Is TD Waterhouse the cheapest way to invest in Vanguard lifestrategy funds for my ISA

jamesd

JohnRo, a managed fund charging 1.5% AMC typically has around 0.75% trail commission. 0.5% normally to the IFA and 0.25-0.3% normally to the platform. The 0.35% platform fee looks like an increase on the current 0.25-0.3% platform commission level and I suppose it's not surprising that a platform would look to use change to increase its cut above current normal platform levels.

The clean share classes have no commission payment at all, just normally a 0.75% AMC. So there would be no platform fee based on the current charging.

Thanks for mentioning the AMC bit in my post, I've corrected that.

The "we believe in putting the customer first" is of course the usual sort of marketing false claim that can be expected when a platform increases its cut. If they were really putting the investors first they wouldn't be taking a higher platform fee than the commission normally provides today.

I'm sure they won't be the last to slip in a price increase for their services during the changes.

Depending on the amount invested and funds or other investments used they may still be cheaper or much cheaper than many other providers. Particularly Hargreaves Lansdown and their 0.6-0.7% platform commission level.

jamesd

Koru, it'll certainly be interesting. Criticising TD Waterhouse for planning to charge 40% more than the standard platform charge is fine but HL charges more like 100% more via commission. And flat out refuse to say how much they get from each fund when asked (or at least did when I asked).

I don't really see how the FSA can possibly not include DIY platforms. It'd be pretty strange to leave unadvised consumers at the mercy of platforms while only helping those with professional advice to help them. Just look at HL doing things like saying there's nothing more to pay for funds when really they are taking an ongoing commission charge by not rebating all commission.

I use a mixture of managed commission-paying and semi-managed* (like Vanguard) so it may be a mixture for others as well.

*semi-managed because funds like Vanguard that do stock lending have to use active management of some form for that activity and because it increases risk beyond a pure tracker not doing it, because there's counterparty default risk in the stock lending transactions. They also have to decide when and how to do their buying, particularly when an index composition changes.

JohnRo

Iweb and a portfolio of carefully selected ETFs is starting to look more and more attractive as these platform changes take shape.

RetiredInThailand

JohnRo wrote: »

Iweb and a portfolio of carefully selected ETFs is starting to look more and more attractive as these platform changes take shape.

I have some HSBC FTSE 250 ACC tracker units bought through NatWest who have just introduced a 0.3% annual charge for holding these (even though they do nothing in return for this fee). Previously there was no charge.

I also have some iShare FTSE 250 MIDD tracker ETFs, also bought through NatWest. These will continue to attract no annual charge.

I expect to be dumping the HSBC funds and buying more iShares ETFs as they are basically the same thing but with a lower cost of ownership.

thesaver79

I want to use my isa allowance for this year to buy the 60% Equity Vanguard Lifestyle. Would it be worth opening an account with TD for now and - before August - switching to HL?

Would I be subject any additional costs if I switched?

Or is it just worth opening an account with HL, given that I'd only buy one fund for now? And if in the future I decide to buy 2+ funds I will then look into switching?

bowlhead99

HL charge a flat fee of £2pm for the Vanguard fund you want. April May June July is 4 months in which to use TD cheaply and avoid HL's £2pm charge.

Are you seriously considering opening an account with a broker you don't want to stay with in the long term, just to save eight pounds? I know the name of this site, but that is being extreme and you are wasting your time.

Aside from that - yes, TD do charge for closing an account. They charge more for closing an ISA than for a regular trading account, as administering an ISA wrapper for you is something they normally expect to earn an annual fee on (even though they waive it for people with large balances or who invest monthly). So there is no point opening an account if you are going to close it again in the short term.

Of course, if you had say £12k across two Vanguard funds, even after August it's cheaper to do this with TD at 0.35% a year (£42) instead of going to H-L at 2x £2pm x 12mths (£48). So it entirely depends how much you are investing over what timescale.

Personally I remain a fan of TD. If I had my ISA with HL it would cost me 0.5% on all my individual shares and investment trusts. And TD's online (and mobile) dealing platform, for shares, is better. For someone exclusively investing in funds, H-L might be preferred - horses for courses.

thesaver79

In the meantime I read about the exit fees!

I think I will stick to HL for now. I'm going to invest £5640 as a lump sum and then I will be making regular payments.

If I decide to buy more than one fund, I will reassess! I think it's sensible. Once I go over the £10,000, I could still transfer my ISA to TD without losing any money thanks to their cashback.

The only thing I wonder is if HL will change the fee structure with the platform reform?!

Totton

Personally I remain a fan of TD. If I had my ISA with HL it would cost me 0.5% on all my individual shares and investment trusts. And TD's online (and mobile) dealing platform, for shares, is better. For someone exclusively investing in funds, H-L might be preferred - horses for courses.

Not sure how you get to pay that much with HL, afaik there is no fee for shares (or IT's) in the trading a/c whilst the ISA fee for those types of holding is capped at £45 per annum.

vickssinex

Have a look at the comparison chart at Candid Money at guide-to-isa-discount-brokers - some helpful comments about the competitiveness of different brokers.

ajdj

innovate wrote: »

But to stay charge-free, you have to have a minimum of £5,100 in the ISA (£7,500 non-ISA), don't you?

Source: http://www.tddirectinvesting.co.uk/choose-an-account/trading-isa/

There was a page on Monevator (which I'm struggling to locate). A representative from TD confirmed in the comments section that as long as you had a 'regular investment ISA' with monthly DD then you wouldn't pay an annual charge, irrespective of the amount you have invested.