Hargreaves Lansdown "playing hardball"

Linton

wile wrote: »

Hi all, may I ask a quick question?

I am now seriously thinking of leaving HL, and have a S&S ISA valued at £29k which is currently spread over 17 funds.

As I understand it, under current HL terms and conditions to transfer these as they are to another provider would incur a charge of £25 per fund.

Would it however be permissible under HL (and also ISA) rules to convert my funds into cash with HL, transfer the balance and then re-distribute into funds with my new provider?

Many thanks

I have always transferred between S&S ISAs via cash, though not with HL. I cant see that being a problem though because you could sell all your holdings even if you werent going to transfer and you can always transfer as cash.

westy22

With funds it is almost always cheaper to come into cash, transfer and then re-buy at the other end. That is because there are usually no selling or buying fees involved. Of course, the market could move against you (i.e. rise) whilst you are stuck in cash but it could also benefit you if the market falls, so a 50:50 gamble.

With shares and ITs it is usually cheaper to transfer 'in specie' and pay the exit charges because:
a. you would avoid selling and re-buying fees (which could be £25 alone)
b. you would not have to pay 0.5% SDRT on the re-buy
c. the receiving provider may be prepared to reimburse the costs you incurred on moving.

grey_gym_sock

you could alternatively switch all your funds into a single, very broadly invested, fund, so you only pay 1 £25 exit fee. which avoids being completely out of the market for an unknown length of time.

westy22

I have only completed one 'in specie' transfer (iii to X-O in 2011) but that only took about 4 weeks and for most of that time the funds and shares continued to be 'live' at iii. I think there was only about 48 hours gap between when the stocks disappeared from iii and reappeared at X-O.

I don't know if that is typical of others' experiences?

SnowMan

westy22 wrote: »

I have only completed one 'in specie' transfer (iii to X-O in 2011) but that only took about 4 weeks and for most of that time the funds and shares continued to be 'live' at iii. I think there was only about 48 hours gap between when the stocks disappeared from iii and reappeared at X-O.

I don't know if that is typical of others' experiences?

I've had numerous problems with re-registrations (in specie transfers) taking many months as has my mum see this thread.

pip895

jimjames wrote: »

If you have £300k of managed funds on HL you could be paying around £800 more per year than an alternative platform.

It will be interesting to see once the dust settles if it is as much as that. If it is and I can get good service else where I will move. I guess that is the whole idea of RDR isn't it?

What I am still trying to get my head around is if I will be worse of after HL introduce their charges. I am assuming the idea of the RDR exercise, isn't to transfer cash from pensioners trying to eek a pretty modest income from their investments, to those worthies of the city the fund managers!!:(

bigadaj

pip895 wrote: »

It will be interesting to see once the dust settles if it is as much as that. If it is and I can get good service else where I will move. I guess that is the whole idea of RDR isn't it?

What I am still trying to get my head around is if I will be worse of after HL introduce their charges. I am assuming the idea of the RDR exercise, isn't to transfer cash from pensioners trying to eek a pretty modest income from their investments, to those worthies of the city the fund managers!!:(

The idea of rdr might not be to make pensioners poorer but never underestimate the ability of the British financial services industry to generate the maximum amount of money from investors pots.

dunstonh

What I am still trying to get my head around is if I will be worse of after HL introduce their charges.

If you used non-commission paying investments, such as shares or index trackers then you will likely end up paying more because these were previously cross subsidised by managed funds.

If you use managed funds, then you should end up cheaper in theory if you look at other platform charges. However, more likely you will end up cost neutral or thereabouts (small amounts may be a little more with larger amounts being cheaper).

I am assuming the idea of the RDR exercise, isn't to transfer cash from pensioners trying to eek a pretty modest income from their investments, to those worthies of the city the fund managers!!

The idea is to remove biases that existed and hidden commission payments or marketing payments to be promoted by that firm. We don't know what HL was paid just as we dont know what most others were paid. Some got nothing. Some got quite a lot.

Also, the regulator was concerned that some platforms were marketing themselves as cheap ways to get investments and making out they were free to use. Whereas in reality, they were being paid by the fund house who would in turn recover that cost out of the annual management charge of the fund which the investor was paying. So, not free at all.

pip895

dunstonh wrote: »

The idea is to remove biases that existed and hidden commission payments or marketing payments to be promoted by that firm. We don't know what HL was paid just as we dont know what most others were paid. Some got nothing. Some got quite a lot.

Also, the regulator was concerned that some platforms were marketing themselves as cheap ways to get investments and making out they were free to use. Whereas in reality, they were being paid by the fund house who would in turn recover that cost out of the annual management charge of the fund which the investor was paying. So, not free at all.

I understand the theory of it - and theoretically its a good idea its just how it is going to pan out over the next year or so that concerns me - I feel there may be a risk of the fund managers ending up pocketing even more of my cash than they do at present.

Rollinghome

pip895 wrote: »

It will be interesting to see once the dust settles if it is as much as that. If it is and I can get good service else where I will move. I guess that is the whole idea of RDR isn't it?

What I am still trying to get my head around is if I will be worse of after HL introduce their charges. I am assuming the idea of the RDR exercise, isn't to transfer cash from pensioners trying to eek a pretty modest income from their investments, to those worthies of the city the fund managers!!:(

Until HL tell their clients what they intend to charge them we won't know the details but what we do know is that HL currently help themselves to around 0.7% of your investment and after RDR2, across the board, they intend to take the same.

Some people are expected to pay slightly more and some will pay slightly less, depending on the amount invested and the type of investment, but the average is expected to be about the same.

So that's about 3 times what you could pay if you used someone such as Cavendish/Fidelity or Alliance Trust. HL are expensive now and will remain expensive if they can get away with it.

For most people, most of their money won't go to pay for the fund managers who actually invest their money. but to HL for just acting as an intermediary. It's a profitable game they're in.

Many people prefer to pay more for managed funds rather than passive funds in the hope that they might get a better return. It's hotly debated. What we know for sure is that you won't get a better return by paying treble the price for the platform, quite the reverse.