HL NOT most expensive?

Catapult

My profile is - £40K invested in SIPP across 10 funds (no shares or ETFs) performing about 20 fund adjustments (buy/sell) per year...

BestInvest and ClubFinance seem to be cheapest based on annual charge. I'm currently with HL - they don't seem that much more expensive based on my profile.

Trustnet, II, iWeb, TD, Charles.S, YouInvest etc. all come in way more expensive using the platform comparison spreadsheet from SnowMan.

Have I missed something? I was expecting to find HL most expensive given the theme of current MSE threads...

zagfles

Well I've said it enough times...HL are good value for low value SIPPs.

SnowMan

Worth mentioning that the SCAM factor with Hargreaves Lansdown is around 1.7 in your scenario. Note SCAM is an acronym standing for Some Charging structures Are Meaningless rather than being anything to do with fraud etc.

The SCAM factor (suggested by Grey Gym Sock) is the ratio of the exit charges (by re-registration) to the annual platform charge. When this factor is much larger than 1 it reflects that comparing annual platform charges can become meaningless as the real cost of the platform is changed signficantly by the eventual cost of exiting the platform.

Fidelity is an obvious choice in your scenario as they have a SCAM factor of zero and lower annual platform costs than Hargreaves Lansdown.

Catapult

SnowMan wrote: »

Fidelity is an obvious choice in your scenario as they have a SCAM factor of zero and lower annual platform costs than Hargreaves Lansdown.

Better than BestInvest too (who seem highly competitive)..?

zagfles

SnowMan wrote: »

Worth mentioning that the SCAM factor with Hargreaves Lansdown is around 1.7 in your scenario. Note SCAM is an acronym standing for Some Charging structures Are Meaningless rather than being anything to do with fraud etc.

The SCAM factor (suggested by Grey Gym Sock) is the ratio of the exit charges (by re-registration) to the annual platform charge. When this factor is much larger than 1 it reflects that comparing annual platform charges can become meaningless as the real cost of the platform is changed signficantly by the eventual cost of exiting the platform.

Fidelity is an obvious choice in your scenario as they have a SCAM factor of zero and lower annual platform costs than Hargreaves Lansdown.

That's only relevant if you think there's a good chance you'd want to transfer away in the near future. The main reason for doing that would be if they raised their charges - I'd say that's unlikely given that a lot of people have negotiated lower charges than their published charges.

And even if they did, then you should be able to get a fee free transfer out as we've seen in the other thread about leaving HL without paying exit fees https://forums.moneysavingexpert.com/discussion/4870018

Fidelity are a bit cheaper (£40 a year according to your s/sheet), but depending what funds the OP has even that difference could be eroded with HL's "superclean" funds.

Another thing to bear in mind with Fidelity is it appears they don't allow drawdown without paying for advice, which in a SIPP seems ridiculous. See
https://forums.moneysavingexpert.com/discussion/4877432

SnowMan

Catapult wrote: »

Better than BestInvest too (who seem highly competitive)..?

Best Invest have a platform charge of £120pa vs £140pa with Fidelity.

However exit costs by re-registration from Best Invest are £400 vs £0 with Fidelity.

So that saving of £20pa comes at the cost of being held in by the £400 exit fee.

But there isn't a single best platform as when costs are close other factors come into consideration.

naedanger

zagfles wrote: »

That's only relevant if you think there's a good chance you'd want to transfer away in the near future. The main reason for doing that would be if they raised their charges - I'd say that's unlikely given that a lot of people have negotiated lower charges than their published charges.

There are other reasons you may wish to leave in future e.g.

1. The provider offers better terms in future but only for new accounts. (And this scenario is much more likely if the provider has a high SCAM factor since it knows the existing customers are effectively trapped by exit charges).
2. The provider's service becomes unacceptable, maybe due to a specific instance of bad service or just a general deterioration in service over time.

By choosing a provider with a low (ideally zero) SCAM factor you know that provider is willing to rely only on its competitiveness (price and service) to retain your business rather than partly relying on significant exit fees.

