H-L introduces a Tracker Platform Charge

Rollinghome

I notice the HL shareprice is down 7% since Friday compared with the FTSE down 4%. Perhaps HL's ability to peeve their customers hasn't gone down well.

gadgetmind

Rollinghome wrote: »

I notice the HL shareprice is down 7% since Friday compared with the FTSE down 4%. Perhaps HL's ability to peeve their customers hasn't gone down well.

I'd have expected shares in the sector to show a high beta to the FTSE.

However, I'm going to give them a call tomorrow in response to their latest secure message, and I'm sure we'll have a frank and honest chat.

ki707

koru wrote: »

The fee is not based on the amount you are contributing. So, your percentages are only correct for the first month. For instance, if you have been contributing £50 per month for 20 months then you will have a holding of £1000, so you will be paying a platform fee of £2, which is 0.2% of your total holding. You will pay this every month, even if you stop your monthly contributions. So, the platform fee is equal to 2.4% per year. If you have a holding of £10,000, the platform fee is equal to 0.24% per year.

Thanks, this makes sense. So they really are trying to force people to dramatically increase their holdings of these funds or sell up. I can't see how 2.4 per year for an index tracker makes sense when you have speacialist managed funds with a TER of 1.5%

HL didn't seem to bothered when I called up to threaten to move my holdings elsewhere. They said the new changes only affect a small number of funds and investors...which is scant comfort for those of us affected!

Really is a sad day for small investors. Seems so wrong given their recent drive to get people to move all fund holdings to them. People impressed by HL would have paid exit fees to come to HL. And this is the thanks they get....

This is only the beginning I fear

koru

ki707 wrote: »

Thanks, this makes sense. So they really are trying to force people to dramatically increase their holdings of these funds or sell up. I can't see how 2.4 per year for an index tracker makes sense when you have speacialist managed funds with a TER of 1.5%

HL didn't seem to bothered when I called up to threaten to move my holdings elsewhere. They said the new changes only affect a small number of funds and investors...which is scant comfort for those of us affected!

Really is a sad day for small investors. Seems so wrong given their recent drive to get people to move all fund holdings to them. People impressed by HL would have paid exit fees to come to HL. And this is the thanks they get....

This is only the beginning I fear

To be fair though, I don't think they have ever pushed people to buy the HSBC trackers. In fact, quite the contrary. In the so-called research for any of the HSBC trackers they say "Once fees are taken into consideration our research suggests passively-managed tracker funds are likely to underperform the index they aim to track over the long term." This is of course absolutely true, but then it is equally true of every single actively managed fund as well (the key word being "likely"). I'm not trying to start another discussion about the relative merits of passive and active management; I am simply saying that by putting only one side of the argument HL have clearly been trying to discourage people from investing in trackers.

ki707

koru wrote: »

To be fair though, I don't think they have ever pushed people to buy the HSBC trackers. In fact, quite the contrary. In the so-called research for any of the HSBC trackers they say "Once fees are taken into consideration our research suggests passively-managed tracker funds are likely to underperform the index they aim to track over the long term." This is of course absolutely true, but then it is equally true of every single actively managed fund as well (the key word being "likely"). I'm not trying to start another discussion about the relative merits of passive and active management; I am simply saying that by putting only one side of the argument HL have clearly been trying to discourage people from investing in trackers.

No, I meant HL's drive to get people to move their holdings to the HL platform (not the HSBC funds per se), but I take your point.

roadster198

I have to say words fail me with H-L....

I drip feed £50.00 a month into the vantage ISA where I have an M&G Index tracker also with the odd lump sum thrown in. Not recently though with whats going on although I probably should more units for my buck if i did. I currently have £1550.00 in the fund

I will be one of the people who'll pay more to hold this fund as there will be no time soon when I'll be able to put a sizable lump into this account which will reduce the charges to an acceptable level.

I planned to open three more trackers with H-L I'm so glad I've held back.

So my questions are....

1: Should I just put my monthly payment up to £52.00 with HL?

2: As there seems to be major changes afoot for next year would it be wise to move somewhere else only to possibly move again?

3: Where can I move to? I notice some names on this post bestinvest being one although to my novice brain they seem more expensive. Can anyone point me to some other Co's please?

