Best place to hold existing portfolio

Rollinghome

Nick_Curry wrote: »

Nick from rplan here - I thought I'd clarify some misconceptions about our charges tool.

Nick, I haven't used Rplan and have only taken a cursory look at your comparison tool. On that basis, it seems to be a very fair attempt to compare the cost of specific providers and I don't really understand the criticisms made which seem to include some misunderstandings.

Certainly your approach seems to be more honest than some of your competitors including Hargreaves Lansdown who say "Receive up to 0.5% cash back every year just for holding your funds" when, in reality, the cashback they pay seems to average around just 0.13% for managed funds. For other funds they charge an additional £24 pa including most tracker funds but also for some managed funds where they already receive some trail and/or platform commission.

Like you, I'd like to see the evidence for the surprising claim that financial advisers charge on average 1.8% initial and 0.5% ongoing. It's difficult to know the picture nationwide as I've yet to see the scale of charges for any non-discount IFA published on their website. I believe it's something the FSA would like to see.

Locally, typical IFA charges seem to be 3-5% initial and as much as 0.9% elected ongoing charges. So for an average of 1.8%/0.5% to make sense then a proportion would need to be charging rather less than that.

I notice you say "Cavendish have a £5.64 per annum charge, but refund all ongoing commission". I'm not aware of that charge, at least not for users of the Fidelity platform, could you explain?

Your site says: "Why make this information available? rplan aims to offer value. We aren't the cheapest provider, though we are consistently in the top 6 in all scenarios we tested. We offer a range of advanced tools, as well as excellent service, which combined with low cost makes us excellent value. This value is harder to see without understanding how our costs compare with our competitors'. "

The exact costs for an individual will depend on a many factors but as far as I can see your comparisons seem to be far more detailed than I've seen from your competitors and refreshingly honest: you should be applauded for that.

westy22

I notice you say "Cavendish have a £5.64 per annum charge, but refund all ongoing commission". I'm not aware of that charge, at least not for users of the Fidelity platform, could you explain?

I expect that is the 0.05% that Cavendish gets from the Fidelity platform fee. '£5.64 per annum' is not correct though - it would be £5.64 in year 1, rising by £5.64 each year until it reached £56.40 at the end of year 10 - a total of £310.20 over the 10 year term.

dunstonh

I expect that is the 0.05% that Cavendish gets from the Fidelity platform fee. '£5.64 per annum' is not correct though - it would be £5.64 in year 1, rising by £5.64 each year until it reached £56.40 at the end of year 10 - a total of £310.20 over the 10 year term.

To include part of the platform payment with one provider but not include their own cut off the platform in their cost comparison isnt comparing like for like.

Thanks for the pointer. Would you mind posting a link to something documenting this? A quick google search didn't yield anything useful. The aim of the tool is to be a useful point of comparison; charges are currently hard to understand, which makes comparing providers difficult. So I'd be happy to amend the calculator to reflect the costs of a typical adviser more accurately.

I will have to look up some links later. I do have the copies of the IDD requirements when the FSA required advisers to publish them. That requirement ended in 2008. The last figure was 1.8% plus 0.5% p.a. for collective investments on single premium basis and 2.4% plus 0.5% p.a. on regular payments. The calculator that the FSA published and updated every 6 months from real sales data is no longer available as the IDD requirements ended. COBS_6_Annex4 is now deleted and links removed.

Cofunds themselves had a 3% maximum on the funds with only a handful higher.

Rollinghome

dunstonh wrote: »

To include part of the platform payment with one provider but not include their own cut off the platform in their cost comparison isnt comparing like for like.

They've already said they don't get any part of the platform fee from Cofunds. Do you have any evidence otherwise?

Following the comment I made they seem to have already removed the reference to the £5.64 "charge" by Cavendish (or at least I now can't find it now). Clearly while that is an income to Cavendish, and appears to be their only income, it shouldn't be called a "charge" any more than the portion of the trail commission they retain is a charge.

Hargreaves Lansdown receive platform commission, platform listing fees, and undisclosed marketing fees all of which are income to them but aren't charges as such to the client.

dunstonh wrote: »

I will have to look up some links later.

