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H-L introduces a Tracker Platform Charge

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  • gadgetmind
    gadgetmind Posts: 11,130 Forumite
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    srcandas wrote: »
    ps. Gadget you are a fairly active investor so its no surprise you are comfortable with multiple platforms.

    I'm not active in the sense of doing lots of buying and selling, though I will admit that September has been a pretty lively month for me (with a few sales, which is most unlike me) and October is likely to be similar.

    For the most part, my investments are passive and enjoy regular drip-feeding.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • dunstonh
    dunstonh Posts: 119,543 Forumite
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    edited 27 September 2012 at 12:13PM
    pps Dunston do you really think hl will be lowering their prices after next year? I feel they are trying to offer better services and thus justify price increases. I can't see how they can live with less per client income unless they can significantly increase their market share. Perhaps by selling a wider range of services?

    I'm not going to second guess what they are going to do as I think they are in a tough position. They have successfully sold their platform as being low cost and people have bought into that. Usually not realising that it is low cost because it is being paid for by the fund houses who in turn have higher annual charges being levied to the investor. Their current take is around 0.7% of average. Yet most platforms are moving to a 0.25% to 0.5% range (although the 0.25% ones tend to have a range of other charges for misc tasks whereas the 0.5% ones are all in - so largely similar at the end of the day). They need to remain competitive as much of their business was sold on the promise of low cost. Although they havent been low cost for a number of years now but still get viewed as such. So, maybe they wont need to aim for that best price in the market.

    Also, they have an awful lot of investment on the commission based platform. They could leave it there still paying them the commissions and only do new business or new purchases on a unbundled basis. In theory, they could then cross subsidise the unbundled side from the bundled side. Nothing says you have to move everyone across to the new method (iii style). However, if you are a heavily internet based provider where your product has got it's reputation via discussion forums, it could be dangerous to leave some people on an older more expensive platform when a newer, cheaper one is available.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • There's no way an operation such as HL could have grown as they have done without doing something right. A very slick service, at a price, combined with a relentless hard sell has worked well for them.

    For that slick service they charge pretty much top dollar and whether the cost is justified will depend entirely on individual circumstances. Someone who wants to swap funds very frequently and perhaps ask lots of questions is likely to find it fair value provided the sum invested with them isn't too large.

    Where the amount invested with them is sizeable then the cost of that convenience can be substantial so important to be aware of the price tag.

    Someone investing entirely in active managed funds should expect the rebate of the AMC from HL to average around just 0.15%. That average is likely to be much lower if they hold those funds, including trackers, where HL make an additional charge of £25 pa on top of the AMC. That makes them one of the most expensive options around and for a larger sum may not save much over using a cheapish IFA.

    Additionally HL tend to only offer the more expensive versions of funds. For example, they sell the M&G Optimal Income only as the class X. You'll pay a TER of 1.64% and HL will rebate 0.10% making 1.54% net.

    Through CavendishOnline/Fidelity you could buy the fund as class A with a TER of 1.42% and a rebate of 0.50%, making just 0.94% net. Which means paying an additional 0.62%, that's a net TER that's 67% higher, for the convenience of using HL. Which is quite a chunk out the return you might expect from a bond fund.

    When the FSA ends the platform revenue and payments for marketing HL has been receiving in the next year or so then it looks inevitable that their charges will go up further. So well worth keeping an eye on how much it will cost to jump ship.

    The reason I'd favour using more than one platform is that it can reduce costs substantially and it's likely to be less problematic to move two or more smaller accounts than to move one large one on a single platform.
  • jimjames
    jimjames Posts: 18,584 Forumite
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    dunstonh wrote: »
    However, if you are a heavily internet based provider where your product has got it's reputation via discussion forums, it could be dangerous to leave some people on an older more expensive platform when a newer, cheaper one is available.

    An alternative is that that for some investors where the old model is cheaper then they may be very happy with the HL system.

