Best Invest announce RDR pricing structure

SnowMan

https://select.bestinvest.co.uk/media/1851771/final_ois_pricing_release.pdf

0.4%pa for ISAs and dealing accounts
0.3% pa for SIPPs

Applies across investment types (funds and shares)

£7.50 dealing cost for shares
£0 dealing cost for funds

(lower rate for investments in an account above 250K)

talexuser

Interesting.

No good for small ISAs, but they only seem to be worried about their "main competitor" HL? ... Close Bros?

The 0.2% for larges ISAs is good compared to Cavendish but not compared to iii, but then the service and glossy booklets supplied are different.

SnowMan

They are good value for small to mid-value mainly fund oriented SIPPs, and not good value for dealing accounts or ISAs. And there are cheaper places to hold share and ETF holdings.

Looks like they are hoping to pick up HL SIPP customers with their 0.3%pa vs 0.45%pa and offer to pay up to £500 of SIPP exit fees for those moving to them?

The rates for investments above 250K are marginal rates and per account so you still pay 0.4%pa (0.3% for SIPPs) on the first 250K of your ISA or SIPP. Interactive Investor and ATS represent best value at high investment levels.

talexuser

SnowMan wrote: »

The rates for investments above 250K are marginal rates and per account so you still pay 0.4%pa (0.3% for SIPPs) on the first 250K of your ISA or SIPP. Interactive Investor and ATS represent best value at high investment levels.

Ahhh... that rules out ISAs completely then.

TCA

SnowMan wrote: »

And there are cheaper places to hold share and ETF holdings.

Yes indeed. I'm jumping ship with my unwrapped investment trust portfolio. I'm in the process of opening an ISA with IWeb (for funds) and they open a regular trading account at the same time anyway, so tempting just to move everything there as no holding charges whatsoever.

Either that or the investment trusts get a separate new home with TD Direct or X-O. Again, no fees for shares. Won't be Best Invest though.

jimjames

Really looks like their emphasis is on SIPPs. Maybe they've realised that the value of assets in a SIPP is generally much higher than an ISA and as the account has to be maintained until 55 then there is much less chance of churn or selling than with ISAs.

Interesting that the charge does only apply to the whole portfolio value - no difference whether that contains funds, shares or investment trusts - unlike HL that charge an additional level of fee for each so someone with £250k in each would pay 3 sets of charges with HL but only one charge on £750k with Best Invest.

The announcement doesn't really give much to inspire changing from HL when the difference is only 0.05% between them for ISAs but much more reason to do so for SIPPs.

Also a dig at HL for only using open ended funds in their recommendations:

Unlike major competitor services, Bestinvest applies its research ratings to investment trusts and ETFs alongside funds. Indeed some 37% of the investments rated Bestinvest’s Premier Selection are investment trusts or investment companies. We note that competitors continue to perpetuate differential pricing structures based on the underlying investment-type held rather than the service delivered and their rated-lists of investments appear to remain solely based on open-ended funds

gadgetmind

It doesn't look like either HL or BestInvest will be low cost places for our SIPPs or ISAs moving forwards. I'm going to do some research this weekend and must say that going the personal pension route could well prove more cost effective.

My SIPP could stay with BestInvest but whether I qualify for the lower rate is difficult. I did last week but not this week!

koru

Funny that their email to me says: "Another of the key changes we have made is to reduce the cost for you of investing through the Best SIPP."

Strange kind of cost reduction, because I currently pay nothing for my Best SIPP. I'm invested wholly in HSBC retail class trackers, on which they have no custody charge. Now, they want to charge me 0.3% and presumably they will rebate the commission they receive on my trackers. There's no way that rebate will be higher than 0.3%.

koru

I could, of course, switch to clean trackers with slightly lower AMCs, but I doubt they will have Pacific or Japan trackers that are more than about 0.1% cheaper than my current ones.

koru

From their website:
"Although these changes are required as a result of new Rules from the FCA, we have tried to be as fair to all our clients as possible; to the extent that the vast majority of our clients will be better off in the charges they pay going forward. We do recognise, however, that there will be some clients who, because of the charges or some other reason, would not like to proceed with these changes... Ultimately, however, you do have the right under the terms and conditions you hold with us to close your account, although we hope you will talk to us first to see if there is anything we can do (for example, it may be that a conversation to clarify and explain these changes more fully might assist?)...
If, however, you do want to proceed to close or transfer your account as a result of these changes please contact us and we will endeavour to help ensure that process is completed as smoothly as possible and at minimal cost to you as a client."

Could that possibly mean they will waive exit fees? More likely it means they will suggest selling some investments before transferring out, so you have fewer charges of £25 per asset transferred out. Looks like I'll be off the Ombudsman again.

jamesd

I just called to check. £25 per item to transfer out and they won't waive it for departing clients. A gentleman by the name of Jonathon (unsure of which spelling form) there told me that it is industry best practice to make such charges and have the new provider refund them. That was with the not a customer phone choice and it's possible that they might give existing customers a different answer.

Since I dislike such client lock-in attempts that makes it significantly less likely that I'll even consider them. Claiming it's industry best practice when it is contrary to FCA guidance on unfair contract terms is particularly unimpressive.

Might be interesting for someone else to ask them in email and see if they say the same in convenient written form.

It's particularly interesting to see how many providers in this line of business seem to not be paying attention to the unfair contract terms paper and FOS rulings on this matter, which to me implies that the FCA unfair contracts team has some work still to do in this market.