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Hargreaves Lansdown "playing hardball"
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juliamarsh wrote: »Depends on the size of your portfolio. Interactve Investor charges £20/quarter ie £80/year which would work out substantially cheaper for me, and that includes 2 free trades /quarter so it would depend how often you are trading your funds whether it would work out more advantageous for you.
My two best options are:-
1) Move everything to II
2) Move my active funds to Charles Stanley Direct and my passive funds to SVS (converted to ETFs)
These come out at about the same overall platform cost, but II will be more convenient and as my portfolio grows it will become relatively cheaper. I should be able to keep mostly within the 8 free trades per year, so I'm pretty much decided on the first option.0 -
I've done my sums now. Still waiting for answers to a couple of questions I've sent to two platforms, but as things stand:
Our unwrapped funds (husband and I, approx. 155k total, in Vanguard trackers) will be transferred in specie to Interactive investor. Cost: £80 per year plus initial transfer costs (?). Trading costs (2 to 4 sales per year) hopefully absorbed by trading allowance.
Our ISAs (approx. 45k total at the moment, but will grow as we transfer in each year from the unwrapped fund) will go to CSD, where there is no trading charge. Our ISAs are mainly trackers but have some active side funds, so there will be maybe 16 trades a year including rebalancing. Cost for the first year at CSD will be £114 total, plus transfer costs (?).
So, our total costs with the new platforms in year 1 will be approx. £195, as opposed to £891 if we stayed with HL.
After approx three years we hit the point where it may be cheaper to move to a single platform for unwrapped and wrapped funds. By then we'll have an idea of how well we are getting on with iii and CSD and can make a choice then. Also, by then all the funds will be clean, which will tidy things up, and any "price war" will have concluded, and we can review other offers at that time.0 -
I've now had time to look into the effect this will have on our income.
Mrs Joe and I have around £375,000 invested via HL in UK and Global equity income funds. Last year they produced an income of just under £15,000 (i.e. 4% which I am happy with). Together with our pensions and a small amount of interest on cash this is an important part of our retirement income which we use to live on.
Currently all charges on our investments are taken from capital. Despite this we managed to achieve 12% capital growth last year. I am happy with that too.
I now learn that HL plans to charge us £1,650 per annum for platform fees. Where the charge will be taken from is unclear to me at the moment. We hold no cash on our accounts. If we go for clean funds will the charges be taken from income (the charges represent over 10% of our investment income each year)? If we continue with bundled funds will loyalty bonuses be sufficient to cover the charges? During months when there are insufficient funds available will they really sell small chunks of our investments to pay the charges and charge us further fees for the privilege?
I don't know the answers to these questions at the moment but what I do know is that RDR is about to make investing for income much more complicated for us, and it seems it may reduce our net income.
I am concerned about this and would welcome any comments from those with a better knowledge of these matters than myself.0 -
I've now had time to look into the effect this will have on our income.
Mrs Joe and I have around £375,000 invested via HL in UK and Global equity income funds. Last year they produced an income of just under £15,000 (i.e. 4% which I am happy with). Together with our pensions and a small amount of interest on cash this is an important part of our retirement income which we use to live on.
Currently all charges on our investments are taken from capital. Despite this we managed to achieve 12% capital growth last year. I am happy with that too.
I now learn that HL plans to charge us £1,650 per annum for platform fees. Where the charge will be taken from is unclear to me at the moment. We hold no cash on our accounts. If we go for clean funds will the charges be taken from income (the charges represent over 10% of our investment income each year)? If we continue with bundled funds will loyalty bonuses be sufficient to cover the charges? During months when there are insufficient funds available will they really sell small chunks of our investments to pay the charges and charge us further fees for the privilege?
I don't know the answers to these questions at the moment but what I do know is that RDR is about to make investing for income much more complicated for us, and it seems it may reduce our net income.
I am concerned about this and would welcome any comments from those with a better knowledge of these matters than myself.
