H-L introduces a Tracker Platform Charge

saveonarola

ki707 wrote: »

Has anyone looked at how much you would need to have in the affected funds to make the new platform fee cost effective? A news article on This Is Money (on the HL increased fees - sorry as I'm new, I can't paste the link) does a rough analysis with a TER of 0.5% (with the £1 fee, you'd need £2,400 in the fund. With the £2 fee, you'd need £4,800).

Here's the link:

http://www.thisismoney.co.uk/money/investing/article-2064358/Hargreaves-Lansdown-2-monthly-charge-tracker-funds-offers-Vanguard.html

koru

ki707 wrote: »

Hi everyone

Has anyone looked at how much you would need to have in the affected funds to make the new platform fee cost effective? A news article on This Is Money (on the HL increased fees - sorry as I'm new, I can't paste the link) does a rough analysis with a TER of 0.5% (with the £1 fee, you'd need £2,400 in the fund. With the £2 fee, you'd need £4,800). My maths is rubbish!

Thanks!

It depends how you define cost-effective. You need to decide what alternative you are comparing it with. For some people, the alternative would be to stick with HSBC trackers but switch to Bestinvest or Fidelity or HSBC direct. For others, the alternative might be to switch to another tracker with a higher TER but no platform fee.

For others, the alternative might be to switch to an actively managed fund. With full rebates of trail commission (for instance, through ATS and Cavendish), the TER of many actively managed funds is around 1%, which might not be significantly more expensive than HSBC trackers once you have adjusted their TER for the platform fee. With an investment in a fund worth £2400, a fee of one pound per month is equivalent to an extra TER of 0.5% and a fee of two pounds per month is equivalent to an extra TER of 1.0%.

black_taxi_2

£50 a month 4%+t.e.r
£100 a month 2%+t.e.r
£200 a month 1%+t.e.r

saveonarola

koru wrote: »

For some people, the alternative would be to stick with HSBC trackers but switch to Bestinvest or Fidelity or HSBC direct. For others, the alternative might be to switch to another tracker with a higher TER but no platform fee.

iii is another option, as mentioned earlier in this thread. They still offer the same deal as HL (used to offer) on the HSBC trackers, and there are no exit fees from HL if you transfer in cash. Of course, you would be out of the market for a short time, so you might lose out in that way (but you might gain), and iii might well change their charges too, so you would have to keep an eye on them, but that's a risk wherever you move.

In the end, as Koru says, what's best will depend on the funds you hold, the level of investment and so on.

Doshwaster

gadgetmind wrote: »

Quite so. Virgin has always been a sucky tracker, and it's stayed put as others have improved, which makes it even more sucky.

That's true, but at the same time I can understand why the Virgin tracker has been so successful. It's well marketed, easy to understand, easy to manage and there's no complicated list of funds to choose from - you have a choice of one and one only. For a beginner investor, it's much easier to get started with a Virgin ISA than one from H&L or other self-select provider. That's how I started out but as I became more experienced and knowledgeable I switched away from them.

If you go across all the sectors where the Virgin brand has a presence, they usually aren't the best or the cheapest at anything but they have the marketing power and a brand that tends to be trusted.

zcrar70

has anyone tried rplan.co.uk?

They say that they refund 50% of the commission back. No initial charge on most funds either. Thinking of moving over, but they seem fairly new

Ilya_Ilyich

Articles such as this suggest that Vanguard is a cert to appear from 'early next year' on HL. Going to try to find out what exactly this means as it might end up cheaper just plonking everything in boring managed funds for a month or two rather than shifting provider.

competitionscafe

Doshwaster wrote: »

If you go across all the sectors where the Virgin brand has a presence, they usually aren't the best or the cheapest at anything but they have the marketing power and a brand that tends to be trusted.

Indeed. Likewise with Hargreaves Lansdown - big marketing budget, good PR department (lots of free press coverage) and therefore very popular. But not always the cheapest option nor necessarily the 'best' option. Although though there may be a perception among many people that HL is the cheapest/best way to buy a stocks and shares ISA or a SIPP simply because they are unaware of cheaper/better options and/or because they trust the 'bigger' brand.

Or because finding the best/cheapest option is not that simple - it depends on if you hold managed funds only, tracker funds only, a combination, direct share investments, IT's etc (or a combination).

Lokolo

zcrar70 wrote: »

has anyone tried rplan.co.uk?

They say that they refund 50% of the commission back. No initial charge on most funds either. Thinking of moving over, but they seem fairly new

Are you sure they are a fund supermarket? To me they just seem like a financial organiser company.

black_taxi_2

when it comes to investing i always go with someone with a long history