S&S ISAs. Where's best (cheapest!)

zolablue25

Having only just (march 11) taken the plunge into cash ISAs I thought I should also start looking at S&S ISAs. Wifey and I maxed out our 11/12 cash ISA allowance and we will be doing the same with 12/13 allowance over the weekend, so that bit is sorted. So now I'm thinking about S&S ISAs. The problem is it all seems a bit confusing. I kind of get the idea that it is a wrapper that you can put a variety of funds or individual stocks, and having thought about it I reckon that I will be the type of investor who would prefer investing in funds than individual shares, but I am very confused about the whole charges side of things. From reading threads on here HL and ii seem like popular options but which one is the best (cheapest!) out of them. Or would it be someone else entirely? I noticed from the MSE blurb that they selected HL as the cheapest discount broker but ii didn't get a mention at all and yet they are getting mentions in the forums as a cheap option.

Any help gratefully received....

psychic_teabag

Yeah, the MSE article is very out of date - they really ought to at least add a big banner at the top saying so, if they don't update it.

See https://forums.moneysavingexpert.com/discussion/3153942

Unfortunately, everything will probably be changing at the end of the year, when the RDR comes into force. I don't think all the platforms have announced what their new charges are going to be. I'd focus on someone that doesn't have an exit fee, so that if you transfer, you don't incur extra costs. (I think BestInvest had an exit fee, last time I looked.)

I'd say that HL has one of the best web interfaces (and I hear they are very good on the phone too, but I've not had to use that). But HL aren't the cheapest.

Cavendish + Fidelity is currently one of the cheapest, but IMHO the web interface is pretty appalling.

I think iii has particularly low initial purchase requirements (many require you buy £1000 initially, then increaments of £250, unless you use a regular monthly purchase program, but iii allows much smaller purchases). But I don't think iii rebate any of the renewal commission. But post-RDR that may not be relevant.

zolablue25

Oh no! Not more confusion. What on earth is RDR? and does it mean I shouldnt bother setting up a S&S ISA until after it comes into force?

Thanks for the reply BTW.

dunstonh

Yeah, the MSE article is very out of date - they really ought to at least add a big banner at the top saying so, if they don't update it.

not as bad as the pension article where the key product provider mentioned in that has not only replaced the product but it's replacement has also been replaced and is now on version 3.

The lack of updating of articles in areas covering regulated financial services has been very poor in recent years. Is the site and commitments getting too big?

What on earth is RDR?

Two big events coming up are the retail distribution review and the platform review. RDR starts beginning of next year. The platform review is about a year behind but date to be confirmed very soon.

RDR will see the removal of trail commission on investment funds. This will affect platforms which keep some of that trail commission to pay for towards their services. With no trail to keep, they will either have to suffer the loss or bring in a replacement charge.

The platform review is still under consultation but as it stands currently, bundled platforms will not be able to be paid hidden commissions as they currently are. This system encourages the marketing of more expensive investments or the potential for bias in marketing lists (such as platforms indicating funds they think are good. Is the fund on there because they think it is good or have they been bunged some money to promote the fund - there is evidence the latter happens).

Bottom line is that fund houses appear to be heading to clean share classes. An example are the Schroder class Z funds. These have no commission/trail payments.

As there are no commissions, the platforms will have to charge explicitly. Cynics will say that 0.5% plus 0.5% = 1% in the same way they were paying 1% as a bottom line previously. However, it does mean that investments that currently pay no commissions/trail will become more expensive. Whereas those that pay commission/trail currently could become cheaper.

You shouldnt delay because of these changes. You just need to make sure your provider has no charges to transfer out.

brick

psychic_teabag wrote: »

Cavendish + Fidelity is currently one of the cheapest, but IMHO the web interface is pretty appalling.

Is it the core Fidelity web interface itself that you're not keen on, or something different about the Cavendish (powered by Fidelity) experience?
Considering a move to Cavendish but wouldn't want it to be something I regret.

psychic_teabag

Fidelity itself. Well, I think so. Cavendish is entirely invisible since it's taking the role of IFA. Though I think I heard on here that different IFAs can arrange different levels of service from Fidelity.

My OH used Fidelity without Cavendish briefly (before re-agenting) and it was exactly the same.

brick

Thanks.
I can cope with the foibles of the Fidelity interface, and good to know Cavendish should be a similar experience.

Sorry if I now veer slightly off-topic.
If I was to transfer a subset of my FundsNetwork funds to Cavendish, do you happen to know if they all (transferred funds plus funds not transferred) would continue to be visible and able to be analysed *as a whole* using the X-ray utility on log in to FundsNetwork?
Or would the Cavendish funds be somehow separate from the non-Cavendish funds?
I hope it is the former, and that having different agents associated with different funds would make no difference.

codetown

Cavendish doesn't change *anything* to Fidelity.
You simply have to use their referral IFA code when subscribing (new user) to Fidelity, or call them if you wish to have them change the IFA code if you are already a Fidelity user.

The Fidelity interface (login, usage) is totally separate and indepentent on Cavendish. You use it *exactly* as you were doing earlier (same credential, nothing changes relly)