platform fees who's next

roadster198

I'm currently considering a move away from H&L as I'm still a bit peeved at the platform fees. Does anyone think the others will soon follow suit and start charging them?

I was looking to add a gilt tracker to my ISA with HL however if I do that it will take the funds I have to three and my platform fees to £96 a year. Not much I suppose but I just hate the thought of the money going on these fee's. I wish they would add the platform fee to the TER calculation so I can judge for my self if I should buy the fund or not.

Aegis

roadster198 wrote: »

I'm currently considering a move away from H&L as I'm still a bit peeved at the platform fees. Does anyone think the others will soon follow suit and start charging them?

I was looking to add a gilt tracker to my ISA with HL however if I do that it will take the funds I have to three and my platform fees to £96 a year. Not much I suppose but I just hate the thought of the money going on these fee's. I wish they would add the platform fee to the TER calculation so I can judge for my self if I should buy the fund or not.

They can't add the platform fee to the TER because the platform fee is fixed and the TER is variable, therefore you'd have vastly different figures for a holding of £100 vs a holding of £100,000.

Fidelity Fundsnetwork via Cavendish Online is probably the market leader for funds at the moment.

jem16

roadster198 wrote: »

I'm currently considering a move away from H&L as I'm still a bit peeved at the platform fees. Does anyone think the others will soon follow suit and start charging them?

They will have to if the FSA Platform Review goes ahead as they want to ban bundled platforms in favour of explicit charging. This should have been happening at the end of this year but it might take a bit longer.

I wish they would add the platform fee to the TER calculation so I can judge for my self if I should buy the fund or not.

That's the way, up until now, it has been handled. With the ban on bundled charging each fund will have to show the explicit costs for each section. For example on a fund with a typical amc of 1.5%, 0.5% would go to the IFA, 0.25% would be the platform fee and 0.75% to the fund provider.

HL have gone for a fixed fee for trackers but some platforms have a percentage fee on a sliding scale.

Up until now the likes of HL made most of their money on the active funds with a few loss leaders thrown in. Moving on they won't be able to do that so each fund will have to be charged explicitly.

grey_gym_sock

platforms have always been paid. i think it's positive move for the FSA to ban hidden commission and so force them to use explicit charges. if we know what we're paying, we have more chance of avoiding over-paying.

if you don't like paying a platform provider at all, then the other option is to buy funds directly with the fund manager. funds which make an initial charge or pay a trail commission are generally better with a platform provider (who will hopefully make no further charges, and even share some of the initial or trail commission with you; whereas if you go direct, the fund manager will trouser the lot). funds with no initial charge or trail commission may be cheaper direct with the fund manager (because a platform might make additional charges). the FSA is (presumably) going to force all funds into the latter category; for the moment, few funds except trackers are there.

apart from cost considerations, platforms have some advantages, especially the ease of moving between funds with different managers. if a platform is more expensive for you, the question is how much it's worth paying for those advantages.

RetiredInThailand

I dont care much for funds (most of the fund managers seem to be even more financially incompetent than I am, and I've never been keen to pay the high fees that support their champagne lifestyles) but I do have some trackers that were bought and held via NatWest Stockbrokers. I pay nothing for this. That's nothing as in zero fees for purchase and zero ongoing fees.

Nothing is just about what most agents, brokers and managers are worth, so the price sounds right to me.

Aegis

RetiredInThailand wrote: »

I dont care much for funds (most of the fund managers seem to be even more financially incompetent than I am, and I've never been keen to pay the high fees that support their champagne lifestyles) but I do have some trackers that were bought and held via NatWest Stockbrokers. I pay nothing for this. That's nothing as in zero fees for purchase and zero ongoing fees.

Nothing is just about what most agents, brokers and managers are worth, so the price sounds right to me.

I don't know of any tracker offering zero fees whatsoever. There might not be any explicit fees, but there will be some sort of annual fee deducted automatically from the net asset value of the units you're holding.

