainly not. If anything the reverse unless IFAs get real and offer fee based advice at a realistic price. It will come as shock to many when they realise that advisers with only basic requirements can't charge the fees demanded by properly qualified professionals in fields with high educational requirements. As always competition will drive down prices to what the customer is willing to pay.

Jake'sGran wrote: »

What you need to be looking for is a broker who discounts the initial charge levied by the the companies they buy the funds from such as Hargreaves Lansdown or The Share Centre.

Jakes Gran, there are 16 firms listed on that link that eliminate the entire initial charge. http://www.candidmoney.com/actionplans/actionplan3.aspx

jamesd

Rollinghome, the table isn't entirely accurate.

Take Cavendish for example, listed as having 100% initial and 100% trail rebated. That's often true for the initial buy but not always, it's 0.25% for Aberdeen Emerging Markets even though it's 0% for Invesco Perpetual Income. Both are 0% at HL. Also "The switching fee charged by Fundsnetwork is just 0.25%" and that's usually higher than the normal 0% from HL for a fund switch. It doesn't seem as though this 0.25% is added to the initial purchase, though. Work out what their £25 admin fee (apparently for putting money in) adds and it's not so cheap as it seems.

Whenever I've done comparisons of Cavendish and HL I've found that for the funds I was checking there was a lower initial charge overall with HL than with Cavendish.

Jake'sGran

Linton wrote: »

They do for their online service:
Quote from their website:

"Online savings

• the typical initial charge is just 1.25% representing a saving of over £200 compared to buying direct from the fund company*
• low cost online switching - typically 0.25%**
• even greater savings on selected funds when you become a Fidelity investor"

I am getting confused, 1.25% is part of the initial fee whereas with HL , depending on the fund, they may refund all of it.

Rollinghome

James, I doubt they've been able to check out every fund offered. Just as H-L charge an additional 0.5% on top of the fund managers' charges within an ISA in some instances. Nor do H-L refund the entire initial charge in all cases, notably for Jupiter funds.

People will need to check out all the terms themselves including addititional charges for certain services that some make. It won't be one size fits all. It's a guide that's all.


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