Shares Isa investment help

pip895

dunstonh wrote: »

On small amounts yes. On large amounts they are not.

Interesting - when I looked at some, admittedly a few years back now, they weren't, even if you went for the "with advise" option from HL. It will be interesting to compare once HL have announced their post RDR pricing.
I don't really see how a with advice package even with a competitive platform could compete with a no advice service.
I am not suggesting that a with advice service isn't the best option for many people btw, particularly if they have complex issues or haven't the inclination/time to do the research.

grizzly1911

pip895 wrote: »

Interesting - when I looked at some, admittedly a few years back now, they weren't, even if you went for the "with advise" option from HL. It will be interesting to compare once HL have announced their post RDR pricing.
I don't really see how a with advice package even with a competitive platform could compete with a no advice service.
I am not suggesting that a with advice service isn't the best option for many people btw, particularly if they have complex issues or haven't the inclination/time to do the research.

I tend to agree with you taking the initial advice fee and spreading it over say 10 years, together with the servicing charge, that could easily be 0.8% pa just for a one off set up. Add in new purchases and that will increase. Which platforms can save that?

Arguably the biggest benefits would be potentially protecting the investor from making obvious mistakes (losing money) and possibly finding all the tax breaks.

For those with modest needs the number of non obvious tax breaks will be limited or of limited benefit.

dunstonh

Interesting - when I looked at some, admittedly a few years back now, they weren't

Since RDR (Jan 2013) that position changed. IFAs are no longer paid commission. If the product contains commission, then it should be rebated in full.

I don't really see how a with advice package even with a competitive platform could compete with a no advice service.

Lets use HL. It takes the platform commission and keeps it and only rebates about 0.1-0.25% of the 0.5% trail commission.

Using a real fund, lets use Inv Perp distribution. The retail TER is 1.56% HL only rebate 0.188% on that fund and the total net effective charge is 1.372%

An IFA gets that fund at 0.87% TER and you can use a platform at 0.25% making a total cost of 1.12%

So, that makes the annual ongoing cost 0.252% cheaper with an IFA on transactional basis.

Now an adviser has to make something so there would be an initial set up charge. On an execution only case or transactional case, probably around £500-£1000 (many advisers price execution only as a passive blocker rather than to actually do it). Lets take £750. So, someone with £100k to invest would be initially £750 worse off but £252 a year cheaper in year one and a rising figure, hopefully, over time. So, within 3 years, this person would be better off using an adviser platform on XO basis or transactional basis.

pip895

dunstonh wrote: »

Using a real fund, lets use Inv Perp distribution. The retail TER is 1.56% HL only rebate 0.188% on that fund and the total net effective charge is 1.372%

An IFA gets that fund at 0.87% TER and you can use a platform at 0.25% making a total cost of 1.12%

So, that makes the annual ongoing cost 0.252% cheaper with an IFA on transactional basis.

Granted but this is comparing post RDR IFA's with pre RDR HL - if the HL post RDR costs are in line with expectation they will end up cheaper.

jimjames

pip895 wrote: »

Granted but this is comparing post RDR IFA's with pre RDR HL - if the HL post RDR costs are in line with expectation they will end up cheaper.

If post RDR HL is in line with expectations then it will still be more expensive!

dunstonh

Granted but this is comparing post RDR IFA's with pre RDR HL - if the HL post RDR costs are in line with expectation they will end up cheaper.

Unless HL are going to drop their take from around 0.7% to 0.25% pa. the example will still stand.

I am not saying that people should seek out an adviser to do it. I wouldnt expect most advisers to be that interested in doing XO business and many larger investors prefer to use advisers as a matter of course. Many DIY would still prefer to DIY fully even if it means it may be a tad more expensive. It was more a case of saying that adviser charging is not always more expensive.

pip895

My rumour was 0.3% for large portfolios - so only a 0.05% difference. It would take a long time to recoup the £750! To be honest if they are much above that I will be voting with my feet - Trustnet looks very interesting.:)

gadgetmind

dunstonh wrote: »

Many DIY would still prefer to DIY fully even if it means it may be a tad more expensive.

Let's just say that I won't be paying anything like the 1.12% you quote. TBH the very idea of around 20% of my returns disappearing down the throats of the financial industry fills me with horror.

Even if all the platforms do get greedy with the bps they demand, and don't apply caps, my worst case is to lob my SIPP into my Friends Life GPP at a TER of 0.5% (with rumours of us negotiating this lower in FY 2014.)

This would still leave me with some headaches with ISAs, but I'm still pretty confident I can get sub 0.5%, though I'm not sure which player yet.

dunstonh

pip895 wrote: »

My rumour was 0.3% for large portfolios - so only a 0.05% difference. It would take a long time to recoup the £750! To be honest if they are much above that I will be voting with my feet - Trustnet looks very interesting.:)

If 0.3% is their figure for large portfolios then it would still be more as you can get down lower into the teens on IFA platforms for that level.

jamesd

pip895 wrote: »

My rumour was 0.3% for large portfolios - so only a 0.05% difference. It would take a long time to recoup the £750! To be honest if they are much above that I will be voting with my feet - Trustnet looks very interesting.:)

Yes, Trustnet does look quite interesting. Combined ISA and SIPP with cap on total charge could be very attractive for biggish pots and up.