HSBC Global Investment Centre

viross5000

Hi everyone,

Complete stocks and shares ISA novice looking for some guidance. We have decided we have enough cash savings stored away - we've got approx 8 months' of bills and essentials. Plus we're both already paying in to pensions (he's doing 10% plus 5 from his employer, I'm doing about 8% plus 5 from my employer but have been paying in at that rate or more since I was 24). So we have decided now is the time to start a stocks and shares isa. We bank with a variety of banks - Santander, Barclays, First Direct and HSBC, and of those HSBC seems to offer the most user friendly fund investment platform with its Global Investment Centre. I have googled and can see that others probably have lower fees but I can't work out if HSBC is just average (which I would probably accept for the simplicity of doing it all through someone who we already bank and have our mortgage with) or is actively bad! I also can't work out how much of a difference it's going to make if we're likely to be investing in the region of £1000 / month.

My husband is prepared to take a fairly active approach to investing and it's not really the funds themselves that we need help with, more the platform. Any help / thoughts much appreciated!

colsten

The most important thing is that you strike a balance between cost, functionality, range of available investments and user-friendliness of your chosen platform. Only you can rate these as only you know what sort of investments you want to choose, how much and how frequently you want to invest, and what features you need from a platform.

Generally speaking, HSBC, like literally all other banks, do not score well on cost, functionality and range of investments. Have a look here for tons of alternatives: http://monevator.com/compare-uk-cheapest-online-brokers/

dunstonh

and of those HSBC seems to offer the most user friendly fund investment platform with its Global Investment Centre.

Banks are not normally the place you go for investments. Their products tend to be basic (even if third party branded, they are often cut down versions of the whole of market version) and expensive compared to whole of market options.

I would probably accept for the simplicity of doing it all through someone who we already bank and have our mortgage with

It adds no simplicity.

viross5000

GARGH! a further question! now looking at iWeb and Interactive Investor. What we had envisaged for the stocks and shares isa was a regular monthly investment (in the region of £1000 / month). All the charges seem to be 'per trade'. Would that mean that we were doing a minimum of 12 trades a year even if we were not selling anything?

Sorry, I assume this is a really basic question!

Thrugelmir

Take a look at Investment Trusts. All the large investment groups offer regular savings plans with minimal fees for investing.

bowlhead99

viross5000 wrote: »

GARGH! a further question! now looking at iWeb and Interactive Investor. What we had envisaged for the stocks and shares isa was a regular monthly investment (in the region of £1000 / month). All the charges seem to be 'per trade'. Would that mean that we were doing a minimum of 12 trades a year even if we were not selling anything?

Sorry, I assume this is a really basic question!

There are a wide variety of different charging structures. What is quite common is for investments that are acquired through stockbroker services (where the assets need to be traded in real time on an open market, like shares, bonds, investment trusts and ETFs) to charge per buy or sell transaction. While those that use an investment fund platform (i.e. OEICs (open ended investment companies) or unit trusts) have been historically more likely to charge you an annual percentage fee based on your level of assets on the platform, for providing access to the platform and maintaining your account.

Someone holding both types of assets through one ISA provider might get different types of charges for different parts of their portfolio. And you find some with fund platforms that have relatively lower percentage based charges than rivals, or even nil%, but then levy their buy/sell transaction fees even on fund trades or have an annual membership or inactivity fee.

So, depending on what type of investments you're making and how often, one place may be cheaper than another.

Of the ones that charge 'per transaction' fees for purchases, they often have a 'regular investing plan' where you can pay into your account monthly and buy on a fixed day of the month for a discounted rate, e.g. £1.50-£2.00 per purchase. So if you're dropping £1k in per month, 1.50 of fee would get lost in the roundings. The fee reductions on that sort of plan are because they can bulk-purchase shares for you on the same date and time with other customers and split the fee. So it often only extends to major (UK FTSE 350) shares, perhaps funds, perhaps certain ETFs and the more popular investment trusts.

Thrugelmir's right that if it's investment trusts you are looking for, and you want one or more from the same manager, you can often go direct to the fund manager and avoid the monthly purchase transaction fees altogether if you use their own ISA or regular investing plan - just paying the stamp duty each time you buy and some flat fee for the rare occasions you sell. While if you want OEICs or unit trusts that are made available via platforms, you might need a pretty massive portfolio to be able to go direct to the manager and have him let you have the account maintenance for free.

In addition to the link mentioned by Colsten, a user here 'Snowman' has a good comparison spreadsheet on his google drive which you can download and put in your own assumptions on amounts, account types, number of purchases. Just search the savings and investment forum for 'snowman spreadsheet' and you'll see plenty of hits.

For example if you were buying Funds with an account balance going up from £0 to £12k over a year, TD Direct Investing would charge you 0.3% platform fee on the average £6k balance: £18 for that first year. More in later years as the £6k balance got bigger. If you were buying FTSE 350 shares or certain ETFs you would instead pay 12x £1.50 which is also £18pa but it wouldn't get bigger in year 2. But if you were buying investment trusts outside the FTSE 350, it would be 12x £12.50 because ITs don't qualify for the 'regular monthly trade' programme.

