Hagreaves Lansdown - Poor Independent Advice and Asset Management

PatrickGrant

Answers:

1) Other than maybe warning other investors, what do you wish to acheive by posting on the forums?

>>> There is certainly an element of warning here. From what I can see, there have to vey large question marks over the independence of Hargreaves Landown Financial Advice and Investment Services. It has cost me quite a lot - put that in thousands.

2) Over this period, did you not have reviews of how your investments were performing and raising questions as to charging structures etc?

After a fashion. For example, this contained charts that did not make the true extent of the failure to reach the benchmark very plain. Nor was there any exaplantion given about why benchmarks were not reached and what would be done in response to that situation.

3) it is very easy to select the best funds with hindsight, how does anyone select them in advance?

I do not disagree but to not go above the sector average for four consective years ??? The chances of that are 1/16. But more importantly, it looks like HL investment choices benefitted HL more than its customers. This type of portfolio I invested in should return around 5% pa. If the selections were funds investing in other funds there was a double layer of costs - say 4% assuming average TER of 2%. That kills growth and HL must reasonably have known it, it is merely a way of HL getting 80% of fund growth.

>>> I had hoped to get some feedback forum members who have had Independent Financial Advice from HL or who had experience of using HL's Discretionary Investment Management Service. I have not received any replies to those questions so far which is a shame.
>>> I have written to HL to request compensation. I have asked them to compensate me up to the level that would have been achieved if their Discretionary Management had achieved its benchmark. The reason I have given for expecting compensation is questionable Independent Financial Advice and questionable stock picking on behalf of Discretionary Customers. If HL decide not to compensate, I will refer the matter to the regulatory authorities. I believe if HL does not accept the points made, the FSA should carefully consider whether the HL should be continued to be licensed to offer Independent Financial Advice, to manage its own Funds and to act as a Discretionary Fund Manager investing on behalf of its customers at the same time. All of these activities have potentially large conflicts of interest as far as the customer is concerned
>>> There are a lot of HL fans on this forum who self select - HL gets it cut from trail back commissions. If the fund does not offer big enough trail back commission, it is not offered by HL. So in other words, even for this business HL is by no means the best. Personally, I think better alternatives are Best Invest, Fidelity and Barclays Stock Brokers.

dunstonh

I had independent financial advice from HL to invest in an HL's Discetionary Fund services. It was HL who decided to invest in these two funds, not me. HL could have selected better investments than their own funds but chose not to do so.

I already covered that. To repeat, its not ideal but its not uncommon for product providers that have an advice arm or DIM arm to have a bias towards their own products. That is why you often see on here that you should use independent IFAs or DIMs as you totally remove any employer pressure or incentives.

Lets break it down......You went to a product provider that has an IFA arm and a DIM arm. The employed IFA of the product provider recommended the DIM service from the same employer. The DIM service used the investment funds offered by the same employer. Doesnt that sound less than independent from the very start? However, you accepted that and they did nothing wrong in doing that.

Or maybe the IFA felt that rather than using HL's IFA arm that you would be better off with their DIM service. Not as advice but as an option. Did the IFA issue a suitability report making a recommendation that you use their DIM service? A written report would be issued on advice. No written report would be issued on an option.

3) it is very easy to select the best funds with hindsight, how does anyone select them in advance?
I do not disagree but to not go above the sector average for four consective years ???

As already said, the sector used as benchmark carries funds of very very different risk profiles. If you look at a risk scattergraph of all the funds in that sector you will see that the funds that are higher risk have typically performed the best. You cant compare the performance of the higher risk ones to the lower risk ones as its like comparing apples and oranges to see which one tastes the most like a banana.

This type of portfolio I invested in should return around 5% pa.

Right, so that sounds like a low risk portfolio then. That would explain under sector average performance.

If the selections were funds investing in other funds there was a double layer of costs - say 4% assuming average TER of 2%. That kills growth and HL must reasonably have known it, it is merely a way of HL getting 80% of fund growth.

