Hargreaves Lansdown "playing hardball"

Porcupine

jamesd wrote: »

Does anyone know when HL started disclosing commission? I see it on contract notes for November 2013 but not July and don't have any in between to narrow it down a bit.

I have it between 22 July and 28 August.

oly2c

It has been stated several times on this thread that HL is only the third biggest platform. As HL is an FTSE100 constituent I tried to find who might be bigger. Only Aberdeen and Schroder are listed under financial services and are obviously not larger platforms. That leaves banks and insurance companies, not noted to for there largess, but presumably paying good commission to IFAs.
Of course the platforms could be foreign owned and taking advantage of offshore listing for tax purposes. Fidelity?
So who are the two larger Platforms?

Porcupine

oly2c wrote: »

So who are the two larger Platforms?

I assume it's Cofunds and Fidelity. Being 'large' is related to assets under management rather than market cap - a company that's lean and mean can have lots of AAM without being so big itself. Fidelity originated in the US, while Cofunds is a platform for IFAs which is why you don't hear much about it.

bowlhead99

Cofunds is touted as the biggest -it was bought by L&G last spring, having previously been owned by a consortium (L&G already part owned it as part of that consortium and used their white-label product). They white label for others too.

Fidelity Fundsnetwork is also huge, and Skandia is big too (maybe £30bn AUA). The actual amount of platform assets under administration from any one group obviously changes all the time with the markets, and whether you include or exclude institutional business, defined contribution scheme business, IFA and direct to customer business (and what different classes we're talking about) from what headline number they say they are managing/ administering /custodying at a point in time.

As Porcupine says, "the biggest" does not mean that they as a business unit are independently listed on any particular stock exchange with the largest assigned fair valuation of the business from the market participants therein. Merely, what does their business do in terms of the volume of business transacted or the assets sitting there on the platform. This is what gives them "buying power" in terms of being able to squeeze suppliers for super clean / more keenly priced fund classes etc etc.

SnowMan

Analysts upgrade Hargreaves by 50% ahead of fee announcement

http://www.ifaonline.co.uk/ifaonline/news/2322882/analysts-upgrade-hargreaves-by-50-ahead-of-fee-announcement

Morgan Stanley acknowledged Hargreaves appears to be the most expensive D2C provider on a surface level, but said accurate comparisons of all costs would prove "almost impossible", and argued consumers "are unlikely to switch providers for 10bps on £40k, ie £40."

jimjames

SnowMan wrote: »

Morgan Stanley acknowledged Hargreaves appears to be the most expensive D2C provider on a surface level, but said accurate comparisons of all costs would prove "almost impossible", and argued consumers "are unlikely to switch providers for 10bps on £40k, ie £40."

The article gives some interesting numbers - rather different to the 10bps mentioned and is even higher than paid at the moment by HL customers

Our survey suggested consumers would be willing to pay between 50-100bps for investment recommendations on £10,000 of assets. This is higher than anticipated and well within the current charging structure of HL," the analysts said

bowlhead99

That's true (i.e. accurate overall cost comparisons being hard to do as a generalisation) although will obviously be possible for a savvy investor who knows his own current portfolio, and also knows what type of investment instruments he's likely to use in the foreseeable future.

Not every investor is smart enough, and/or, ultimately, bothered enough, to do the full cross-market comparison. And it has to be remembered that this particular community only represents one, very cost conscious, end of the market.

Where the price differential is very transparent and several hundred pounds (as in some of SnowMan's useful examples) you could see a clear case to switch, but some still won't, whether out of laziness or naivety or comfort of "better devil you know".

HL have been an expensive rather than ground-breaking provider for a while but they still have kept growing their customer base to hundreds of thousands of customers. The new fees, being explicit and perhaps restructured over some of the historically cheaper asset classes to share the pain, should rightly put some of these people off. But HL's shareholders will be hoping that customer demand from the non-MSE public at large is not as sensitive to fees as it might be at smaller, already-cheaper fund places.

What the general public are perhaps willing to pay in terms of basis points for "investment recommendations" is quite revealing, but also believable. Over a certain level of assets, an IFA could be providing proper regulated advice for that money. But proper advice is less cost effective at lower levels.

At such levels, or for newbies, a chunky percentage might not appear a large absolute amount of cash over and above a less "bells and whistles" website. And as there are thousands of investment choices out there, if someone is willing to summarize the "top 50 funds held by people like you", it is easy to see why some like to go along with the reassuringly expensive Stella Artois / Starbucks / Waitrose-priced offering.

So, even if the various finance pages of some newspapers do a feature on "best platform for a portfolio like this", it is still a leap to getting the majority of HL's customer base to visit a proper, niche, comparison website, and actually entering in all their current and future holdings details and then acting on what they find...

SnowMan

Hargreaves unveils unbundled pricing structure

http://citywire.co.uk/new-model-adviser/hargreaves-unveils-unbundled-pricing-structure/a727982

Drp8713

Looks very good. It will save me money and wont have to move.

westy22

Full details are now available on the HL website as PDF downloads.

Maybe not as bad as feared for many investors with funds but the separate fee caps for shares and ITs is a big increase (the cap used to apply to all shares, ETFs and ITs but now seems to be separate caps).

Overall, a 0.45% tiered platform fee for the vast majority of people.