Platform News: FSA confirm ban on platform rebates

gadgetmind

dunstonh wrote: »

I very much doubt it will be if you use platforms. You will have to go direct or hope for distributor deals

My TERs are currently sub 0.5% for SIPPs and ISAs with BestInvest and Hargreaves Lansdown, and for my GPP with Friends Life.

1) This is the most I will pay.
2) If platforms and funds change their charging structure, then I will adapt.
3) See (1)

jem16

gadgetmind wrote: »

My TERs are currently sub 0.5% for SIPPs and ISAs with BestInvest and Hargreaves Lansdown, and for my GPP with Friends Life.

1) This is the most I will pay.
2) If platforms and funds change their charging structure, then I will adapt.
3) See (1)

Good luck with that then.

Cofunds, for example, have announced their unbundled charging of 0.29% plus a £40 annual fee. A tracker of around 0.3% plus platform fee of 0.29% would be 0.59% plus the £40 annual fee.

Fidelity is 0.25% plus £45 annual fee, so 0.55% plus £45 annual.

I wouldn't be surprised to see BestInvest and HL doing something similar.

gadgetmind

I guess we're all going to have to vote with our wallets.

I've been considering holding unwrapped investments"off platform" for a while and hopefully we'll start seeing the likes of Vanguard providing their own ISAs so we can cut out the middle men and their markups.

dunstonh

gadgetmind wrote: »

I've been considering holding unwrapped investments"off platform" for a while and hopefully we'll start seeing the likes of Vanguard providing their own ISAs so we can cut out the middle men and their markups.

That doesnt replace the middle man. It just creates a new middle man. The reason Vanguard are cheaper is that they do not have to cover the costs of distribution and supply. If they start doing that, who is going to pay for it?

gadgetmind

dunstonh wrote: »

That doesnt replace the middle man. It just creates a new middle man.

In my business we call it "disintermediation" and it's a good thing.

The reason Vanguard are cheaper is that they do not have to cover the costs of distribution and supply. If they start doing that, who is going to pay for it?

I am prepared to pay for it, just not very much. HL's 0.5% with a £45 (ISA) and £200 (SIPP) cap is *just* acceptable as is there £2pcm per tracker given this covers LifeStrategy. A blanket 30 bps would send me elsewhere in the blink of an eye.

What are Vanguard's fees like in the US where I understand they do sell direct?

grey_gym_sock

i'd think 0.5% TER is probably realistic if you don't want actively managed funds and you're investing relatively large amounts. there may be fewer investment options at that price for smaller amounts (especially in SIPPs).

the musical chairs charges game will probably keep going for a while before this all settles down.

dunstonh

What are Vanguard's fees like in the US where I understand they do sell direct?

I just took a look. 0.3% for S&P 500 tracker. 0.65% for emerging markets. 0.4% european. There are dilution levies on some of the funds (typically upto 0.25%)

Investments under $10k have a $20 charge for receiving paper documentation. The FSA require paper documentation (and are actually proposing more paper to be sent on various things). So, £10k or under getting £20 would be a fair estimate.

jem16

dunstonh wrote: »

I just took a look. 0.3% for S&P 500 tracker. 0.65% for emerging markets. 0.4% european. There are dilution levies on some of the funds (typically upto 0.25%)

Is there any minimum investment amount? Often with direct investments there is a higher minimum than with platforms.

dunstonh

jem16 wrote: »

Is there any minimum investment amount? Often with direct investments there is a higher minimum than with platforms.

In the UK there is. I believe it is £250k per fund if direct but none if via platform. In the US there is no indication of any minimum (apart from the extra charge on $10k investments (per fund).

The TERs on the US funds are higher than the UK equivalent. That is despite a larger market. So, it does suggest the cost of retail is factored into them. Something the UK funds do not have.

gadgetmind

grey_gym_sock wrote: »

the musical chairs charges game will probably keep going for a while before this all settles down.

True enough.

I'll move to avoid charges based on an uncapped percentage as TBH I can't see why the charge should depend on the size of a holding as that isn't where the cost is generated.