Hargreaves Lansdown "playing hardball"

grey_gym_sock

guitarman001 wrote: »

Oh? I'm paying £2 a month for any Vanguard fund I hold...

you always pay something just to hold a fund, but not (if you pick the right provider) to hold an ETF. ETFs are like other shares, not like funds. so you do pay dealing commission to buy or sell them.

bigadaj

grey_gym_sock wrote: »

you always pay something just to hold a fund, but not (if you pick the right provider) to hold an ETF. ETFs are like other shares, not like funds. so you do pay dealing commission to buy or sell them.

The fact that many efts are synthetic has made me wary of holding them rather than funds, though this can be determined by detailed research I suppose.

hyposmurf

guitarman001 wrote: »

Oh? I'm paying £2 a month for any Vanguard fund I hold...

You also have to look at other fees youll need to pay, other than management fees. For example XO currently have a subscription fee for SIPPS. Im currently looking myself for a SIPP provider.Önce you start factoring in the subscription\annual fees together with the management charges theres not a huge difference between providers.

grey_gym_sock

bigadaj wrote: »

The fact that many efts are synthetic has made me wary of holding them rather than funds, though this can be determined by detailed research I suppose.

cursory research will do it.

also, some ETF providers are more into synthetics. if you stick to vanguard, ishares & HSBC, it's almost all physical.

dunstonh

i think HL's last results showed their margin on funds (net of loyalty bonus) as c. 0.6% (it may have fallen a little). my guess is that the new pricing will aim to give up a tiny bit more margin. if you then throw in lower AMCs on some funds, they might look a similar cost to other platforms (only if you use those funds).

But you have platforms running on 0.25-0.35% as a typical charge for the platform. So, its more than giving up a tiny bit of the margin.

though doubtless other platforms will then be asking why they don't have the same lower AMCs - if they don't - some may get them at the same time, but i doubt that all will.

Remember that HL are not the biggest. They are perhaps the loudest when it comes to self promotion. They are big in the DIY world but there are bigger IFA platforms. Some of those IFA platforms are used by the discount brokers. So, if HL get deals, you would expect the bigger platforms to get the same or better.

Superclean is already starting to happen on platforms. There will be unique deals for certain platforms but it will end up a bit swings and roundabouts with one deal on one platform with one fund house and a better deal on another with a different fund house.

noclaf

I transferred a £12.5k pension from a previous employer to HL in November last yr, havent invested it yet since waiting to see how HL's charges would change.Im 32 and looking at the Vanguard 60 or 80 LS funds as a home. I already use HL for my S&S ISA but in terms of charges is it worth considering using a different platform for the SIPP?

pip895

Difficult to know before they publish there post RDR prices but at present HL are good for SIPP's - particularly smallish ones.

Rollinghome

grey_gym_sock wrote: »

well, if c. 0.25% reductions on the AMC of some funds are an especially nice dessert, then apparently they will.

The difficulty for HL is that secret arrangements will no longer be possible, or not without the likelihood of the FCA pouncing on it, and so as dunston points out, it looks extremely likely that any lower AMCs negotiated will also be required by other platforms, which in some cases are bigger than HL.

If they do manage AMCs as much as 0.25% lower, albeit, on a very limited number of funds, a 0.6% platform charge still doesn't get them down to the 0.25% available across the full range from their competitors. If Danny Cox's talk of "Waitrose pricing" concedes that they won't be able to be competitive on price then they would be selling the same products but more expensively.

There's also the question of whether fund managers will put the same resources into "bargain basement" funds they receive a lower fee for or if their main effort will go into more profitable funds. And then what happens if the funds HL offer a lower AMC on do underperform? Will they go back and try to get better funds from more successful managers who had previously refused them or stick with the dog funds and hope clients don't notice?

