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HL's future charging structure: any hints, guesses, predictions?
gterr
Posts: 555 Forumite
Hi there,
I have a £180k lump sum coming at the beginning of November. I'm intending to invest this in S&S funds (one account each for husband and I, or possible just a single joint one). The plan would be to gradually move funds into S&S ISAs from the unwrapped accounts. We will be largely invested in VGLS funds- not more than two in each account. We will also have some actively managed side funds.
We currently each have a (small) S&S ISA with HL.
I was hoping that we might have had news by now from HL regarding their future charging structure. Without this I don't know if they are going to be the best place to lodge our lump sum funds, or whether another platform might be better. I would rather avoid the cost and palaver of moving funds to another platform if HL turn out not to be a cost-effective.
I know it's a bit of a crystal ball, but would anyone feel able to predict what HL will do next regarding charges, and/or if we might be best putting our money elsewhere?
Many thanks for your time.
I have a £180k lump sum coming at the beginning of November. I'm intending to invest this in S&S funds (one account each for husband and I, or possible just a single joint one). The plan would be to gradually move funds into S&S ISAs from the unwrapped accounts. We will be largely invested in VGLS funds- not more than two in each account. We will also have some actively managed side funds.
We currently each have a (small) S&S ISA with HL.
I was hoping that we might have had news by now from HL regarding their future charging structure. Without this I don't know if they are going to be the best place to lodge our lump sum funds, or whether another platform might be better. I would rather avoid the cost and palaver of moving funds to another platform if HL turn out not to be a cost-effective.
I know it's a bit of a crystal ball, but would anyone feel able to predict what HL will do next regarding charges, and/or if we might be best putting our money elsewhere?
Many thanks for your time.
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Comments
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Look at the other platforms to get an idea. There are two models basically.
1 - no fixed fee but a percentage applied to all investments irrespective of type
2 - a fixed fee and a percentage applied to all investments irrespective of type.
There is also the variation that sees the percentage based the value of the investments. i.e. £1 into that tier and the whole amount gets that percentage vs the method that sees the first £x charged one rate, the next £y charged another rate and the next £x charged a different one.
In all cases so far with those that have published their unbundled terms or have been operating that way for years, small amounts are worse off than bundled and trackers end up costing more than they did previously. It is unlikely HL will differ from that position. I suspect HL will not go the fixed fee plus percentage route but percentage only. They have too many people with small funds and whilst losing some of those would not be an issue, the volume of small cases would likely compensate for the low profitability. Whether they go for the full tiered percentage charge or a stepped percentage charge is anyone guess. I don't buy into their views that they will negotiate better terms with some funds to get enough superclean funds to make them more competitive. They are not the biggest platform. Big, yes. However, there are others bigger or comparable and whatever HL get, others will get as well. Although there may end up a situation where one platform gets one fund house on special terms unique to them but another platform gets a different fund house on unique terms. So, a bit of balancing out may be needed.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
i am going to be interested in this too, with ISA and SIPP held with HL. i do find their service to be good, and website is easy to use.0
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I already pay fixed fee for trackers with Best Invest and expect I'll be moving everything to BI once everyone has played their hands. However, I guess BI may change their model in an unexpected way, so let's wait and see, get all the information, and then do the calculations.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
They have too many people with small funds
What's small in this context? We both have SIPPs and ISAs, but it's my wife's SIPP that's the tiddler as she doesn't work so isn't allowed to put much in pa. At sub £40k I think she's going to have a rough ride fees wise.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
gadgetmind wrote: »What's small in this context? We both have SIPPs and ISAs, but it's my wife's SIPP that's the tiddler as she doesn't work so isn't allowed to put much in pa. At sub £40k I think she's going to have a rough ride fees wise.
She may do. However, many of the unbundled platforms allow family linking for charges. i.e. the total amount invested on platform by direct family members is what is used as their charging tier. e.g. one with £10k, one with £100k and one with £300k would see the total family investment, £410k and all being charged as if they were in the £410k tier.
That method is not possible with stepped charging tiers but is possible where the whole balance is charged a certain percentage.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Would this only apply to future investments? Think I remember reading legacy investments can continue paying commission as they've always done.I suspect HL will not go the fixed fee plus percentage route but percentage only. They have too many people with small funds and whilst losing some of those would not be an issue, the volume of small cases would likely compensate for the low profitability.0 -
Would this only apply to future investments? Think I remember reading legacy investments can continue paying commission as they've always done.
Platforms have until 2016 to convert legacy business. Trail commission is currently open ended but there is talk of a sunset clause coming on that. Hl keep both the platform commission and most of the trail commission. So, they will have to change.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
gadgetmind wrote: »I already pay fixed fee for trackers with Best Invest and expect I'll be moving everything to BI once everyone has played their hands. However, I guess BI may change their model in an unexpected way, so let's wait and see, get all the information, and then do the calculations.
Yes, this is part of the problem, isn't it? I can do the calculations based on current charging structure, and invest accordingly, but if the providers then change their charging structure a few months down the line I may be stuck with the wrong firm. Part of my decision making may have to include the costs of moving funds to another firm if that happens. I haven't yet researched this aspect, but I seem to recall that HL charges a withdrawal penalty PER FUND held. That could be painful!!0 -
I haven't yet researched this aspect, but I seem to recall that HL charges a withdrawal penalty PER FUND held. That could be painful!!
If you stick everything into a mixed-asset fund for when you switch, you'll keep the fees down but won't be out of the market.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
gadgetmind wrote: »If you stick everything into a mixed-asset fund for when you switch, you'll keep the fees down but won't be out of the market.
Good thinking. Thanks!0
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