New Passive Investor screwed by iii - where to transfer to?

jimmyjones_2

I opened a new S&S ISA in April and am investing £470 per month. I am using a passive portfolio of tracker funds similar to the Monevator Slow and Steady passive portfolio.

I have invested £940 so far and am due to invest another £470 today as its pay day but got the email notifying me of the new £80 per year charge - brilliant.

Obviously at my current level of investment I cant be paying the £80 annual fee so where next?

The best I can come up at the moment investing in a single Vanguard Lifestrategy fund through a Hargreaves Lansdown Vantage ISA at £24 per year - that's what I do with my SIPP.

I would kind of miss the flexibility of having multiple funds but I am not willing to pay a premium for that.

Does anyone have any other ideas of where to transfer to for a low cost passive portfolio?

grey_gym_sock

you could buy the HSBC trackers directly with HSBC. however, they don't accept transfers-in of ISAs.

plunt

voice your thoughts here as well. tons of people have been addressing this stupid new charge

https://forums.moneysavingexpert.com/discussion/3990039

jimmyjones_2

Thanks, I posted a mini rant there :-)

Perelandra

Cavendish Online works very well with the Slow 'n Steady portfolio, for an ISA.

No charges.

With the size of your "pot" at the moment, you'd probably need to do this as regular investing though (due to the minimum "buy" for lump sums).


You can't get Vanguard with them, though.

jimmyjones_2

Perelandra, thanks for your post

I will look into Cavendish Online now.

My pot is only £900ish, I am investing £470 a month and only stated this tax year.

I would actually prefer to stick to be Slow and Steady style because I can tweak my asset allocations.

Perelandra

jimmyjones wrote: »

Perelandra, thanks for your post

I will look into Cavendish Online now.

My pot is only £900ish, I am investing £470 a month and only stated this tax year.

I would actually prefer to stick to be Slow and Steady style because I can tweak my asset allocations.

You're welcome. I believe that all the Slow 'n Steady funds are available through them, so should suit you nicely.

EDIT:

Of course, I should add a caveat that the "no fees" is only as per today, and that they may well change going forward, post-RDR.

dunstonh

voice your thoughts here as well. tons of people have been addressing this stupid new charge

What it stupid about it?

Charges like these are a consequence of the Retail distribution review and platform review. There are some more rule changes proposed as well which will add to costs for certain people as well.

The FSA no longer wants managed funds cross subsidising tracker funds. It wants no bias at all to exist on the different investment types. So, the investments that were paying back handers and marketing bonuses to platforms will be ending. Trail commission whether partly refunded or not, will be ending. Instead, platforms will charge explicitly for their services. Funds are already appearing in clean share classes with all commissions removed (hidden or disclosed previously). This is seeing the cost of managed funds coming down by nearly half. Problem is that tracker funds often paid little or no commission/bonuses. So, they have little or nothing to come down by. So, as warned about a number of times in these forums previously, the cost is likely to go up for those that have focused on the providers that previously used cross subsidy to their advantage.

grey_gym_sock

the new charge also applies to accounts containing no funds, just shares. in this case, RDR has nothing to do with it.

jimmyjones_2

dunstonh, are you suggesting that all platforms (e.g. cavendish) will implement a similar charge to iii.co.uk in the not too distant future?

Perelandra

dunstonh wrote: »

What it stupid about it?

Whilst I understand that we are seeing the consequences of the RDR, if the result of this is that investors who are just starting out are charged-out of the market (due to fixed costs being a high percentage of the total pot size), then the system becomes fundamentally flawed. Nobody will want to start a S&S ISA from scratch, as a fixed-charge structure wipes out the benefit.

iii have also implemented this in a way which is likely to antagonise a large number of investors (it feels like it has been 'sprung' on the customer, with effective lockins through expensive transfer out fees, and no grace period), so I would think that this approach, at least, has been "stupid" as it's likely to provoke an over-reaction. The extreme response on the Savings and Investment forum shows this.