H-L introduces a Tracker Platform Charge

SnowMan

Rollinghome wrote: »

If they’re going to write to everyone effected they’re leaving it awfully late. Confusing that they should publish two lists there, one entitled “Tracker Funds” and the other “Other Funds” yet neither list mentions the Lindsell Train fund referred to by dach. It’s now unclear how many other funds could be effected but not on those lists.

Just in case everyone hasn't fully understood what HL are saying about who they are writing to.

There are 3 sets of funds affected by the platform fees

1. Tracker Funds (list on page 17 of the Investment Times)
2. Other Funds (again listed on page 17)
3. 'Small number of funds for which we do not make a charge' which are unspecified funds not listed on page 17, such as the Lindsell Train Fund presumably

What HL are saying in the Investment Times is that they will write to everyone in 3. but will not be writing to anybody in 1. and 2.

So if someone has just taken out say a HSBE FTSE all share tracker 2 months ago and put £1,000 into it then they are not going to write to them to say that a (roughly) 2.7% charge will be applied next year rather than the 0.3% they were expecting. The investor's only chance of spotting the charge is if they happen to get to page 17 of the Investment Times, happen to click on their fund key features again on the HL website, or spot comments on an internet forum.

gadgetmind

Given that HL have the email address of all investors, and know what funds they are in, they really could be more proactive.

But what energy do building socs put into telling you that you're about to go from 3%pa to 0.1% pa interest?

Caveat emptor.

pqrdef

I suppose this is a hint that when trail commissions go away, flat monthly fee per holding will be H-L's charging model for all funds.

So why are they opting for that particular model, as opposed to flat fee per account, or percentage, or trading fees?

Have they decided there's no future in the DIY market and they ought to focus on IFAs and HNW individuals?

Rollinghome

pqrdef wrote: »

So why are they opting for that particular model, as opposed to flat fee per account, or percentage, or trading fees?

Particularly odd in that they have a maximum per account fee if you hold ITs but not if you hold UTs.

If the fee is to eventually apply to all UTs, and fees for ITs remain the same, there'd be no charge to hold 10 ITs outside of an ISA but £240 pa to hold 10 UTs in the same way; or a maximum of £45 pa to hold 10 ITs in a ISA but £240 for holding 10 UTs in an ISA.

That would seem a nonsense so I'd be reluctant to assume they won't increase the recently announced fee scale for ITs again as the costs of getting out could be significant.

competitionscafe

Rollinghome wrote: »

I’d think that Best Invest is a bigger threat to them than Cavendish and ATS unless those two make their presentation more customer friendly.

Cavendish (at least for my ISA on Fidelity platform) is just the agent so I am not too bothered about their lack of fund info, basic website etc compared to HL as I use the Fidelity site not Cavendish. Fidelity also gives you free use of the Morningstar portfolio xray tool which is no longer offered free on the Morningstar UK site.

Also if Cavendish introduced annual charges or other changes I was not happy with I would just need to find another company who offered the Fidelity platform (like Best Invest for example) send them a signed change of agency form and that would be the transfer done. Of course if I wanted to switch from Fidelity fundsnetwork to another platform that would be a bit more effort.

I agree that Best Invest is probably a bigger threat to HL though - I have always vastly preferred the Best Invest website to HL for fund research and info anyway (and Best Invest research Investment Trusts too!). All this is available free whether or not you are a client.

HL and their 150 Wealth list has never been somewhere I look at when researching funds as other sources are much better (bestinvest, trustnet, morningstar etc) and it's always seemed like more of a marketing thing anyway despite their claim that it represents "what we believe to be the best funds across all the major sectors". 150 funds is also far too many for a best of list.

RoughRook

competitionscafe wrote: »

HL and their 150 Wealth list has never been somewhere I look at when researching funds as other sources are much better

A guy down the pub, with a dog, said that the low cost trackers would soon be included in the 150 WEALTH list, probably sometime next year, but not until the new platform fees had been revised and upped from £2 per hit to £5 or so!!:D:D:D

gadgetmind

pqrdef wrote: »

So why are they opting for that particular model, as opposed to flat fee per account, or percentage, or trading fees?

I think they just decided to try dipping their toes in the piranha tank.

koru

pqrdef wrote: »

I suppose this is a hint that when trail commissions go away, flat monthly fee per holding will be H-L's charging model for all funds.

So why are they opting for that particular model, as opposed to flat fee per account, or percentage, or trading fees?

Have they decided there's no future in the DIY market and they ought to focus on IFAs and HNW individuals?

Perhaps they are trying to reflect more closely their own incremental costs. It would make sense to me that it is more work for them where a punter has a Vantage account which contains, say, five funds each worth £5000 compared with a Vantage account which contains one fund worth £25,000. If that's right, then it would make sense to charge on a per fund basis.

Then again, most of the service that they provide seems to be fully automated, so I am not sure if they do have any incremental costs, other than in relation to carrying out acquisitions and disposals. If that were the case, it would make more sense for them to charge only for acquisitions and disposals (like ATS!) and then maybe a small additional fee on a platform basis (like ATS does on pensions and ISAs) as a contribution to the costs of running the platform, which will be mainly fixed (that is, they will be much the same regardless of the number of funds each punter holds). The more I think about it, the more the charging basis adopted by ATS makes sense.

mr_fishbulb

gadgetmind wrote: »

Given that HL have the email address of all investors, and know what funds they are in, they really could be more proactive.

Exactly. They are more than happy to email me out fund manager comments about the funds I'm in invested in.

gadgetmind

I wonder what HL's current average take per customer is based on 0.5% trail, or the 0.5% capped at £45/£200 for non-fund holdings?