Over at Youinvest, Funds do attract a transaction fee as well as a platform fee, so with them it would be 12 x £1.50 plus 0.2% on the average £6k balance (£12, more in later years as the £6k of Funds got bigger). While for shares, ETFs and a lot of investment trusts it would just be the 12 x £1.50; their regular trader programme is wider in scope than TD and lets you do ITs.

Then over at Interactive Investor, they have a quarterly minimum £20 fee which is quite a lot more expensive than both of the above in the years where you only have small balances, but it does at least give you credit with them that can be used to cover some transaction fees in the period. And they allow you to link accounts across families so you don't attract another £20 when your other half sets up their ISA with them too.

So as you can see how much you pay is going to be linked to what you are doing but everyone works it differently. That's why a spreadsheet is handy. The first place you mentioned, HSBC GIC is quite expensive at 0.39% per year on asset values to get access to their fund platform, when we've seen that TD is only 0.3% and Youinvest is 0.2% (albeit with transaction fees on the side). In between those two is Charles Stanley Direct at 0.25%... The list goes on!

Basically you will want low (percentage based) fees when you have small amounts invested and then when you have hundreds of thousands invested you will want lower or zero percentage based fees in favour of fixed flat periodic fees. Enjoy your window shopping as there is plenty of choice.

ristac

I use the HSBC Global account for my ISA are those saying it is expensive assuming it is because it is a bank? So far in 12 months I have invested £3,200 I have made about 15 transactions and my total charges are under £2 easy interface limited choice compared to dedicated services but I can't knock them.

I have used First Direct, AJ Bell and a couple of others before but I like HSBC global due to low costs but then as I sometimes do £100 investments I do not want transaction fees

bowlhead99

ristac wrote: »

I use the HSBC Global account for my ISA are those saying it is expensive assuming it is because it is a bank? So far in 12 months I have invested £3,200 I have made about 15 transactions and my total charges are under £2 easy interface limited choice compared to dedicated services but I can't knock them.

Yes, many people will say it is likely to be expensive because it is a bank. Then when they look into it in more detail... they will see that actually their assumption is right, it is indeed expensive

The annual account fee for funds is 0.39% which compares unfavourably to, say, Charles Stanley Direct who charge 0.25%. On that comparison you are looking at something more than 50% more expensive than a rival. I haven't seen their full range of funds, it might be quite reasonable - but as you put it yourself, "limited choice compared to dedicated services". So, that just supports the presumption that banks will never be market leaders in this space even if the offering seems to their customers to be adequate.

If you've only paid £2 so far, that implies they have only billed you on an average balance of about £500 over the year as your account went up from £0 to its current level. Probably you have more fees still to come to cover the period and they are simply billing in arrears. It could not be that cheap going forward, based on their published rates.

The other potential alternative is that if you started the account with a platform a year ago, some of the funds you are invested in are not 'clean priced' like the new ones you would buy today, but are 'dirty' versions which had a higher annual management fee to give a kickback to the platform. So you are still paying for it one way or another, in reduced investment returns.

I have used First Direct, AJ Bell and a couple of others before but I like HSBC global due to low costs but then as I sometimes do £100 investments I do not want transaction fees

Well, First Direct is a bank (part of HSBC) so based on the generalisation, you wouldn't expect them to have a particularly competitive investment product either. Their sharedealing is at £11 per trade (which would not make sense in your situation on £100 investment chunks) so you would presumably look at their 'selected investment funds' product instead. That product is relatively cheap (0.25% p.a.) but the selection of investment funds available is tiny. So it just supports the general assumption that banks will have a high price or restricted product range or both.

AJ Bell (now Youinvest) is one I mentioned above and is a decent product but of course it depends on your holdings. You're right to avoid transaction fees while your account is small but £1.50 for a monthly regular investment plus 0.2% a year becomes cheaper than HSBC's 0.39% a year once your average balance gets over £10k.

One final point:

HSBC's product is not terrible but I agree with Dunstonh above who says it 'adds no simplicity' to use them (when the OP had suggested using them because bank and mortgage was already with HSBC). To use an investment platform you have to send them money from your bank account via a transfer or debit card payment and when doing this it doesn't matter whether the bank has the same brand name as the investment platform. It is a separate interface. When you get your investment statements they won't come in the same envelope as the bank statements. You won't use the same telephone numbers or email addresses to communicate with the staff.

To go with the bank brand 'for simplicity' is one reason that banks' investment products are not market leaders. They do not need to be because they can still win business by simply cross selling their products to existing customers: if they are in the right place at the right time and less than twice the price of rivals, they can still get a lot of signups.

To use them for 'simplicity' is like saying you will buy an Adidas tennis racquet because you use Adidas football boots and it will keep it simple. Instead, if you have the time and inclination, you should seek out the best tool for each job.

viross5000

Thank you so much everyone, really helpful

dunstonh

It may help us if you told us which investment universe you plan to use? e..g shares, ITs/ETFs, Unit Trust/OEICs etc

Different platforms will usually be priced on them focusing on a specific type of universe. So, a platform that focuses mostly on UT/OEICs will often not be cost effective on direct investments and vice versa.