S+S ISA - Should I change broker?

pledgeX

About 6 months ago I opened my first S+S ISA with Hargreaves and Lansdown. The only fund I have is the HSBC all share tracker. At the moment I'm paying £100 a month into this ISA with the intention of continuing to do so for the next 40 odd years.

As I'm sure many of you know, H&L have introduced a £2 a month platform fee for this, and several other of their tracker funds.

Now this £2 may not make much of a difference if you've got a few thousand stashed away, but right now I haven't, so this £2 is quite a big hit. Especially as I'm looking to invest into another tracker fund or two both of which have this same platform fee (maybe a pacific and emerging markets). So £4/6 a month is a pretty severe dent into any gains I make in a month.

Is there any other broker worth looking at that doesn't charge these platform fees? I understand these changes have come about recently and that a few more changes may come into effect over the next year or so, so I don't really want to switch providers, only for them to slap on a fee in another 6 months time!

I liked H&L in the first place not only due to their low costs, but also due to the simplicity of their site. I have no interest in any kind of share dealings apart from these tracker funds for my ISA, so this is the only thing I need from the provider/broker.

Thanks for any advice.

Lokolo

Is there any reason why you don't move to another tracker inside HL?

psychic_teabag

Have a look for some existing threads on here which talk about it. One suggestion is to stay with HL but switch to a Vanguard lifestyle (sorry, lifestrategy) fund - "the only tracker you'll ever need". You'll still suffer the platform fee, but it's still one of the cheapest ways to access this Vanguard fund.

Most trackers at HL attract the platform fee. Some only £1 rather than £2, but that's because they pay some commission to HL. There is one blackrock tracker that doesn't have the fee, but it has higher charges. I can't remember off-hand the breakeven point - there was another thread that discussed this

Moving broker does mean you'll either have to pay HL a £25 re-registration fee, or transfer as cash and be out of the market for a while.

See also https://forums.moneysavingexpert.com/discussion/3153942 though that focuses more on which brokers rebate commission from active funds, rather than the best place to hold trackers.

middlepuss

pledgeX wrote: »

I understand these changes have come about recently and that a few more changes may come into effect over the next year or so, so I don't really want to switch providers, only for them to slap on a fee in another 6 months time!

I hold the HSBC tracker with H-L as well. I'm going to wait maybe a year before considering switching. As you suggest, no point in switching only to find the new broker introduces a similar fee after a couple of months. I've done that once or twice with electricity and gas suppliers!

pledgeX

Thanks for all the feedback folks.

Lokolo wrote: »

Is there any reason why you don't move to another tracker inside HL?

The vast majority all have some form of platform fee, those that don't have a higher TER which isn't desirable either.

psychic_teabag wrote: »

One suggestion is to stay with HL but switch to a Vanguard lifestyle fund - "the only tracker you'll ever need".

Do you mean the Vanguard LifeStrategy funds? I can't info on the lifestyle fund you mention. If it is the LifeStrategy funds, they're even more expensive and have little to no info as they're so new.

middlepuss wrote: »

I hold the HSBC tracker with H-L as well. I'm going to wait maybe a year before considering switching. As you suggest, no point in switching only to find the new broker introduces a similar fee after a couple of months. I've done that once or twice with electricity and gas suppliers!

Glad to hear I'm not the only one. Let me know if you find anything in the meantime!

psychic_teabag

pledgeX wrote: »

Do you mean the Vanguard LifeStrategy funds? I can't info on the lifestyle fund you mention. If it is the LifeStrategy funds, they're even more expensive and have little to no info as they're so new.

Sorry, yes, that's the fellow. See also http://monevator.com/2011/10/18/vanguard-lifestrategy/

Hydromancer

I am in the process of switching to interactive investor...it may be worth a look. They don't have any platform charges for tracker funds. However, they do not refund any annual management charges. The other good thing is that with their £1.50 portfolio builder thing, you can buy into investment trusts and shares every month so there's that little bit of flexibility. Personally, I find HL easiest to use but I really wanted to buy into an IT so switched due to their excessive charges

jimjames

I've switched all my ISA HSBC trackers from HL to Cavendish.

In my SIPP I've switched to the Blackrock versions to stay with HL.

I had the full range of HSBC trackers so the annual fee would have been nearly £200.

Quite why HL think it is reasonable to cap the share fee at £45 but have an unlimited fee for funds I'm not sure.

Ilya_Ilyich

The Blackrock trackers on HL are around 0.6%. In the coming year the average balance on your ISA will be £1200. That means a difference of approximately £4 pa in TER if you switch to the Blackrock trackers. This is substantially less than any platform fees.

pledgeX

Ilya_Ilyich wrote: »

The Blackrock trackers on HL are around 0.6%. In the coming year the average balance on your ISA will be £1200. That means a difference of approximately £4 pa in TER if you switch to the Blackrock trackers. This is substantially less than any platform fees.

Thanks Ilya. I didn't see the UK BlackRock one!

Can you explain the maths a little more as after doing a few sums it still looks like BlackRock is the more expensive option to me (0.27% TER + £2p/m vs 0.57% TER).

My maths isn't great so I'm sure you're right, but I just can't get my head around it

Newbie2saving

I'm thinking of getting the Blackrock one (although I have a few ideas running round my little mind at the moment) and as a cost comparison I have £1400 in my HSBC tracker currently which is costing ~£28/pa whereas the Blackrock doesn't have the platform fee, hence only ~£7.98/pa.

Question to myself - why haven't I moved away from HL?!?!?!?!? Or changed trackers? I suppose this is what HL are relying on!