And even if they did, then you should be able to get a fee free transfer out as we've seen in the other thread about leaving HL without paying exit fees https://forums.moneysavingexpert.com/discussion/4870018

True if the reason for exiting is an increase in charges but you may still have to fight to get your fees refunded. And if the reason for exit is not to do with a charge increase (see above examples) you may have no choice but to pay to leave.

Rollinghome

zagfles wrote: »

The main reason for doing that would be if they raised their charges

Or if a competitor lowered theirs - unless we assume that prices won't ever get lower than they are now.

It's always relative prices that determine whether there's a benefit in moving.

Anyone, especially the more elderly, who thinks they or their spouse might ever need a probate valuation from HL at £30 per stock (with a minimum of £100 and a maximum of £500 for 17 or more) should also take that cost into account. The stockbroker I use charges a maximum of £25 regardless of the number of stocks and it's a service that many competitors do for free or for a trivial sum. I'm not aware of any other provider taking several hundred pounds from bereaved relatives for the service.

It's what Danny Cox of HL describes as "Waitrose style" pricing apparently. I doubt Waitrose would agree.

zagfles

naedanger wrote: »

There are other reasons you may wish to leave in future e.g.

1. The provider offers better terms in future but only for new accounts. (And this scenario is much more likely if the provider has a high SCAM factor since it knows the existing customers are effectively trapped by exit charges).
2. The provider's service becomes unacceptable, maybe due to a specific instance of bad service or just a general deterioration in service over time.

By choosing a provider with a low (ideally zero) SCAM factor you know that provider is willing to rely only on its competitiveness (price and service) to retain your business rather than partly relying on significant exit fees.

I don't understand what this "SCAM factor" is suppose to tell you. Suppose you are comparing two providers.

Provider A has annual fees of £50 and exit fees of £100
Provider B has annual fees of £100 and exit fees of £110

Clearly provider A is better value on both counts, even though they have a much higher "SCAM factor" than provider B.

zagfles

Rollinghome wrote: »

Or if a competitor lowered theirs - unless we assume that prices won't ever get lower than they are now.

It's always relative prices that determine whether there's a benefit in moving.

Anyone, especially the more elderly, who thinks they or their spouse might ever need a probate valuation from HL at £30 per stock (with a minimum of £100 and a maximum of £500 for 17 or more) should also take that cost into account. The stockbroker I use charges a maximum of £25 regardless of the number of stocks and it's a service that many competitors do for free or for a trivial sum. I'm not aware of any other provider taking several hundred pounds from bereaved relatives for the service.

It's what Danny Cox of HL describes as "Waitrose style" pricing apparently. I doubt Waitrose would agree.

As I understand it a SIPP is not counted as part of the estate, so why would a probate valuation be required?

SnowMan

zagfles wrote: »

I don't understand what this "SCAM factor" is suppose to tell you.

The SCAM factor tells you whether having decided on a platform by cost, exit fees are likely to be material in relation to the annual platform charge.

So in this example where it is 1.7, it gives that warning, and translates easily as watch out if you have to leave, you will be charged over a year and a half's annual platform costs to leave. If if it had been a factor of 0.25 say, then the translation would be, it will cost me about 3 month's worth of charges to leave.

Any simple measure can't tell you everything though as you show in your example. The SCAM factor is there to compare exit costs with annual platform costs not to compare absolute £ exit costs between providers.

Think of the SCAM factor as an alert, once you have chosen your likely platform. If it is a high figure for your chosen platform, it is saying, you need to look into things more carefully as exit fees could be a material factor.

When you reach that point, if using my platform comparison spreadsheet, then look at the absolute exit charges in £ amounts shown in my spreadsheet. Also look at the chart showing the 'total platform charge assuming re-registration exit after one year'. Again that is a like for like comparison of absolute exit costs with the assumption exit is required after one year, so it shows who is really cheapest if you have to leave after one year.


Note compare fund platforms has a good exit cost tool here. I like that tool because it also shows the cost of moving to cash and exiting (which is one possible route to exit a platform while minimising costs).