Hargreaves Lansdown "playing hardball"

gadgetmind

Rollinghome wrote: »

Ian Gorham has stated that their services aren't price sensitive

I'll make sure to CC him on my transfer paperwork if they hike their fees and force me to move.

Of the three platforms we use, HL currently have the smallest share, and this could hit 0% quite easy. The ball is in their court.

planteria

who do you guys consider to be the main alternatives, at this stage?

JohnRo

I suppose it depends what you want from your platform and how much you're prepared to pay for it, given that many things could still change.

Personally, only investing in funds and ITs using ISA and GIA, and given the sums involved, Charles Stanley tick many boxes for me - but their dealing fee on stocks is a bit high compared to some and the way they've implemented their platform charge is just weird imho

With no platform charge levied if making 6 or more stock purchases every 6 months in accounts with only stocks but where mixed stocks and funds exist the platform fee is only waived on the qualifying lines of stock.

That means for only stocks and shares the platform charge is a minimum £20 and effectively capped at £120 a year if managed properly or explicitly hard capped at £150 if you cant be bothered to trade 6 times each 6 months, yet for funds there is no such upper limit to the 0.25% or 0.15% platform fees chargeable at different investment levels and no way to cap them beyond limiting the amount invested in funds.

I don't know why that should be unless there is some sort of liability cost incurred on their part from accounts containing funds that doesn't apply to stocks but the difference on a large investment account could easily run to thousands.

jamesd

Rollinghome wrote: »

Would be good to see that happen but Ian Gorham has stated that their services aren't price sensitive and I'd reluctantly concede that he may be right.

I think he's right overall but that there are market segments where there is price sensitivity and that it would be rewarding for HL to recognise that and deal with it.

Consider that I briefly discussed the possibility of a workplace pension of not insignificant size maybe using them, they declined to discuss price, I eliminated them from consideration because they would have been price-uncompetitive so there would have been no point in me continuing with my intent to advocate their offering.

Or consider the audience here, where we can tell people which providers are likely to be cheaper or offer best service so they can pick a blend. Then consider individuals here who can do pricing checks for many platforms - I do - and see what their relative costs are for their specific activities. There's clearly going to be some price sensitivity there that could help HL to compete if it was recognised. Whether HL will choose to do that is another matter, but the potential is there.

Take me. What would be the effect on HL if I was to decide to switch? My assumption at the moment is that they will choose not to be price-competitive and I'll end up moving around £170k on their platform now and not moving to them another £50k or so that's not on their platform, with the expectation that it'll fairly soon cost them quarter of a million of assets under management if they choose not to be competitive enough. Each 0.1% is £220 today so it's worth me thinking about and worth them considering whether they really do want to lose what they could keep and get moved to them by being more competitive. They wouldn't want to do that for £50 a month from zero but the odd couple of hundred thousand is more interesting, as it is if they make up some of the difference by getting more money transferred to them.

Rollinghome wrote: »

Often surprises me that people will jump through hoops for an extra tenner p.a. from a cash "saver" account but happily pay hundreds a year more to a fund supermarket than they could pay elsewhere. More will take notice when we have the greater transparencey of RDR2 with any luck.

Many don't do the calculations. I've toyed with the idea of producing a tool to make it easier to do. Maybe you or someone else will beat me to it.

Rollinghome wrote: »

If we take the figure of 0.6% as what they need that's along way from the circa 0.25% of some of their competitors.

If I recall correctly they have given 0.32% as their break-even overall, but of course that will be lower for those with more than average on the platform because of the fixed costs. Given the FSA/FCA opinion against cross-subsidies it'll be interesting to see what shows up at different amounts on platforms.

JohnRo

jamesd wrote: »

Many don't do the calculations. I've toyed with the idea of producing a tool to make it easier to do. Maybe you or someone else will beat me to it.

Didn't Justin at Candid Money beat everyone to this already?

http://www.comparefundplatforms.com/

jamesd

Maybe. Not sure whether it has flexibility on things like trading levels. Thanks, I'll take a look, could be very useful and worth promoting here.

JohnRo

It's been around for quite some time and promoted on here before James, I'm not sure it's to be totally relied on as the information is only as good as that last provided to him by the platforms, at least the ones who submitted anything.

HL refused to submit data to the site apparently but that should be no surprise to anyone reading this thread.

Linton

planteria wrote: »

who do you guys consider to be the main alternatives, at this stage?

iii seems very competitive now everyone else is moving to RDR compliance. It came top for both my large share and fund ISAs in comparefundplatforms - I see no reason to doubt the iii data there.

My experience with them has been good. The platform works well and the telephone support is very helpful.

jamesd

planteria, it heavily depends on what you invest in and how you invest. Things like trading frequency and fund or share or ETF holdings can completely change the answer.

Rollinghome

jamesd wrote: »

If I recall correctly they have given 0.32% as their break-even overall, but of course that will be lower for those with more than average on the platform because of the fixed costs.

I believe Gorham on one occasion put their cost at 0.28% - which is a problem for them when competitors are charging below both figures and the margins expected by their shareholders are much higher.

That's the figure used here (July 13) http://www.ftadviser.com/2013/07/22/investments/wraps-and-platforms/platform-view-evolve-or-face-extinction-aZUhpMjzZAWEoRKFKFS4NI/article.html but with one pundit suggesting that margins on platforms would fall to 20bps.

I suspect HL are very dependent on client inertia and price-checking fatigue. There may be a danger for them if awareness of how expensive they are gradually grows. There was a time when they were the automatic recommendation on this board but not any more. They may still make sense for clients with just a couple of thousand who need a lot of hand holding but rarely for their most profitable clients with large sums.

Unless they can reduce their costs that'll be hard to change. They'll be aware of the risk that when they do introduce their new charges it will prompt clients to re-assess their position, just as happened when they introduced the additional platform fee for some funds.

They need to notice how M&S fell from exemplars of retail to where they are now; lots of similarities in their assumptions that customers would stay loyal regardless of price.

Justin Modray's calculator is the best around but providing accuracy makes it more complex to use. Each fund has to be entered with assumptions made and not all funds will be available on all platforms. His simpler comparison chart http://www.candidmoney.com/guides/3/guide-to-isa-discount-brokers may be enough for most people.




EDIT: Just noticed that a couple of words have been deleted from my original post, presumably at someone's request and possibly Hargreaves Lansdown themselves. Following the alleged threats of legal action against Justin Modray when he discussed their uncompetitive charges on www.candimoney.com this seems to be a very sensitive issue for them.

A very good article, "Hargreaves Lansdown in a spin", by Justin Modray on Hargreaves Lansdown pricing and margins here: http://www.moneymarketing.co.uk/justin-modray-hargreaves-lansdown-in-a-spin/1069857.article