The whole idea of using a DIM is to use direct investments rather than unit trust/OEICs. IFAs cant do what a DIM does. An IFA would typically use funds. A MM fund does everything within the fund (which is why they cost more). So, a DIM using unit trust funds rather than shares, gilts, ITs/ETFs etc isnt really giving you the best service. There may be the odd UT fund where there is no alternative available in the investment universes. However, you would expect a minority being in UTs. A DIM then using MM funds is effectively creating an extra layer of charges unnecessarily. However, its possible (and probable) that there may be some discount on the retail AMC for using their own brand funds. That could remove most of or all of that extra cost layer.

The bottom line is that there has been no wrong doing. Many will agree that independent should mean independent but the rules as they stand don't go that far. I personally dont think the IFA gave you advice (unless you say you got a written report from the IFA telling you to use the DIM service, which would be two reports. One from the IFA and one from the DIM). I reckon they said something along the lines that you could be better off using the DIM service rather than the IFA service and that you have perceived that as advice when its really a choice of services.

jem16

Out of interest how much did you invest and why did you choose HL?

You also mentioned having a fund or funds with BestInvest and you are comparing that performance with HL. What fund/s have you there and how long have you held it/them?

jem16

PatrickGrant wrote: »

>>> I had hoped to get any feedback from this forum who had Independent Financial Advice from HL or who had experience of using HL's Discretionary Investment Management Service. I have not received any replies to those questions so far which is a shame.

As I said earlier very few on here, if any, would have used this service.

>>> I have written to HL to request compensation. I have asked them to compensate me up to the level that would have been achieved if their Discretionary Management had achieved its benchmark. The reason I have given for expecting compensation is questionable Independent Financial Advice and questionable stock picking on behalf of Discretionary Customers.

A waste of time. You cannot complain for poor performance. You can only complain if you were put into a higher risk profile than you asked for which doesn't appear to be the case.

Plus as Dh has already stated, more than once (although you seem to be ignoring it), the benchmark contains funds of different risk profiles. Some will beat the benchmark, some will be on it and some will be below.

>>> There are a lot of HL fans on this forum who self select - HL gets it cut from trail back commissions. If the fund does not offer big enough trail back commission, it is not offered by HL.

Actually they do from what I understand. There are some tracker funds where HL levy a charge as opposed to offering a discount as there is not enough trail commission.

So in other words, even for this business HL is by no means the best. Personally, I think better alternatives are Best Invest, Fidelity and Barclays Stock Brokers.

Most people on here choose HL for its discounts and ease of use. For example take M&G Recovery - with all HL, BestInvest & Fidelity there is no initial charge. However only HL offers a 0.25% discount on AMC and no switching fee. BestInvest & Fidelity have no discount on AMC and a 0.25% switching fee.

sunil1234

when can we see the30% yoy portfolio please?:j

PatrickGrant

sunil1234 wrote: »

when can we see the30% yoy portfolio please?:j

Why not ??? Its below and you will see the worst investment is with Hargreaves Lansdown. And it helps to sell a lot in 2007/8 and buy the back at a lower price in 2009.lding
Purchase Date
Growth pa
Artemis Income Acc 07/07/2009 26.64%