So if you're not buying any new funds, AIUI the platform fees can just be taken out of the rebates on the "dirty" (or "inclusive") units you have now. Though you'll have to check the timing of the rebates and the payment of the fees.
Otherwise you'll have to make note of the minimum cash balance which HL suggest. You shouldn't be worse off either way, but it will be more complicated. And with the sort of sum you have invested, other platforms will be much cheaper.0 -
Are the funds "free" to hold at the moment (ie not trackers which they charge a platform fee for?). If so you're unlikely to worse off as the new "loyalty bonus" is likely to be more than the platform charge. You'll be able to use the loyalty bonus on funds which you hold now to pay the platform fee, but if you buy new funds you won't (some rule in the RDR about rebates have to be used to buy units).
So if you're not buying any new funds, AIUI the platform fees can just be taken out of the rebates on the "dirty" (or "inclusive") units you have now. Though you'll have to check the timing of the rebates and the payment of the fees.
Otherwise you'll have to make note of the minimum cash balance which HL suggest. You shouldn't be worse off either way, but it will be more complicated. And with the sort of sum you have invested, other platforms will be much cheaper.
Thanks for that. All our funds are free to hold at the moment (or will be once I've sold one next week) so hopefully the loyalty bonuses would be sufficient to cover the new fees. Timing might be a problem though.
Longer term we review continously, bed and ISA annually and rebalance every six to twelve months so I guess that will leave us with a mix of new and old funds within the next year which will be even more complicated.
I must say I was quite happy as we were.0 -
I now learn that HL plans to charge us £1,650 per annum for platform fees. Where the charge will be taken from is unclear to me at the moment. We hold no cash on our accounts. If we go for clean funds will the charges be taken from income (the charges represent over 10% of our investment income each year)? If we continue with bundled funds will loyalty bonuses be sufficient to cover the charges? During months when there are insufficient funds available will they really sell small chunks of our investments to pay the charges and charge us further fees for the privilege?
If you hold no cash on the platform and have no method to pay the charges by other means then units will be sold to cover the charges.
bundled funds will not have loyalty charges. That is just HL marketing. They are giving you back a fraction of the commission they receive. From April 2016, all commissions on legacy business will have to be rebated in full. None of this marketing rubbish.I don't know the answers to these questions at the moment but what I do know is that RDR is about to make investing for income much more complicated for us, and it seems it may reduce our net income.
For most people it is more or less cost neutral or cheaper. For those that were benefitting from cross subsidy (passive investors/direct investors) they will see their charges go up but that is only fair.All our funds are free to hold at the moment
No they are not. This is exactly why the FCA have forced the change. Your charges are higher and have hidden commissions built into them. Or if you used passive/direct investments, you were getting a cross subsidy from managed fund investors who were paying your charges for you. Neither is right. Neither is free.I must say I was quite happy as we were.
The IFA world has been unbundled longer than the DIY side. So, IFA offerings are ahead and people have had a better chance to understand the differences on that side. It has gone down really well with most people.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
i'm not into funds.
So probably best not using an investment platform that is primarily focused and focused on funds.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
ATS are also saying they will not increase prices for a while.
From their web site
"We are so confident in our charging structure and service we guarantee not to make any further increases to our charges until 2016 at the earliest. Nor will we increase the online or offline dealing fees. This will give you certainty on the cost of our service to you."
I don't think there is any size of portfolio or mix of portfolio or frequency of dealing under which Interactive Investor would not be cheaper than ATS.koru0 -
Glen_Clark wrote: »Interesting article about HLs fees: http://www.theguardian.com/business/nils-pratley-on-finance/2014/jan/17/hargreaves-lansdown-fee-price-war
Perhaps one of the other platforms needs to start spending some serious money on marketing, to compete with the HL marketing juggernaut.koru0 -
Yes, it is a good point about why the likes of Interactive Investor, ATS and Charles Stanley are still tiny compared to HL. But then it is also a puzzle why so many people stick with their banks, insurers and power companies.
Perhaps one of the other platforms needs to start spending some serious money on marketing, to compete with the HL marketing juggernaut.0
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