Realistically you're probably paying at least 0.25% annual fee for a tracker, plus some additional fund expenses. In some particularly bad cases you see trackers offered with 1% annual charge or more, which is extremely expensive.

I think it would be a good idea to check the fund details again, as no funds are run for free.

RetiredInThailand

You didn't read what I wrote. I pay no fee to NatWest for buying or holding my trackers. The tracker funds do have a minimal management charge, of course, and this 0.25% is deducted by them from the value of the fund every year.

Anyone investing via the H&L platform (as in the subject of this thread) will be paying a fee on top of the fund manager's charge, and this extra fee is the fee that I do not pay when buying via NatWest.

Hence my post.

dunstonh

I don't know the natwest platform but it sounds like a bundled platform offering running loss leaders. Or it isnt a platform at all and they just deal with the buying and selling (which shouldnt be mixed up with a platform).

Assuming the platform review goes through as expected and no U-turns due lobbying etc, then expectation is that all platforms will have to bring in explicit charges as they wont be allowed to take commissions you dont know about. So, loss leaders would likely end. This would see a move back to fund houses directly for small investors. However, some fund houses appear to be getting into bed with certain platforms with a view to offering distribution via them without the platform charge.

it really is too early to tell. There will be changes, clarifications and all sorts which will happen. There is still the possibility that DIY only platforms may be exempt (although it doesnt sit ethically with the intention of the platform review and Consumer Focus doesnt like it)

RetiredInThailand

NatWest Stockbrokers are not a platform, they are stockbrokers.
I pay no fee for buying or holding my trackers, and from their website I get the impression that they also handle many hundreds of other funds for no charge to the buyer (personally I am not at all interested in funds that have management fees over 0.25%, so I haven't looked closely at that).
This sounds like a better deal to me than buying via a platform that charges a fee.
Maybe other people are getting something else from their platform that I'm not getting from NatWest, and maybe that justifies the extra charge, but if so I cant imagine what it might be.

dunstonh

Maybe other people are getting something else from their platform that I'm not getting from NatWest, and maybe that justifies the extra charge, but if so I cant imagine what it might be.

Generally it is multiple tax wrappers and convenience and the ability to hold multiple fund houses under one ISA in the same tax year. Not for everyone but most seem to prefer it.

grey_gym_sock

RetiredInThailand wrote: »

NatWest Stockbrokers are not a platform, they are stockbrokers.
I pay no fee for buying or holding my trackers, and from their website I get the impression that they also handle many hundreds of other funds for no charge to the buyer (personally I am not at all interested in funds that have management fees over 0.25%, so I haven't looked closely at that).
This sounds like a better deal to me than buying via a platform that charges a fee.
Maybe other people are getting something else from their platform that I'm not getting from NatWest, and maybe that justifies the extra charge, but if so I cant imagine what it might be.

i'm guessing you have the HSBC trackers. if so, they're probably paying natwest c. 0.1% (out of the 0.25% AMC) (because, when fidelty fundsnetwork disclosed the kickbacks they got from different funds, it was 0.1% for HSBC trackers). you're still getting a good deal. (better than i am holding HSBC trackers with HL.) but there's nothing magic about paying no explicit fee: the important thing is to pay low total fees (whether explicit or not).

1 reason to go elsewhere would be to gain access to Vanguard trackers. they may be preferable to HSBC. natwest won't offer vanguard funds, because they pay no kickbacks. it could be worth paying a platform fee to gain access to vanguard. if the platform fee + the vanguard TER is less than the HSBC TER, vanguard is cheaper. (if we're talking about HL's platform fee, that will only work for larger holdings.)

another reason would be if you wanted to buy funds with a much higher AMC, say, 1.5% (fairly typical for actively managed equity funds). i'd mostly agree that low cost funds are a better choice. but if people are going to buy the higher cost funds, they shouldn't buy them through natwest, who do not (at a quick glance) appear to rebate any of that 1.5% to you. they could get up to c. 0.5% back by buying through Cavendish.