Stocks and shares ISAs

scomjak

I notice that MMT recommends Hargreaves Lansdown as the first place to go to open a stocks and shares ISA. Just over a week ago an article in the Sunday Times suggested Hargreaves Lansdown might be overcharging customers and might be guilty of 'hidden charges'. I investigated their ISA charges and, with some difficulty, found that they charge 0.5% for the ISA wrapper. The important thing here is that it took me a considerable amount of time and effort to find a reference to this charge... so is this a hidden charge and how many more such charges lie hidden in the small print?
On the Sunday Times recommendation, I am moving my investments to Charles Stanley Direct who, as far as I can determine, make no charge for the ISA wrapper. I have studied their list of charges and they do appear to undercut HL by a good margin.
By the way, Hargreaves Lansdown are charging me £50 to transfer my approx £5400 investment to Charles Stanley. Another charge I did not expect.

C_Mababejive

Why do you need an ISA wrapper for your stocks and shares? Will it contain funds or shares?

innovate

Who is/are MMT?

I haven't read the Sunday Times article myself, but if it says that HL charge 0.5% for an ISA, this isn't the full story. The charges for HL S&S ISAs are very clearly laid out on http://www.hl.co.uk/investment-services/isa/savings-interest-rates-and-charges. They do not charge for an ISA wrapper, even if the ISA is dormant. You are paying charges based on your portfolio - not dissimilar to what many others doing, incl Charles Stanley.

On very small investments, and depending on your portfolio, you could pay even more than 0.5%. But on larger sums, and again depending on your portfolio, the annual charges could be a lot less than 0.5% (e.g. some funds are £2 a month, regardless of the size of the investment).

Charles Stanley have attractive offers for people starting out. But don't kid yourself, they aren't in this business to make no money!

I seem to remember that all HL charge for a Vanguard Lifestrategy fund is £24 a year, whilst Charles Stanley charge a percentage. So you could be lulled into a 'cheap' investment that, over time, could cost you an absolute fortune.

monevator.com did an in-depth study on discount brokers - from there you will see that it isn't as simple as whether you get charged for an ISA wrapper

scomjak

[FONT=&quot]As I am a new contributor I am unable to post links but if you use a search engine and look for 'Sunday Times Hargreaves Lansdown' you will find part of the article I mentioned.
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[FONT=&quot]I looked at your Stocks and Shares ISA link on the HL site and it does say 'No Charge' for everything listed. This is misleading because if you search further you will see that on the Vantage S & S ISA info it says
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[FONT=&quot]The annual charge to hold shares and other investments is just 0.5% (capped at a maximum of £45 per annum). [/FONT][FONT=&quot]

For a minority of funds (mainly tracker funds) there is a monthly platform fee of £1 or £2.

[/FONT][FONT=&quot]Like most investors I am looking for honesty and would like to know upfront what the total charges will be. With an invest ment of £5400 in two holdings I calculate that my total annual charges with HL could be £27 plus £48 making a total of £75, nearly 1.4%. I can only guess at this because although I always knew what my holdings were worth I never saw a statement that mentioned dividends or charges.
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[FONT=&quot]I agree that Charles Stanley and others will no doubt make charges but the suggestion in The Sunday Times is that their charges are more transparent. Incidentally HL charged me £25 per holding to transfer out whereas Charles Stanley Direct charge only £10 per holding for transfers out.

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Archi_Bald

I can't see how you can say HL aren't upfront with their charges - - you have quoted part of what they are saying yourself? It seems to all be clearly spelled out on the same page.

No platform provider is free of charge, whether your investment is in an ISA or not.

Charles Stanley, for instance, charge 0.25% per annum on first £500,000 of Funds held across all accounts; 0.15% per annum on balance of Funds in excess of £500,000 (across all accounts).

That would be £1,250 if I held £500K of a Vanguard LifeStrategy fund. At HL, I would pay £24.

