Hargreaves Lansdown asks clients for cash to cover new charges

juliamarsh

dunstonh wrote: »

Probably quite a lot as the ones most likely to leave are the unprofitable ones.

I disagree - it is the MORE profitable ones that are likely to leave, because anyone with a decent sized portfolio will be better off with a provider charging a flat fee. HL's percentage charge is just about the highest out there, so it would only be cost effective to stay if you had a very small portfolio, and even then you could easily save money elsewhere. So less commission for HL if people leave in droves! I think they have shot themselves in the foot with this, they have either underestimated the intelligence and financial acumen of their clients or they thought people would just stay loyal to them because of their 'great customer service'. Their customer service has been good over the years admittedly, but let's not forget it is after all an execution only service they are offering and I am not prepared to pay that much over the odds for it! I also object to the way they have insulted my intelligence by trying to make their booklet sound like they are giving us a good deal!! :rotfl:

guymo

juliamarsh wrote: »

I think they have shot themselves in the foot with this, they have either underestimated the intelligence and financial acumen of their clients or they thought people would just stay loyal to them because of their 'great customer service'.

They may well have underestimated your intelligence, or overestimated your loyalty, but who is to say what will happen to the massed ranks of investors that have assets on HL's books?

My parents, aged 70ish, have a decent sum in various funds and other securities held by HL and are not interested in investigating what the new charges will mean for them or whether they could save money elsewhere. To them, 1% sounds like a small number. Moreover, their investments have more than met their goals, so their experience has absolutely confirmed to them that HL are serving them well.

My guess is that they are somewhat typical of a large class of investors.

juliamarsh

guymo wrote: »

They may well have underestimated your intelligence, or overestimated your loyalty, but who is to say what will happen to the massed ranks of investors that have assets on HL's books?

My parents, aged 70ish, have a decent sum in various funds and other securities held by HL and are not interested in investigating what the new charges will mean for them or whether they could save money elsewhere. To them, 1% sounds like a small number. Moreover, their investments have more than met their goals, so their experience has absolutely confirmed to them that HL are serving them well.

My guess is that they are somewhat typical of a large class of investors.

I expect you are right, there are probably quite a lot of investors similar to your parents on HL's books, and I suppose at their age if they are comfortably off there really is no need for them to spend time investigating switching provider rather than enjoying their retirement! However I hope there are quite a few like me too who will not allow HL to become complacent

lvader

juliamarsh wrote: »

I disagree - it is the MORE profitable ones that are likely to leave, because anyone with a decent sized portfolio will be better off with a provider charging a flat fee. HL's percentage charge is just about the highest out there, so it would only be cost effective to stay if you had a very small portfolio, and even then you could easily save money elsewhere. So less commission for HL if people leave in droves! I think they have shot themselves in the foot with this, they have either underestimated the intelligence and financial acumen of their clients or they thought people would just stay loyal to them because of their 'great customer service'. Their customer service has been good over the years admittedly, but let's not forget it is after all an execution only service they are offering and I am not prepared to pay that much over the odds for it! I also object to the way they have insulted my intelligence by trying to make their booklet sound like they are giving us a good deal!! :rotfl:

I don't think they are concerned either way, they probably feel that their brand is strong enough that they don't need to be the cheapest provider. Judging by some of the posts here some people genuinely think so many people are leaving that the business could go bust (thinking of the III thread from last year here). In reality it would have hardly registered as a blip on the balance sheet.

juliamarsh

lvader wrote: »

I don't think they are concerned either way, they probably feel that their brand is strong enough that they don't need to be the cheapest provider. Judging by some of the posts here some people genuinely think so many people are leaving that the business could go bust (thinking of the III thread from last year here). In reality it would have hardly registered as a blip on the balance sheet.

I am not imagining that the business will go bust but I think they will be surprised that more people will leave than they had anticipated.

vm2pensioner

From HL's website, on new charges:

"Automated income reinvestment (funds and shares)
All reinvestments take place when the balance available exceeds £10 (see Terms). This change takes effect from 2 June 2014.
1% (£1 minimum, £10 maximum) - new charge"

So if one fund in your holdings pays just a small dividend and this is (say) £10, you'll have to pay minimum £1 (= 10%) if you have elected for reinvestment in the account. That's on top of paying 0.45% to hold the new units purchased! At present, automatic reinvestment in funds has no charge. Although the sum may sound small, multiply the number of funds across the numbers of accounts held by HL clients - that amounts to quite a nice little earner.

Rollinghome

Is it permitted to hold cash in a S&S ISA for the purpose of paying fees? HMRC say that cash can only be held if its purpose is to invest in qualifying investments.

If you hold a separate HL Vantage Share and Fund account for cash they will now automatically close the account if the balance falls below £50 and charge you a £30 account closure fee. If you choose to leave after April they will make a £30 charge for closing an ISA plus a further £30 for closing a Share and fund account on top of the£25 per fund or stock transfer charge.

If there isn't enough cash free to pay the fee they will sell your investments to pay the fees and make yet another charge for "Automated sales to cover charges".

It's all sounding a bit complicated, if not greedy and silly.

Thrugelmir

Rollinghome wrote: »

It's all sounding a bit complicated, if not greedy and silly.

Need to cover all eventualities in a business sense.

masonic

Thrugelmir wrote: »

Need to cover all eventualities in a business sense.

That may be the case, but there is no need to do so in a manner that is so complex and inefficient for their clients. Selling investments to cover fees and charging for that "service"? Why not direct debit the fees from the customers' nominated bank account or at least offer that option?

Rollinghome

Thrugelmir wrote: »

Need to cover all eventualities in a business sense.

Fidelity who make no such charges presumably take a different view.