Hargreaves Lansdown "playing hardball"

grey_gym_sock

zagfles wrote: »

Do they have to treat all funds the same? Could they have (eg) a higher charge for managed funds than for trackers & shares?

they are expected to charge the same for tracker funds as for managed funds. since the idea is to remove product bias from platforms; and the costs of handling funds for a platform are the same regardless of whether it uses active or passive management (unlike the costs for the fund manager).

OTOH, shares (including ETFs and investment trusts) can presumably be charged differently from funds. since they are handled by different processes by a platform - and perhaps, more cheaply.

certainly, some platforms are charging differently for funds and for shares. e.g. sippdeal's new charges have a (capped) percentage which only applies to funds; but cheaper dealing for funds than for shares.

OTOH, there are platforms who charge a percentage on shares, too. and there is ATS, with no percentage charges at all, and the same fixed charges for funds as for shares.

AFAICS, ppl who are leaving HL now, thinking that they are about to be charged the same rumoured percentage on their shares(/ETFs/ITs) as on their funds, may be mistaken. but may be correct.

for passive investors, the whole direction of charging, across various providers, is making it worth considering dumping tracker funds entirely in favour of ETFs.

westy22

AFAICS, ppl who are leaving HL now, thinking that they are about to be charged the same rumoured percentage on their shares(/ETFs/ITs) as on their funds, may be mistaken. but may be correct.

I think that HL have been behind much of the news leakage and rumours regarding their new charging structure so I would have thought that they would have seen some benefit in leaking that shares, ITs etc would be treated differently if that were their intention.

jimjames

zagfles wrote: »

So, with someone with 100% in that fund pays 0.31% p.a. plus £24 a year to HL.

A far cry from 0.7% !!

Not if they have a small portfolio in that fund. I've not done the numbers but £24 could be above 0.7% for some portfolios - remember the £24pa kicks in immediately you buy the fund so someone with £50pm would pay it on £600 and even start paying £2 on their first £50.

That is £1.86 as the 0.31% and £24 is 4% of £600.

Total 4.31%. It doesn't take too many to give an average of 0.7%. And 0.7% would actually be a massive drop in this example.

Rollinghome

grey_gym_sock wrote: »

AFAICS, ppl who are leaving HL now, thinking that they are about to be charged the same rumoured percentage on their shares(/ETFs/ITs) as on their funds, may be mistaken. but may be correct.

It was suggested that might be a requirement in this thread but I'd be very surprised if that were the case.

It would put any FSM with a share dealing service at a huge disdvantage. Many of HL's most profitable clients will have a mixture of funds and shares/ITs/ETFs and even raising the fee cap above the present £45 would have them running for the exit.

Especially when there are competitors with half HL's dealing charges, £0 account fees, £0 ISA fees, and less than half HL's exorbitant transfer out fees.

Fun article on Investment Week (login required): "Advance! Retreat! Arrrgh! .... Hargreaves' RDR pricing palaver"
"Sometimes we get to see the sausages being made. I reckon this was one of these times. Good fun to watch, and we wait with anticipation for the big announcement in the New Year."

SnowMan

Rollinghome wrote: »

Fun article on Investment Week (login required): "Advance! Retreat! Arrrgh! .... Hargreaves' RDR pricing palaver"
"Sometimes we get to see the sausages being made. I reckon this was one of these times. Good fun to watch, and we wait with anticipation for the big announcement in the New Year."

No login required here

http://www.ifaonline.co.uk/ifaonline/opinion/2316953/advance-retreat-arrrgh-polson-on-hargreaves-rdr-pricing-palaver

dunstonh

Yes. It's just the mixed messages on this thread. HL currently charge 0.7% or thereabouts keeps being bandied about, then charges likely to rise keep being bandied about. Truth AIUI is that charges will likely only rise for those paying far below 0.7% it seems. Agreed?

The 0.7% you see referred to is the average. That is not a surprise as the average trail was 0.50% and platforms were typically getting 0.25% to 0.75%

Yes, and presumably they might introduce trading charges, annual charges on the SIPP etc.

The charges will be platform based. Some platforms charge more for the SIPP wrapper given its higher cost and regulatory requirements.

Do they have to treat all funds the same? Could they have (eg) a higher charge for managed funds than for trackers & shares?

Why would they want to do that? With no commission being paid to them on ANY investment type, why would they want to make trackers cheaper than managed?

They would have to remove their independent tag and it would probably fall foul of the principles of RDR.

zagfles

jimjames wrote: »

zagfles wrote: »

So, with someone with 100% in that fund pays 0.31% p.a. plus £24 a year to HL.

A far cry from 0.7% !!
QUOTE]

Not if they have a small portfolio in that fund. I've not done the numbers but £24 could be above 0.7% for some portfolios - remember the £24 kicks in immediately you buy the fund so someone with £50pm would pay it on £600.

That is £1.86 as the 0.31% and £24 is 4% of £600.

Total 4.31%. It doesn't take too many to give an average of 0.7%. And 0.7% would actually be a massive drop in this example.

Yes, though I was talking about those with large holdings.

zagfles

dunstonh wrote: »

The 0.7% you see referred to is the average. That is not a surprise as the average trail was 0.50% and platforms were typically getting 0.25% to 0.75%

So the average charge will likely reduce AIUI.

The charges will be platform based. Some platforms charge more for the SIPP wrapper given its higher cost and regulatory requirements.



Why would they want to do that? With no commission being paid to them on ANY investment type, why would they want to make trackers cheaper than managed?

Why do they now?

They would have to remove their independent tag and it would probably fall foul of the principles of RDR.

So wouldn't people (particularly those who don't need the SIPP/ISA wrapper) stop holding shares on platforms?

gadgetmind

What HL need to understand is that a key part of the duty of those who've been on a gravy train is to act with grace and dignity when said train pulls into the station.

dunstonh

Why do they now?

Because their old pricing was based on commission and that is allowed until 2014/2016. The use of index trackers in on the increase but dwarfed by managed funds. So, running a few loss leaders to allow you to claim that you are the cheapest can make good marketing sense.

So wouldn't people (particularly those who don't need the SIPP/ISA wrapper) stop holding shares on platforms?

Only time will tell.