Hargreaves Lansdown and SIPP

dunstonh

There is an article this morning on what the revised fees may be:
http://www.citywire.co.uk/new-model-adviser/could-this-be-hargreaves-new-charging-structure/a697233?re=24808&ea=196312&utm_source=BulkEmail_NMA_Daily_PM&utm_medium=BulkEmail_NMA_Daily_PM&utm_campaign=BulkEmail_NMA_Daily_PM

Don't be taken in too much about super-clean. HL have been going on about using their size to get better prices from the fund houses. However, you need to remember that whilst they are big in the DIY world, they are smaller or comparable to a number of IFA platforms and those platforms too are talking about getting super clean.

Superclean has been expected as fund houses actually appeared to increase their cut when they offered clean share prices and it is possible for dirty share prices with rebates to be cheaper than clean. So, superclean will likely be comparable to dirty with full rebate. There may be odd funds where one fund platform has it cheaper than another one fund house but higher on a different one.

Freecall

jamesd wrote: »

Say you invested £100,000 there in a range of funds with AMC of 1.5% and Loyalty Bonus rebate that averaged 0.15%.

Yes but I didn't.

My example was based on a low cost fund house such as Vanguard with AMC's typically around 0.3% No rebate, just plain fees. To that you need to add the £24 custody fee. Not completely without cost of course but pretty low.

Clearly you can find more expensive funds and pay more, that is a separate debate.

The OP specifically asked about drawdown costs, what they referred to as 'the Income Drawdown mode'. In this respect I still don't see how you have HL marked up as expensive.

Everybody's situation will be different and depending upon the funds (or other investments) chosen, the frequency of changing and a host of other things then different providers will suit them better than others.

Just to change the investment from my low cost example to a high AMC fund and then say that this proves that HL are expensive is rather disingenuous to say the least.

dunstonh

My example was based on a low cost fund house such as Vanguard with AMC's typically around 0.3% No rebate, just plain fees. To that you need to add the £24 custody fee. Not completely without cost of course but pretty low.

That is going to have to change though.

jamesd

Freecall, the fund charges don't vanish just because income drawdown is being used. Their cost has to be part of the comparison. If a person is only using trackers then the HL premium would be lower. What you're doing is rather like comparing the total running costs of two cars by looking only at the servicing costs and ignoring the fuel. Both matter.

Crisp might perhaps want to write more about what sort of investments they intend to use and what sort of total investment value. Knowing that it would be a lot more practical to give some idea of which platforms might be cheapest for them.

Freecall

dunstonh wrote: »

That is going to have to change though.

Agreed, in the relatively near future as well.

Freecall

jamesd wrote: »

Freecall, the fund charges don't vanish just because income drawdown is being used.

Exactly, but that does not mean that you have to change my low cost funds into ones with high charges and then blame the SIPP provider and label it as expensive.

My original point stands, from the available evidence I can see no reason to call HL expensive for the provision of SIPP services.

If you want to put your money in a range of high-cost funds then that is a different matter and there may well be a better way of doing it with another provider.

jamesd

We don't know what investments crisp is using. No reason to assume that crisp is using low cost funds. HL say that more than half of the money invested with them is in those higher cost funds and if you check comparisons of DIY platforms you'll normally find that they come out worst or nearly worst on costs.

If you want to assume lower cost funds to make them look more competitive, you should perhaps look at the costs of alternative low cost options available elsewhere. You can get FTSE trackers for 0.1% or the lower AMC ETF versions of the Vanguard funds, which HL will charge a 0.5% premium to use, capped at £200, that won't be charged at a percentage rate at some other places.

Not really a lot more to discuss about this until we have some idea of what investments crisp is going to be using, since the investment choices are critical to which platform is going to have lowest costs.

BeatTheSystem

What are peoples opinion on here regarding the Transact wrapper platform. The IFA I use uses this and in addition to whatever transact charges the IFA charges approx 1% pa of the value of the portfolio with no CAP. Good value or not?

jamesd

For how much total investment value? 1% for the IFA is high for a larger pot size and Transact is mainly after larger pots.

Transact charges are fairly high compared to some options. 0.5% of total asset value each year for pots up to £300,000 and 0.2% of all purchase transactions. Also some fixed charges. That sort of pricing can make HL look cheap.

For larger pots Transact charges 0.325% of the first £600,000, 0.2% on the next £600,000 and 0.075% on the remainder. The 0.2% purchase fee goes away at two million Pounds total invested, it's reduced to 0.1% above one million. The pot size for Transact is for all investments there combined, pension, ISA and unwrapped.

If your pot size is not suitable for Transact the IFA is supposed to be using the more appropriate platform for you. 1% IFA charge implies either expensive IFA or small pot size.

dunstonh

BeatTheSystem wrote: »

What are peoples opinion on here regarding the Transact wrapper platform. The IFA I use uses this and in addition to whatever transact charges the IFA charges approx 1% pa of the value of the portfolio with no CAP. Good value or not?

Transact is a capable platform with easy visual information and easy to work. The 0.2% initial charge on purchases (inc fund switches) is not good as most platforms are nil on those nowadays. Although the annual charge is good for large pots and you can use family links to get better terms (ie. the total holdings across a family are used to decide what charging level you are on. Not just your own).

1% for charges is now becoming the norm for smaller pots but 0.5% is still typical for larger pots.