Hargreaves Lansdown "playing hardball"

grey_gym_sock

dunstonh wrote: »

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

i can see why a platform should charge the same way for all funds (whether active or passive). but do you see a problem with a platform charging differently for funds and shares?

e.g. youinvest's new charges include 0.2% p.a. (capped at £200) on funds, but not on shares. also, cheaper dealing on funds than on shares (£4.95 vs £9.95). is that allowed?

(youinvest also have an extra charge for SIPPs, regardless of the type of assets held.)

it would seem unwise for HL to try raising their charges for ppl who only hold shares with them. when there are a variety of competitors who are already a bit cheaper than them. (some of whom are pure stockbrokers, i.e. don't carry funds at all.)

what they should be trying to do is re-apportion charging among customers holding funds, so that customers are not too unhappy, and HL's margin doesn't fall too much. (it seems like an obvious point to give up at least a bit of margin.) why upset more ppl than necessary by also changing charges for holding shares?

zagfles

dunstonh wrote: »

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.

Do they claim they're the cheapest? That would be just as silly as claiming they're the most expensive!

Rollinghome

Bit of dither at HL towers?

On Monday we had the analysis from Barclays that the new fee structure would mean around 0.7% for the majority of HL clients and "Hargreaves commented to Investment Week that they were 'a reasonable representation of how things might work'." Danny Cox announced they'd be charging for a "Waitrose style premium service". Here

Now today in the FT here we have Gorham asserting that "recent reports suggesting Hargreaves’ client fees could reach 0.7 per cent were “unfounded”". “We know 90 per cent of our fee structure,” he explained. “We are just working on a couple of bits around the edges.” - a couple of bits that are going to take them until sometime next year to figure out apparently.

Commentators in the piece suggest they may be having a spot of bother. "Polson said a client fee of 0.7 per cent would be well in excess of what some professional advisers’ platforms charge.... Critics say Hargreaves’ plans risk excluding from its influential list of “core funds” those with higher costs, no matter how well they perform. The group’s enviably chunky margins, are worth trying to protect. But investment selections that became known for omitting some strong performers would be more damaging than narrower margins."

Lokolo

Rollinghome wrote: »

Bit of dither at HL towers?

On Monday we had the analysis from Barclays that the new fee structure would mean around 0.7% for the majority of HL clients and "Hargreaves commented to Investment Week that they were 'a reasonable representation of how things might work'." Danny Cox announced they'd be charging for a "Waitrose style premium service". Here

Now today in the FT here we have Gorham asserting that "recent reports suggesting Hargreaves’ client fees could reach 0.7 per cent were “unfounded”". “We know 90 per cent of our fee structure,” he explained. “We are just working on a couple of bits around the edges.” - a couple of bits that are going to take them until sometime next year to figure out apparently.

Commentators in the piece suggest they may be having a spot of bother.

The first quotation could be talking about having a tiered structure, nothing about the actual charging amounts. Whereas the second quotation is directly against the 0.7% charge.

Barclays guestimate is based on the investment amounts per customer, this would be completely wrong unless they say how they calculated the customer sizes?



As we see here, it says 20% of HL customers have less than £10k. These numbers are estimates and could be way off. But these are the numbers that were used to calculate the 0.7%.

I think they will have a tiered structure, but I don't think the amounts in these tiers are correct, it would be suicide for them.

Rollinghome

Lokolo wrote: »

Barclays guestimate is based on the investment amounts per customer, this would be completely wrong unless they say how they calculated the customer sizes?

If we don't know where they got the data or made their calculations then I don't quite know how we could assert "this would be completely wrong" . I would assume they started from HL's current margins which they have said they intend to maintain.

I think they will have a tiered structure, but I don't think the amounts in these tiers are correct, it would be suicide for them.

I think HL might be coming to the same conclusion. Perhaps Barclays need you to help them out.

zagfles

Lokolo wrote: »

The first quotation could be talking about having a tiered structure, nothing about the actual charging amounts. Whereas the second quotation is directly against the 0.7% charge.

Barclays guestimate is based on the investment amounts per customer, this would be completely wrong unless they say how they calculated the customer sizes?



As we see here, it says 20% of HL customers have less than £10k. These numbers are estimates and could be way off. But these are the numbers that were used to calculate the 0.7%.

I think they will have a tiered structure, but I don't think the amounts in these tiers are correct, it would be suicide for them.

Do you know what's meant by "gross" and "net" direct fee? I thought it was VAT at first but it clearly isn't as the difference is always 15bps

gadgetmind

Lokolo wrote: »

As we see here, it says 20% of HL customers have less than £10k.

Less than a single year's S&S ISA contribution.

I guess we all have to start somewhere, but I banged more into equities in the late 80s when PEPs started, and I was a mid 20s whipper snapper back then.

gadgetmind

Rollinghome wrote: »

Commentators in the piece suggest they may be having a spot of bother. "Polson said a client fee of 0.7 per cent would be well in excess of what some professional advisers’ platforms charge

Dear HL,

Total fees (yours plus those of your fund manager cronies) need to be deep sub 0.5% (50 bps) before I would consider keeping my investments with you. This is for the simple reason that I can get *exactly* the same products elsewhere for this level of fees or less.

You have very little value add, very little USP, and are (to be blunt) entirely fungible middlemen. Keep your fees keen, live on the sliver of margin your value add provides, or cease to be. Frankly I don't care either way, but pull your fingers out and get on with it.

As Sun Tzu said in the Art of War, "cleverness has never been seen associated with long delays"

Thanks

Your Average Investor

Linton

gadgetmind wrote: »

Dear HL,

Total fees (yours plus those of your fund manager cronies) need to be deep sub 0.5% (50 bps) before I would consider keeping my investments with you. This is for the simple reason that I can get *exactly* the same products elsewhere for this level of fees or less.
....

Out of interest where are you proposing to go for "deep sub 0.5%" ? Especially once you get into drawdown payment.

For example with SIPPdeal and a £100K pot in funds the SIPP and fund custody fees would be £300 and then in drawdown you would pay £100/year to get at the cash. That is 0.4% before you get to the fund management charges.

ETFs?

Edit or are you purely talking ISAs?

Porcupine

A quick interlude to clarify what we're talking about.

The charges like 0.5%, 0.7%, in this thread are on top of the fund house charge, am I right? (Talking 'bog standard' actively managed funds here, not trackers or anything special)

So we're talking:
Fund house 0.5%
Hypothetical HL fee 0.7%
Total 1.2%

Compared with say Cavendish:
Fund house 0.5%
Fidelity platform fee 0.2%
Cavendish fee 0.05%
Total 0.75%

So HL's hypothetical 0.7% fee would be roughly equivalent to what many people pay today:
Wrapped fund AMC: 1.5%
minus 'loyalty bonus' 0.25% (if you're lucky)
Total 1.25%

Is that correct?