Would be useful to have verification because if what you say is true then IFAs in this area appear to exceptionally greedy.

westy22

To include part of the platform payment with one provider but not include their own cut off the platform in their cost comparison isnt comparing like for like.

I agree but, in all fairness to RPlan, the calculator did clearly show that Cavendish was about £1,000 cheaper than themselves over 10 years

dunstonh

Would be useful to have verification because if what you say is true then IFAs in this area appear to exceptionally greedy.

How? If the typical maximum figure was around 3% (for example as it was with Cofunds and Fidelity) then how is the average of 1.8% greedy?

Rollinghome

dunstonh wrote: »

How? If the typical maximum figure was around 3% (for example as it was with Cofunds and Fidelity) then how is the average of 1.8% greedy?

I didn't suggest any such thing.

I said on the basis of the claims you made, that IFAs in this area appear to be exceptionally greedy. That's because every one that I have details of is charging considerably more than the 1.8% plus 0.5% trail that you claim to be average.

As IFAs tend to be very shy about their fees and normally don't publish them on their websites I don't know how they compare nationally.

Whether IFAs in this area really are unusually greedy and out of line with the average will of course depend on whether your figures are true or not. Please post the evidence for your figures as soon as you have it.

Perhaps you would also post the evidence for the claim you have now made twice that Rplan receive a cut from the Cofunds platform charge despite their insistence that they do not. Could you clarify exactly what you mean? If you are going to make accusations of dishonesty against them then you should provide some evidence.

I'd remind you that I was the one who pointed out their error on the Cavendish charge and not you. As far as I can see, it was corrected by them immediately after I mentioned it.

dunstonh

I said on the basis of the claims you made, that IFAs in this area appear to be exceptionally greedy. That's because every one that I have details of is charging considerably more than the 1.8% plus 0.5% trail that you claim to be average.

So every IFA you have details on charges more than 1.8% but the figures taken by the FSA on actual sales showed 1.8%. Which do you think has the greater spread?

As IFAs tend to be very shy about their fees and normally don't publish them on their websites I don't know how they compare nationally.

Most dont have websites

Whether IFAs in this area really are unusually greedy and out of line with the average will of course depend on whether your figures are true or not. Please post the evidence for your figures as soon as you have it.

You want the information, you go get it.

Perhaps you would also post the evidence for the claim you have now made twice that Rplan receive a cut from the Cofunds platform charge despite their insistence that they do not. Could you clarify exactly what you mean? If you are going to make accusations of dishonesty against them then you should provide some evidence.

I didnt say that. [text removed by MSE Forum Team]

Nick_Curry

Rollinghome - thanks for the question on the Cavendish charge. This page on their site indicated a £5.64 cost: cavendishonline.co.uk/investments/our-service/ . However, this is not a fixed cost as per our original assessment, but rather the amount of the platform fee that Cavendish receive from Fidelity. (Cavendish rebate all the trail commission back to the client, but Fidelity keep the full platform fee and give part of that back to Cavendish. Cavendish are open about this being the case.) We have updated the calculator accordingly. Apologies for this mistake; I wasn't able to post here sooner.

Westy - as you say, Cavendish is cheaper than us (both before and after the update). In fact, they are the cheapest provider for all the scenarios we tested; the update hasn't change this.

To include part of the platform payment with one provider but not include their own cut off the platform in their cost comparison isnt comparing like for like.

As stated earlier, the calculator includes all costs within the TER (and other costs too) - including the platform fees. Where providers rebate some of the platform fees, this is included in the calculator. Where they don't, the full platform fee is included in the calculator. The comparison is based how much it costs an investor to buy funds with each provider, which we think is the fairest possible comparison.

I can confirm that we don't receive a cut of the platform fee from Cofunds.

dunstonh - I am about to send you a PM with my email address. I would very much appreciate it if you could send a copy of those documents you mentioned, and we would be happy to reconsider our understanding of the charges a typical adviser might make.

dunstonh

Thank you Nick for the feedback and clarification.

Comparison of services and charges is not an easy thing. Especially when you have so many different models. Also the move to clean charging share classes and the removal of hidden commission payments to be replaced with explicit charging just complicates comparison more.