Hargreaves Lansdown charges.

sorcerer

Their is something I am not fully understanding with Hargreaves Lansdown's new charges, if I stay in the old funds will I still have to pay the 0.45% charge. Even with funds that actually give me no loyalty bonus. Because this would come to £2250 a year on my £50000 holding which seems a lot to me.


Any ideas.

Thrugelmir

Decimal point in the wrong place. Should be £225 in your calculation.

dunstonh

if I stay in the old funds will I still have to pay the 0.45% charge. Even with funds that actually give me no loyalty bonus. Because this would come to £2250 a year on my £50000 holding which seems a lot to me.

Not quite.

The loyalty bonus has to go. It is a badly worded marketing gimmick. It is actually a tiny refund of commission which is funded out of the charges you are paying.

From April 2016, they will have to refund all commission that is paid. This is both trail commission and the hidden platform commission. So, if you stick with a bundled fund (which you are allowed to do) you will pay the retail fund charge plus 0.45%. However, you will receive a full rebate of the trail commission (say around 0.5%) plus the platform commission (which could vary a lot but say 0.25%).

If you switch to unbundled funds, then there is no commission and the ongoing fund charge will be lower because there is nothing to rebate.

bertpalmer

I listened to an FT podcast - they said that all other providers will be switching to a similar fee. Whilst HL will probably be the highest because they are the market leaders they expected all other companies to charge 4.x with maybe a few at the high 3.x

HL was just the first to announce the new price structure.

Is this wrong? If not, it doesn't seem like switching to another company will help.

JohnRo

bertpalmer wrote: »

..HL was just the first to announce the new price structure.

Is this wrong? If not, it doesn't seem like switching to another company will help.

Yes, that's wrong.

They're just about, but not quite, the very last to do so. Of their retail competitors many have already introduced RDR compliant charging structures and offered clean fund pricing for months.

dunstonh

bertpalmer wrote: »

I listened to an FT podcast - they said that all other providers will be switching to a similar fee. Whilst HL will probably be the highest because they are the market leaders they expected all other companies to charge 4.x with maybe a few at the high 3.x

HL was just the first to announce the new price structure.

Is this wrong? If not, it doesn't seem like switching to another company will help.

It is wrong.

The IFA market is a year ahead of DIY. It went unbundled by January 2013. Some of the DIY providers use IFA platforms (either white labeled - under their own brand - or they take on the role of a non-advising intermediary) or they operate their own platforms. Many of those DIY own-platforms have moved to unbundled pricing already.

HL is one of the last to move to unbundled pricing.

jimjames

bertpalmer wrote: »

I listened to an FT podcast - they said that all other providers will be switching to a similar fee. Whilst HL will probably be the highest because they are the market leaders they expected all other companies to charge 4.x with maybe a few at the high 3.x

HL was just the first to announce the new price structure.

Is this wrong? If not, it doesn't seem like switching to another company will help.

As above, yes it is wrong.

Switching to another company may reduce your costs, substantially in some cases.

At a basic level HL charge 0.45%, others charge 0.25%. On £100k portfolio that is £450 vs £250 per year. I've highlighted that because any extra in your investment pot will boost it and be compounded over time so be far more than "just £200".

kidmugsy

sorcerer wrote: »

Any ideas.

If it's an ISA you're discussing (or an individual share account) consider swapping providers. Alliance Trust Savings would charge you £90p.a. for an ISA and are currently offering a £150 reward for people who transfer in before April the something. There are others too: ii, Chas Stanley Direct, iWeb …..

We're unlikely to swap because our HL accounts are low value SIPPs, so there's little to be saved and we'd miss HL's excellent service and website.

bertpalmer

Great - thanks for setting me right folks. Grrrr... I really like the HL website - really don't want to switch but might look in to it.

jimjames

bertpalmer wrote: »

Great - thanks for setting me right folks. Grrrr... I really like the HL website - really don't want to switch but might look in to it.

It all depends how much your portfolio is, which funds and if you have shares etc.

The answer will be different for everyone depending on that mix and as with other things it may be that paying a little more for premium service is worth it. Others faced with an increase from £24 to £1750 per year may decide that such an increase isn't worth staying.

takesyourchances

kidmugsy wrote: »

If it's an ISA you're discussing (or an individual share account) consider swapping providers. Alliance Trust Savings would charge you £90p.a. for an ISA and are currently offering a £150 reward for people who transfer in before April the something. There are others too: ii, Chas Stanley Direct, iWeb …..

We're unlikely to swap because our HL accounts are low value SIPPs, so there's little to be saved and we'd miss HL's excellent service and website.

I was wondering myself is it worth the fuss at the moment on my amounts, with not overly long investing and with HL my S&S ISA amount is towards 12K with a Vanguard LS and 6 other satellite funds and I have a retentively new SIPP with a Vanguard LS 80% only starting to build slowly from drip feeds and low amount at the moment not worth talking about.

At this stage I have been wondering is it worth it with low pot sizes, if doing anything it would not be to at least April maybe. Also being honest I would miss the website of HL's which is very good to use.

See what the coming months brings.