Thanks

SnowMan

koru wrote: »

To be fair though, I don't think they have ever pushed people to buy the HSBC trackers. In fact, quite the contrary. In the so-called research for any of the HSBC trackers they say "Once fees are taken into consideration our research suggests passively-managed tracker funds are likely to underperform the index they aim to track over the long term."

The fact remains that they decided to make (for example) the HSBC trackers available as a loss leader and have now changed their mind.

They get no commission now from the fund provider, they get no commission next year after the platform fee comes in and they get no commission in 2013 when RDR comes in. To that extent nothing has changed other than they have decided no longer to offer trackers as a loss leader.

To entice people into what are long term investments and then suddenly force them to sell by increasing charges by what in some cases is a multiple of 30 or more is terrible.

It makes a mockery of disclosure of information and charges if you can disclose low charges to someone taking out a long term investment and then increase charges by a multiple of 30 just a few months later.

These aren't savings accounts where the interest rate has been dropped and you can move elsewhere at a click of a button, these are long term investments that are being seriously affected. How on earth can you make an informed decision on how to invest when this can happen.

Now of course indirectly RDR means that HL are not receiving the large commission and secret payments from their other active funds to enable them to sustain the subsidisation of trackers in the long term. I fully understand that.

However you would then expect Hargreaves Lansdown if it were a decent company (which they most definitely are not in my view) to be very mindful of the affect on investors in the tracker funds and seek to change things in a reasonable way.

A reasonable way would be to write to all affected investors and not just sneaking it into terms and conditions, and to give them much more notice of the changes (e.g. 6 months or better still when RDR came in).

However the way they have gone about it permanently tarnishes their reputation in my eyes. They have shown their true colours and that is as a company that can't be trusted. Their reputation has been damaged in the same way Hoover's was damaged all those year's ago. Or at least I sincerely hope it has been damaged in the same way.

SnowMan

roadster198 wrote: »

I have to say words fail me with H-L....

I drip feed £50.00 a month into the vantage ISA where I have an M&G Index tracker also with the odd lump sum thrown in. Not recently though with whats going on although I probably should more units for my buck if i did. I currently have £1550.00 in the fund. I would have thought that an M and G tracker would be fairly immune from future charges if done through M and G.

I will be one of the people who'll pay more to hold this fund as there will be no time soon when I'll be able to put a sizable lump into this account which will reduce the charges to an acceptable level.

I planned to open three more trackers with H-L I'm so glad I've held back.

So my questions are....

1: Should I just put my monthly payment up to £52.00 with HL?

2: As there seems to be major changes afoot for next year would it be wise to move somewhere else only to possibly move again?

3: Where can I move to? I notice some names on this post bestinvest being one although to my novice brain they seem more expensive. Can anyone point me to some other Co's please?

Thanks

Have you considered transferring the ISA to M and G direct and then continuing with contributions this tax year, possible choosing a different tracker with a different company next tax year?

M and G won't be able to re-register it that is they will have to sell the units and buy units back but you would have to accept there would be a loss or gain from that.

Next tax year if you can save up a lump sum of £500 you could invest that in one of the HSBC tracker funds through their Global Investment Centre or you could invest with Fidelity.

You would probably be only able to invest in 1 fund if going via HSBC unless you had £1,000 or more to invest (£500 minimum lump sum and no regular contributions allowed)

competitionscafe

koru wrote: »

HL have clearly been trying to discourage people from investing in trackers.

True, but the main reason for that probably being that they don't make any trail commission on them.

HL have also actively encouraged people to invest in expensive managed funds without any track record which turned out to be terrible investments performance wise (new launches like P Sigma Income, the Skandia best ideas funds, Bolton's China IT to name just a few).

roadster198

SnowMan wrote: »

Have you considered transferring the ISA to M and G direct and then continuing with contributions this tax year, possible choosing a different tracker with a different company next tax year?

M and G won't be able to re-register it that is they will have to sell the units and buy units back but you would have to accept there would be a loss or gain from that.

Next tax year if you can save up a lump sum of £500 you could invest that in one of the HSBC tracker funds through their Global Investment Centre or you could invest with Fidelity.

You would probably be only able to invest in 1 fund if going via HSBC unless you had £1,000 or more to invest (£500 minimum lump sum and no regular contributions allowed)

I was hoping to stay with a fund supermarket so I could keep everything under the one roof. I'm still very new to this and would like to keep everything straight forward as possible.