Fidelity et al charges

Tony_Geo

My question is about Fidelity but I suspect its something that applies to all of the fund supermarkets. Fidelity have written to their customers advising that by 2016 we must convert all funds to their new clean pricing arrangements for funds. It seems that a customer has to decide for each fund held if its worth switching. They do provide a calculator which advises (for example) that Fund A if converted to Fund A (clean) will cost £40 per year less. Of course to take advantage of this reduction the customer has to sell Fund A and buy Fund A (clean) and probably looses due to the charges and bid offer spread. At the end of the day the customer does have a lower charge but is invested in exactly the same fund as before and has only a vague idea how much it will cost.
This seems to me a bit of a con, so typical of the financial services industry. Am I being unfair?

Totton

Yes :-) Of course the fund industry will do their best to maximise profit but these changes are principally the result of the aim to remove commission bias with regards to investment recommendations. Hence you now pay the platform and fund company separately. (or will)

ColdIron

Tony_Geo wrote: »

Of course to take advantage of this reduction the customer has to sell Fund A and buy Fund A (clean) and probably looses due to the charges and bid offer spread

Can't comment on Fidelity but HL switch funds for free, it's not a buy and sell

Tony_Geo wrote: »

At the end of the day the customer does have a lower charge but is invested in exactly the same fund as before and has only a vague idea how much it will cost

Seems a bit of a strange con to me to end up with a lower charge and I can't for the life of me think why you shouldn't know precisely how much it costs, this was after all the whole point of RDR

Tony_Geo wrote: »

Am I being unfair?

Yes, I think you are. RDR was imposed on the FS Industry, it's not a wheeze they thought up to gouge you

hornmeister

You should be able to convert funds without having to buy & sell which may incur charges and will give you time out of the market. If fidelity don't offer you that option, transfer off to someone else.

puk999

Fidelity don't offer the facility to convert. Unfortunately you need to sell and buy again. You're right, that on dual priced funds you lose money by selling and repurchasing. I wish they had made things easier for their clients. It is also very easy to "accidentally" move your holding from from dirty to clean by manually topping up or adjusting the monthly plan AFAIK.

westy22

puk999 wrote: »

Fidelity don't offer the facility to convert.

That is correct at the moment. They have, however, indicated that this will be an option available in the latter part of 2015. They have explained the delay by saying that they feel that most of their customers will prefer to stay in 'dirty' fund classes as long as possible without incurring the ad valorem platform fee.

ChopperST

Echo all the above.

It was only a forumite (Snowman) here that drew my attention to adjusting a MSP would trigger a change into clean class from dirty class and therefore costing you more in management charges.

I usually increase my contributions every April to account for inflation but the funds being locked prevents this.

Still trying to decide if its worth selling up and moving to Charles Stanley but mine is only a very small portfolio.

Hitting

The CoFunds platform don't apply the buy/sell charge when switching to clean funds, where Fidelity do!

jimjames

Hitting wrote: »

The CoFunds platform don't apply the buy/sell charge when switching to clean funds, where Fidelity do!

Nor do HL as far as I am aware.

It is a conversion not a sell/buy transaction.

No need to rush with Fidelity, just wait until it is a conversion.