Baillie Gifford Emerging MktGrowth A Acc 02/04/2009 61.56%

Baring Europe Select Trust 03/07/2003 34.57%

Blackrock UK Absolute Alpha P Acc 14/01/2008 3.63%

Cazenove UK Growth & Income Fund 08/07/2009 32.34%

Fidelity FIF European 21/08/2006 0.85%

Fidelity FIF South East Asia Fund 03/04/2009 42.79%

First State Asia Pac Leaders Acc 08/07/2009 34.96%

First State Global Resources Fund 31/03/2008 6.05%

First State Greater China Growth Fund 08/07/2009 39.87%

Gartmore European Select Opportunities Fund 28/04/1998 11.03%

Hargreaves Lansown 14/10/2006 1.11%

Invesco Perpetual Asia Acc 07/02/2007 15.71%

Invesco Perpetual Corporate Bond Acc 09/07/2009 20.03%

Invesco Perpetual Euro High Yield 21/08/2006 7.49%

Invesco Perpetual High Income 03/11/2006 2.08%

Invesco Perpetual Latin America Fund Acc 28/03/2006 20.03%

JPM Natural Resources A Acc 21/08/2006 17.18%

Jupiter Emerging European Opps 03/11/2006 3.82%

Jupiter European Fund 03/03/2006 33.94%

Jupiter Income Trust 24/03/1997 5.95%

Legal & General Dynamic Bond Trust 08/07/2009 20.89%

Old Mutual UK Select Smaller Cos OEIC Acc 08/07/2009 38.49%

Schroder US Smaller Cos 08/07/2009 29.54%

Standard Life Inv UK Smaller Cos 27/07/2009 45.82%



ldingPurchase DateGrowth pa

blinko

patrickgrant wrote: »

why not ??? Its below and you will see the worst investment is with hargreaves lansdown. And it helps to sell a lot in 2007/8 and buy the back at a lower price in 2009.lding
purchase date
growth pa
artemis income acc 07/07/2009 26.64%

baillie gifford emerging mktgrowth a acc 02/04/2009 61.56%

baring europe select trust 03/07/2003 34.57%

blackrock uk absolute alpha p acc 14/01/2008 3.63%

cazenove uk growth & income fund 08/07/2009 32.34%

fidelity fif european 21/08/2006 0.85%

fidelity fif south east asia fund 03/04/2009 42.79%

first state asia pac leaders acc 08/07/2009 34.96%

first state global resources fund 31/03/2008 6.05%

first state greater china growth fund 08/07/2009 39.87%

gartmore european select opportunities fund 28/04/1998 11.03%

hargreaves lansown 14/10/2006 1.11%

invesco perpetual asia acc 07/02/2007 15.71%

invesco perpetual corporate bond acc 09/07/2009 20.03%

invesco perpetual euro high yield 21/08/2006 7.49%

invesco perpetual high income 03/11/2006 2.08%

invesco perpetual latin america fund acc 28/03/2006 20.03%

jpm natural resources a acc 21/08/2006 17.18%

jupiter emerging european opps 03/11/2006 3.82%

jupiter european fund 03/03/2006 33.94%

jupiter income trust 24/03/1997 5.95%

legal & general dynamic bond trust 08/07/2009 20.89%

old mutual uk select smaller cos oeic acc 08/07/2009 38.49%

schroder us smaller cos 08/07/2009 29.54%

standard life inv uk smaller cos 27/07/2009 45.82%



ldingpurchase dategrowth pa

go away you are boring

masonic

PatrickGrant wrote: »

Why not ??? Its below and you will see the worst investment is with Hargreaves Lansdown. And it helps to sell a lot in 2007/8 and buy the back at a lower price in 2009.lding
Purchase Date
Growth pa
Artemis Income Acc 07/07/2009 26.64%

Baillie Gifford Emerging MktGrowth A Acc 02/04/2009 61.56%

<snip>

Iterestingly, I hold several of the same funds through Hargreaves Lansdown. If you are looking for a good place to buy funds like those at a discount, I'd highly recommend HL.

sunil1234

Ok patrick thanks, so bestinvest spread you across all those funds? I thought they only have 6-8 in their model portfolios ?

Certainly hindsight is a wonderful thing,

jem16

PatrickGrant wrote: »

Why not ??? Its below and you will see the worst investment is with Hargreaves Lansdown. And it helps to sell a lot in 2007/8 and buy the back at a lower price in 2009

Perhaps a little unfair to compare then.

Your HL funds also made over 30% in the last year but they were having to recover from a major crash the year before.