HSBC World Selection

Bloomberg

Banks have recently come under some scrutiny for the way they market some of their investment products. I was a HSBC Premier customer and was paying a large sum into their World Selection. To be fair the fund did perform well in the first year.

I wanted to make certain adjustments to the fund, my idea was to invest in a particular fund which is managed by a third party but still falls under the World Selection umbrella. My financial planning manager was adamant that this move was totally out of kilter with my attitude to risk. I know that hindsight is a wonderful thing but had I followed my own advice I would have made another £75k.

The World Selection charges a an obscene 4% commission, this means that whatever you invest they take this money plus an annual management fee. I am moving my money to another provider where I make the decisions and the upfront fee is only 1% not 4%. I am also going to downgrade my account to a normal current account instead of a Premier one.

My advise to anyone would be to take some time out and study the markets and do not take what the bank staff tell you as gospel. They are there for the banks and themselves. This article is very interesting.

http://www.thisismoney.co.uk/money/investing/article-2014055/Bank-investment-funds-Can-trust-advisers.html

Lokolo

Do you work for Bloomberg? If so, I hate you.

dunstonh

To be fair the fund did perform well in the first year.

No it didnt. They have been poor performers since launch (relative to sector). Just as you would expect them to be.

The World Selection charges a an obscene 4% commission, this means that whatever you invest they take this money plus an annual management fee. I am moving my money to another provider where I make the decisions and the upfront fee is only 1% not 4%. I am also going to downgrade my account to a normal current account instead of a Premier one.

You should check out the difference between the AMC and TER as well. HSBC have some of the widest spreads.

do not take what the bank staff tell you as gospel. They are there for the banks and themselves.

Correct. However, you shouldnt expect any difference. As the terms of business they supply you before you take anything out says, their advisers represent HSBC. Not you. Bank sales reps are spoon fed information from their employer. They are only told the positives of their range and told to make everything else sound bad.

Do you work for Bloomberg? If so, I hate you.

good iphone app though

Bloomberg

Lokolo wrote: »

Do you work for Bloomberg? If so, I hate you.

NO I do not work for Bloomberg. Why do you hate Bloomberg?

atypical

Lokolo was (obviously) not being serious.

jamesd

Bloomberg wrote: »

I wanted to make certain adjustments to the fund, my idea was to invest in a particular fund which is managed by a third party but still falls under the World Selection umbrella. My financial planning manager was adamant that this move was totally out of kilter with my attitude to risk. I know that hindsight is a wonderful thing but had I followed my own advice I would have made another £75k.

Which World Selection product were you originally using and which did you plan to use? What drop in capital value could you accept during a bad year?

Bloomberg wrote: »

The World Selection charges a an obscene 4% commission, this means that whatever you invest they take this money plus an annual management fee. I am moving my money to another provider where I make the decisions and the upfront fee is only 1% not 4%.

Why pay even 1% up front? It's not necessary, most platforms discount all of the initial commission. Given the amounts you appear to have available you would probably also be better off paying an IFA a fee to set up your investments with no trail commission as well, normally a saving of 0.5% of the investment value a year, charged monthly from the fund value behind the scenes.

An IFA on fee basis could either set things up so that 0.5% wasn't charged or so that it was rebated back to you. The IFA could be paid cash or the agreed fee could be paid by setting an initial commission for the money transferred in as at a once-only level sufficient to match the fee, which can be more tax efficient for you.

If you're watching the markets actively and taking a long term economic view the standard HSBC World election products set up for certain risk levels probably aren't appropriate for you because you're likely to want to take a view on how markets will do.

AmTheMan87

Rather than speaking to your Financial Planning Manager, who focuses on HSBC only products, why didnt you speak with the IFA's? HSBC offer them and they are fully independant, they could have arranged that for you, pushing what you already have.

dunstonh

AmTheMan87 wrote: »

Rather than speaking to your Financial Planning Manager, who focuses on HSBC only products, why didnt you speak with the IFA's? HSBC offer them and they are fully independant, they could have arranged that for you, pushing what you already have.

HSBC IFAs are still biased and influenced by their employer. IFA by name but more panel based by nature. An "indpendent" IFA wouldnt go near these world selection funds. However, HSBC IFAs had incentives and sales pressure to recommend them.

Whether its an FA or an IFA, if they work for a salesforce, then they should be avoided as the sales pressure prevents them from being truly independent.

Loughton_Monkey

Bloomberg wrote: »

.....My advise to anyone would be to take some time out and study the markets and do not take what the bank staff tell you as gospel.....

...er.... you won't get much argument about that on these forums!

You are probably too young to remember the "Man from the Pru". Those of us born and bred on a council estate in the 50's will remember this 'animal'. He wasn't necessarily 'Prudential', but could have been Co-op, Liverpool Victoria, United Friendly, Royal London, etc.

Not particularly well educated [but with an uncanny 'gift of the gab'], but an extremely 'nice' guy, he rode around on a bicycle (with bicycle clips) and visited people to collect their Life Insurance premiums for the most appalling value products. And yet every customer respected him no end. He would rip you off in the most charming manner and spot a 'lifestyle change' a mile off and 'pull you in' for yet another shilling a week policy. In most cases, he had a part time job and could mend your television, or unblock your toilet [for a small bit of cash in hand] as well.

This guy is now 'extinct'. But it is my own very deeply held view that he has re-incarnated in the form of the High St Bank salesman. It is roughly the same model. He knows your account details and can smell the right time to 'give you a pull'. And expects you to believe everything he says, and to buy one of his 'appalling value' products.

It is argued that 'the man from the Pru' served a real purpose. He came to you and convinced unsophisticated people to save/insure when otherwise they might have spent. OK, an extremely expensive distribution system but better than nothing at all....

I perceive his later re-incarnation [the High St Bank salesman] as pretty much the same if you are talking about customers who (a) have absolutely no sophistication or 'nous' to do anything themselves, and (b) who value the 'gift of the gab' delivered by a 'nice guy' who convinces you he is the guru of wealth management.

Sadly, however, two things have changed. Firstly, you have to go to him, and secondly, he cannot mend your toilet any more. Which is why I go to the plumber to have my toilet mended. [And I have a feeling my plumber could give me better financial advice.......]

IronWolf

I also got duped into buying this years ago. I just went into the branch because my savings account had 0.2% interest and I wanted something better. One smoothe sales pitch later and I'd put half my savings into this.

The funds made about 10% in 2 years, after deducting my 5% comission charge, so tbh Im just happy that my first major blunder in investing didn't actually cost me any money.

I'm now much more clued up and invest in my own shares but tbh I still have money in this fund, I think its at least better than cash until I find some good shares to invest the money in. I might just stick it into a FTSE tracker instead though in the meantime.