    I would echo the comments about their platform & service. I still hold some funds with them but have moved most to Cavendish. The full 0.5% rebate is very welcome but the platform definitely isn't to the same level as HL. For my circumstances I'm prepared to put up with that for the lower level of costs which hopefully will continue beyond RDR/Platform review for existing customers.
    Remember the saying: if it looks too good to be true it almost certainly is.
  • jamesd
    jamesd Posts: 26,103 Forumite
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    edited 27 September 2012 at 2:26PM
    Now I'm just waiting for someone to refer their latest attempt to flog a new fund: the Newton Emerging Income. They claim "Act by 3 October to invest at launch and save 4%". That will be entirely and deliberately misleading if, as expected, the initial charge is immediately removed after the launch, as has happened when they previously made similar claims.
    There's no need to wait. Their site currently says the initial discount is 4% and I phoned to ask what the discount would be from 4 October and later and was told no change, it'll still be 4%.

    Here's the FSA form to report misleading financial promotions if you want to do that.

    At this page HL says ""We can offer a 4% saving on the initial charge for clients who wish to invest at launch, but we must receive your instructions by 5pm on 3 October". I can see why you might believe that their intent was to mislead people into thinking that they had to buy soon to get a discount that ends after 3 October, when HL already knows that the discount will be continuing and says so if you phone them to ask.
    srcandas wrote: »
    I've been with hl for 8 months and am also very pleased - although of course that may be that I'm lucky. The other day I sent an email question relating to Trojan fund types (a question no one responded to here). By mistake I sent it through my wife's connected account. ... Within a few hours they phoned me, answered the question in detail, and wished me well. For sure there are reverse stories but what can one do :cool:
    You weren't just lucky. HL customer service is from superb to exemplary, except in the area of pricing disclosure and marketing, which are gradually reducing my opinion of the ethics of the firm over time. Unless HL fixes that I'll eventually get to the point where I end up recommending against them on ethics grounds, in spite of the rest.
  • jamesd wrote: »
    There's no need to wait. Their site currently says the initial discount is 4% and I phoned to ask what the discount would be from 4 October and later and was told no change, it'll still be 4%.

    Here's the FSA form to report misleading financial promotions if you want to do that.
    I already have though it wouldn't go amiss if others did the same to ensure that HL got the message. It's the sort of dishonesty that should be discouraged.
    You weren't just lucky. HL customer service is from superb to exemplary, except in the area of pricing disclosure and marketing, which are gradually reducing my opinion of the ethics of the firm over time. Unless HL fixes that I'll eventually get to the point where I end up recommending against them on ethics grounds, in spite of the rest.
    I'd tend to agree though I'm not sure why most people would need more than a reasonable lower cost service. I used to widely recommend them but, while I still have some investments with them (due to the hassle/cost of moving without knowing the position post RDR) would be reluctant to do that in future.

    I'm uncomfortable with using a company that I feel I need to watch very closely. The way they introduced the new fee that Snowman complained of with the least possible notice and without notifying clients of all the funds affected, including clients holding affected funds, confirmed that view.
  • gadgetmind
    gadgetmind Posts: 11,130 Forumite
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    I'm uncomfortable with using a company that I feel I need to watch very closely.

    And I'm uncomfortable with the idea of not watching *every* company I deal with *very* closely. :D
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • gadgetmind wrote: »
    And I'm uncomfortable with the idea of not watching *every* company I deal with *very* closely. :D
    Life's too short for that. I find an easier approach is to simply avoid companies with a habit of ripping their customers off. The result being that I very rarely have problems. ;)
  • gadgetmind
    gadgetmind Posts: 11,130 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    I find an easier approach is to simply avoid companies with a habit of ripping their customers off.

    Who the hell do you get your gas and electric from, and who do you bank with? :D
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • Rollinghome
    Rollinghome Posts: 2,729 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    edited 27 September 2012 at 3:42PM
    gadgetmind wrote: »
    Who the hell do you get your gas and electric from, and who do you bank with? :D
    Companies that I don't get any problems with. ;)

    I've dealt with any number of banks and the only one that ever caused me problems was Santander. I have never used them since and unlikely to ever use them again. Went into a branch and made the manager very uncomfortable. Problem solved.

    I sometimes wonder why some people get problems with almost every company they deal with. I don't. If it's because I'm unusually lucky then I hope that luck lasts. I like to think it's because I read contracts and avoid putting myself in a position to get ripped off.
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