Of course, if I held only £5,000, Charles Stanley would charge me £12.50, whilst HL would still charge me £24. As has been widely reported, HL are your best option for Vanguard Lifestrategy as soon as you have more than £10K invested. For many people, that's less than one year's ISA deposit.

This just as an example to demonstrate that it isn't as black and white as you were trying to say it is. As has already been mentioned, Charles Stanley could be a good choice for people starting out. But they are by no means the best choice for all investors - - like everything in life, it's horses for courses.

badger09

scomjak

I think you are misreading HL charges for investments held in S&S ISA:o

For many Funds (typically trackers) they charge a straight monthly fee of £1 or £2 per Fund. So if you held 2 Funds, the most you would pay would be £48 per year. This applies regardless of the amount invested.

For shares & other investments they charge annual 0.5% capped at £45 per year.

You don't pay both charges on the same investment though;)

jimjames

scomjak wrote: »

[FONT=&quot]Like most investors I am looking for honesty and would like to know upfront what the total charges will be. With an invest ment of £5400 in two holdings I calculate that my total annual charges with HL could be £27 plus £48 making a total of £75, nearly 1.4%. I can only guess at this because although I always knew what my holdings were worth I never saw a statement that mentioned dividends or charges.[/FONT]

I think HL charges are as clear as they could possibly be. You need to make some effort to calculate them as the amount will vary depending on what you hold in your ISA.

I have my ISA with HL and pay nothing in charges other than the portion of the managament charge they retain - there is no explict additional charges that you have mentioned.

If you hold shares you will pay more (0.5%)
If you hold trackers you will pay more (£1/£2 pm)

I don't hold either of these so don't pay anything extra.

scomjak

My first statement was 'I notice MMT (Martins Money Tips) recommends Hargreaves Lansdown as the first place to go to open a Stocks and Shares ISA'
I had just read an article in The Sunday Times written by Ali Hussain, published 8 September. I cannot include links so here is the start of the article.....
INVESTORS using one of Britain’s most successful fund supermarkets may be paying thousands of pounds more in charges than those at smaller rivals.
Hargreaves Lansdown recorded a 28% jump in profits last week as a ban on commission-based selling by advisers drove more clients to its DIY investing website, Vantage.
Since June 2012 the site has gained 76,000 customers, lifting the total to 507,000.
However, analysis by candidmoney.com, the personal finance website, shows that Hargreaves customers are losing out.
The financial services company pockets sales commission from fund managers averaging 0.77% a year. From this, it gives back an average 0.17% to customers as a loyalty bonus. The overall effect of this is a 0.6% charge a year. The typical equivalent by rivals, such as Cavendish Online and Charles Stanley Direct, is 0.25%.


.... To see the rest of the article you would have to subscribe to The Sunday Times.
[FONT=&quot]I realise that as a small new in vestor I have made some mistakes in my understanding. However, thanks to jimjames, badger09, Archi Bald, and innovate [/FONT]for all your responses which I have found helpful. I am pleased to know that I will not be paying 0.5 % plus the platform charges. Hargreaves Lansdown were charging me £2 per holding making an annual total of £48 so I will be better off paying 0.25% on £5400, that is £13.50. As Archie Bald said, there are better alternatives than HL for smaller investors and those starting out.

innovate

An unqualified recommendation for an HL ISA is a bad recommendation because it's not a well researched recommendation. I don't think it has been updated for several years, either.

MSE should stay clear of giving any investment recommendation and just stick to savings. After all, it is Moneysaving Expert, not [Investment] Expert. HL may be right for some investors, but not for others.

Perelandra

This link below:

http://monevator.com/compare-uk-cheapest-online-brokers/

Lays out reasonably clearly the charges for all the major DIY brokers/fund supermarkets, including HL.

scomjak

I would have said 'Who better than Moneysaving Expert to compare charges between between brokers? The average man in the street rarely looks at sites such as monevator but they do look at MSE'

But now, having glanced at monevator.com and candidmoney.com, I can see it would not be a simple task. Many thanks for the tip re monevator. This will be a real challenge for me and I am sure it will be well worth the effort.