Hargreaves Lansdown "playing hardball"

SnowMan

At first glance interesting that there is no separate SIPP account charge (unless I am missing something).

So for relatively small value fund SIPPs (perhaps up to 50K) they may actually be reasonable if not good value (although a transfer elsewhere may be needed when the fund gets bigger)

£30 SIPP, ISA, dealing account closure fees being introduced from 2nd June (also a £25 cash transfer charge not sure how they interact)

Drp8713

Some Blackrock and L&G passive funds from 0.06%.

HL is still best for small investors. No fixed fees for anything, just percentages.

SnowMan

Drp8713 wrote: »

HL is still best for small investors.

Charles Stanley 0.25%, HL 0.45% so that isn't generally true, they are almost twice as expensive at a headline level of analysis. Super clean funds won't erode that difference for trackers.

For low value fund SIPPs though HL look good value because of the lack of separate account fee.

Drp8713

Yes the £100 fee for SIPPs at CS means under £50k and HL is cheaper.

The more under £50k you are the more you save

peterg1965

So, how do I know if I am better off staying with HL with a £120k SIPP, ££13k S$S ISA and £17k fund and share account, with regular £1700 saving into the fund account investing in 3 OEICs per month -£250 each, the rest remaining in cash? I will transfer some shares into my ISA on 5 April.

Is there an easy way to compare providers and whether I am better off remaining with HL?

jamesd

Well, HL and Artemis combined did manage to avoid one way to trip up, at least in the HL video about new fund prices, which uses the Artemis Strategic Assets fund as an example. The Artemis Strategic Assets fund currently has an AMC of 1.5% and commission of 0.84% with 0.1% rebate/Loyalty Bonus, leaving the fund manager getting 0.66%. The changes for this fund:

1. From 1 March a clean version will be available at HL with a 0.66% charge. The same as the current price with all commission removed.
2. From 1 March the rebate/Loyalty Bonus on the current version, which HL now calls "inclusive" versions, will increase to 0.84%, producing the same 0.66% effective AMC.
3. However, the existing version with higher rebate will be more costly than the clean one in any product where the rebate is subject to income tax. It isn't in the ISA or SIPP.
4. The total cost to investors is now 1.4% AMC after the 0.1% rebate. It will fall to 1.11% with either the clean or full rebate pricing, assuming 0.45% HL charge.

The video says that the Loyalty Bonus on thousands of "inclusive" funds will increase on 1. March 2014 but doesn't say anything about whether it will always be the full commission. I don't think HL are yet compelled to change to 100% commission rebating.

The tiering is the least advantageous way for customers, unsurprisingly. Each account is considered individually, so each ISA, SIPP of or fund and share account is split. Then the charge is 0.45% for the first £250,000 plus 0.25% for the next £750,000 (to 1 million), 0.1% for the next million and nothing for anything above two million.

No charge to deal funds online, by phone or by post.

Cost for holding shares, ETFs and investment trusts drops from 0.5% to 0.45%, capped at £45 in the fund and share account or ISA and £200 in the SIPP. It appears that this platform continues to have discriminatory pricing in respect of the ETF and investment trusts, with them being more costly than funds at the 0.45% tier until total holding size for them in the SIPP reaches £44,444 and in ISA or fund and share account, £10,000. Above those amounts they are cheaper than the fund alternatives in this tier, since the price drops below 0.45%. This may make it useful for some to switch from fund to ETF versions of say some Vanguard funds to reduce HL charges.

There's a new £1.50 dealing charge for regular saving into shares and investment trusts.

The disclosure of the very, very expensive foreign exchange commission appears to continue to be misleading, since it's apparently tiered in the same way as the funds but the description has ranges that appear to be deal sizes. the commission is so high that it looks daft to do much of this at HL and that doesn't seem to change.

dunstonh

You have to suspect that HL are cross subsidising the SIPP wrapper cost from the high initial 0.45% band.

1. From 1 March a clean version will be available at HL with a 0.66% charge. The same as the current price with all commission removed.
2. From 1 March the rebate/Loyalty Bonus on the current version, which HL now calls "inclusive" versions, will increase to 0.84%, producing the same 0.66% effective AMC.

James, HL have used AMC rather than TER/Ongoing Charge previously. Do you know if that is the TER/OFC or the AMC? The rest of the marketplace has moved to TER/OFC. Your figures on the retail version suggest they are still AMC.

jamesd

As a very rough estimate, it currently appears that the new HL pricing would be around £800-£1,000 a year more than Trustnet Direct for me, though a combination of the two with most at Trustnet Direct would probably be cheaper than either alone. But I still haven't come close to fully evaluating things, other than the obvious thing, that HL does not add £800-£1,000 a year of value. However, that's without comparing fund costs at the two places and it's always possible that HL might have lower fund pricing, and that it could be enough lower to cover the difference. Doesn't seem likely in my case, but maybe.

Lokolo

Why is it free for £2million+!?

How on earth does that make sense.

jamesd

Not only the SIPP wrapper, also the ISA one. What this pricing does is leave a very nice total pot size range where competitors can be substantially cheaper. Cheap enough to move funds off the HL platform starting at perhaps £100,000 total value, to save money compared to HL.

My guess is that this announcement should be making the price-competitive alternative providers smile broadly.