If HL have such an attractive proposition to offer then I'm surprised that they've decided to postpone announcing it so many times. With tracker funds becoming increasingly popular that will be an especially difficult area for them. Low cost trackers at an AMC of 0.1% can't go much lower and paying 0.1% to the fund managers but 0.6% to HL won't look appealing to price conscious index fund investors who select funds on the basis of a few BPS.

Shareholders of HL like yourself will obviously hope they can maintain their margins but their marketing will need to be at it's best to sell the idea of "Waitrose pricing" rather than optimum returns.

Whether RDR will drive down fund management charges has yet to be seen but that was a secondary objective and I suspect that it might.

grey_gym_sock

dunstonh wrote: »

But you have platforms running on 0.25-0.35% as a typical charge for the platform. So, its more than giving up a tiny bit of the margin.

supposing HL have a platform charge of 0.6%, and can get some funds for 0.25% cheaper than some other platforms can, then the total charges for holding such a fund with HL are the same as holding it with another platform charging 0.35% ... on those assumptions, they'd be comparable in total costs ... that's a lot of assumptions, i know ...

Remember that HL are not the biggest. They are perhaps the loudest when it comes to self promotion. They are big in the DIY world but there are bigger IFA platforms. Some of those IFA platforms are used by the discount brokers. So, if HL get deals, you would expect the bigger platforms to get the same or better.

yes, though HL may have a bit more negotiating power than their size would suggest, due to their ability to "steer" customers into funds they favour. this is rather contrary to the spirit of the platform review, but there it is ...

Superclean is already starting to happen on platforms. There will be unique deals for certain platforms but it will end up a bit swings and roundabouts with one deal on one platform with one fund house and a better deal on another with a different fund house.

yes, swings, roundabouts, and confusion.

Rollinghome wrote: »

There's also the question of whether fund managers will put the same resources into "bargain basement" funds they receive a lower fee for or if their main effort will go into more profitable funds. And then what happens if the funds HL offer a lower AMC on do underperform? Will they go back and try to get better funds from more successful managers who had previously refused them or stick with the dog funds and hope clients don't notice?

i think managers will only offer "bargain basement" pricing if they expect to get enough volume that their revenue will be as high as for a higher-priced fund. (does putting more effort in actually help actively managed funds to do better, anyway?)

presumably some dogs will get kicked out of the list, as happens with HL's current list. though i doubt the new list will be a much better way of picking funds for investors than the old 1 has been.

If HL have such an attractive proposition to offer then I'm surprised that they've decided to postpone announcing it so many times.

i think they've seen how everybody who introduces platform-review-compliant pricing gets massive bad publicity in turn. and reckon the least bad option is to declare last.

though i agree they won't be that attractive on price, and will probably end up moving my own fund holdings away from them.

With tracker funds becoming increasingly popular that will be an especially difficult area for them. Low cost trackers at an AMC of 0.1% can't go much lower and paying 0.1% to the fund managers but 0.6% to HL won't look appealing to price conscious index fund investors who select funds on the basis of a few BPS.

absolutely. they can't compete on price on trackers. which is why i'm likely to move away myself.

Shareholders of HL like yourself will obviously hope they can maintain their margins but their marketing will need to be at it's best to sell the idea of "Waitrose pricing" rather than optimum returns.

as a shareholder, i'd like margins to decline slowly enough that profits can still increase, as assets under management increase. there is actually a lot of scope for that to happen, with predictions for the size of the D2C platform market to double over the next few years.

Whether RDR will drive down fund management charges has yet to be seen but that was a secondary objective and I suspect that it might.

transparency will hopefully downward pressure on pricing of both platforms and fund managers.

gadgetmind

grey_gym_sock wrote: »

supposing HL have a platform charge of 0.6%

Announcing that would be a suicide note IMO. No way can a platform, which adds no value/advice beyond being an ISA/SIPP wrap, justify 60bps on top of the underlying holdings.

Half that is an absolute max and a tenth of that should be achievable for any platform running a tight ship.