Nationwide Investment Charges

dealsearcher

Has anyone used this service? It appears to be a pretty good service looking at your full financial and risk profile and determining the best funds for you from a wide selection.

However the 'initial advice' charge is a bit confusing. It seems simple enough as they charge 3% of the amount you invest. But then you can top up your fund directly without a 3% charge on the top up amount. Therefore it would appear you can invest a minimal amount, which is subject to the 3% fee, and then top up the fund to a much larger amount with no further 3% charge.

Has anyone tried this with this service?

bowlhead99

dealsearcher wrote: »

Has anyone used this service? It appears to be a pretty good service looking at your full financial and risk profile and determining the best funds for you from a wide selection.

hmm, well perhaps not:

Our Financial Planning Managers offer advice that is restricted to the range of products and services available through Nationwide:

As you haven't experienced the service it seems a bit of a leap of faith to say it appears to be a pretty good service.

An IFA would sell you a proper whole of market service, which still might or might not be a good service because there are good companies and bad companies and good individuals and bad individuals... but would at least have a chance to determine the best funds or opportunities for what you are looking for without having to work within the restrictions of being unable to pick the cheapest funds or the historic top performing funds or only having access to a limited range of sectors etc.

However the 'initial advice' charge is a bit confusing. It seems simple enough as they charge 3% of the amount you invest. But then you can top up your fund directly without a 3% charge on the top up amount. Therefore it would appear you can invest a minimal amount, which is subject to the 3% fee, and then top up the fund to a much larger amount with no further 3% charge.

If it is genuinely an advice service then if you are telling them you only have 1000 to invest you will probably be advised to invest in a substantially different portfolio than would really be appropriate for you if you have 300,000 to invest. It would seem to be too good to be true to be charged 3% initial review on say 100 quid and then pay a 0.3% 'renewal' on a figure many times that, for your actual amount invested.

I haven't looked at Nationwide's current offering, which I presume has changed since the new industry rules came in discouraging providers from being able to sell funds driven purely by sales commission. In the old days they would just charge you a high initial charge and a hefty chunk of trail commission, both of which you could have got heavily or totally discounted by going to a diy platform yourself (providing your own 'advice') or by buying advice separately from an IFA.

Has anyone tried this with this service?

Banks and building societies are good at savings and lending. They are not famous for providing cheap or independent investment advice with the customer's interests at heart. While I don't doubt they have helped 300k members make investments, I think it unlikely those investors will have got the best deal possible (although quite possibly, they got the best deal they could be bothered looking for - but this is a money saving expert site so you wouldn't want to follow joe public if he's not getting a good deal). And in the context of a membership of some 15 million, it seems only 2% bothered to take investment services. Some of the other 98% can't afford it anyway, while the remainder (millions) are probably less taken in by sales patter and have refrained, rather than become one of the 300k 'happy customers'.

I'm a nationwide customer who's had current account and savings products and loans and mortgage products, all of which have been good, but am happy to say I don't know much about the quality or price of their investment advice because I know it's unlikely to be what I'd want. I've not been tempted to join their friendly in-branch (sales) advisor for a chat...

dunstonh

However the 'initial advice' charge is a bit confusing. It seems simple enough as they charge 3% of the amount you invest.

Why would you want to pay 3% for a non-advised service when when average adviser charge is 1.8%?

Nationwide were, last time I looked, tied agents. So, their sales reps would have a limited product range.

dealsearcher

Thanks for the replies.

Nationwide use Legal & General to invest in funds. Nationwide's annual service charge is 0.5% but the 'initial advice charge' is 3% on the initial amount invested. The overall annual fees come to 1.5%, including fund charges and the Nationwide advisor fee of 0.5%.

This answers my question more directly:

bowlhead99 wrote: »

If it is genuinely an advice service then if you are telling them you only have 1000 to invest you will probably be advised to invest in a substantially different portfolio than would really be appropriate for you if you have 300,000 to invest. It would seem to be too good to be true to be charged 3% initial review on say 100 quid and then pay a 0.3% 'renewal' on a figure many times that, for your actual amount invested.

Although I am not sure where you get the 0.3% from? There is no fee on subsequent top ups if they are done directly with Legal & General or online.

A smaller initial investment would create a different portfolio than if a larger amount was invested. Although the 0.5% annual service fee allows for interviews with the financial advisor where the portfolio could be rebalanced for the subsequent larger amount invested.

opinions4u

Use an IFA instead.

Please.

A_Flock_Of_Sheep

opinions4u wrote: »

Use an IFA instead.

Please.

Or buy Tim Hale's book and get a few cheap trackers.

opinions4u

A_Flock_Of_Sheep wrote: »

Or buy Tim Hale's book and get a few cheap trackers.

I'm a fan of trackers in an ISA for low value monthly saving.

But not once you're into more significant sums.

A_Flock_Of_Sheep

opinions4u wrote: »

I'm a fan of trackers in an ISA for low value monthly saving.

But not once you're into more significant sums.

What do you class as more significant sums? What do you use? Managed funds?

dealsearcher

opinions4u wrote: »

Please.

Now that is sounding a little desperate.

bowlhead99

dealsearcher wrote: »

Although I am not sure where you get the 0.3% from? There is no fee on subsequent top ups if they are done directly with Legal & General or online.

A smaller initial investment would create a different portfolio than if a larger amount was invested. Although the 0.5% annual service fee allows for interviews with the financial advisor where the portfolio could be rebalanced for the subsequent larger amount invested.

Fine, so it's not a 0.3% trail commission or annual review fee, it's a 0.5% annual review fee. The fact remains there's no point taking their advice on how to invest £5000 and then splitting your £500,000 in those proportions and waiting a year for the review to come up, where they tell you at lower cost how to rebalance it to something more appropriate for that amount of money and your genuine goals, risk profile and expectations.

The disparity in returns between different asset classes might be 20% over the year, so unless you are going to competently DIY during that time (in which case you don't need to pay advice fees in the first place), you should probably not try to beat the system to get something for nothing.

Instead engage an IFA who has access to all investments on a wider choice of platforms for whatever the market rate is for that service. Or defer your investments and take time to learn to DIY. Opting instead for the halfway house of paying IFA-type fees but being locked in to whatever the L&G /Nationwide products and prices are - and bearing in mind that they don't offer all funds or necessarily the cheapest versions of the funds that they do offer - seems a funny way of going about it.

opinions4u

dealsearcher wrote: »

Now that is sounding a little desperate.

It depends how you want to read it.

Desperate, it isn't. I am not an IFA. I don't work for an IFA. I don't think I know any IFAs.

A genuine desire to find the OP - you - a cheaper way of investing while at the same time having access to a wider and better range of products is why I bothered posting.