Hargreaves Lansdown Charges for Funds?

dunstonh

Their primary point was that other providers operate at a loss and had questionable futures.

Some of the very cheapest do operate at a loss and there have been repeated concerns that the platform market will see some losses and mergers at some point. That said, there have been those concerns for many years and no-one has gone bad yet.


There are cheaper providers who are profitable.

naedanger

MoneyBob wrote: »

I asked HL for a discount because I could get the same, cheaper elsewhere. They wrote me 2 sides of A4 listing the reasons why they would not. Their primary point was that other providers operate at a loss and had questionable futures. They felt it better to pay a little more (for additional service level and...) for peace of mind that the platform is going to be around for a very long time.

If the others are operating at a loss then perhaps they're right but I suspect they (HL) can still be profitable charging a capped price. Presume it doesn't cost them any more if I hold £10,000 or £100,000 in a particular fund?

HL can be much, much more expensive than other providers for some people. (From memory they were around 5 times more expensive than my current provider the last time I looked.)

They certainly could reduce their charges and still make a profit, as they are a very profitable company. The reason they won't do so is that they have calculated they will make more profit by keeping them at their current level. A large number of customers are willing to pay their charges for whatever reason e.g. that they offer a good price for those customers, those customers are willing to pay more for HL's service, inertia etc. And it is perfectly reasonable for HL to set their charges for new customers at the levels that suit HL, they are a business aiming to maximise profits and customers are free to go elsewhere if they prefer an alternative.

What you need to decide is whether HL is the right company for you. Now you know they won't reduce your charges you can decide whether to go to a cheaper alternative or pay extra for HL's offering.

If you do decide to go elsewhere you need to be aware HL have high transfer charges and so you should consider the most cost effective way of transferring.

Chickereeeee

naedanger wrote: »

...... you need to be aware HL have high transfer charges and so you should consider the most cost effective way of transferring.

This is the most off-putting part of HL's offering, to me. I can understand people who wish to pay more for what they see as better service, website etc, but why penalise them when they want to leave? Make the service so good they dont WANT to leave.

Fidelity have zero exit charge...

C

jimjames

naedanger wrote: »

Can it not be much, much more than double the cost of some other platforms, e.g. for those with substantial investments in unit trusts?

Absolutely.


With HL I'd be paying well over £500 per year.


iWeb was a £25 one off fee but even with their new pricing of £200 one off I'd still be better off after 6 months.


So in 10 years, HL £5000 cost or iWeb £200.


Easy decision if you can live with the platform.

naedanger

Chickereeeee wrote: »

This is the most off-putting part of HL's offering, to me. I can understand people who wish to pay more for what they see as better service, website etc, but why penalise them when they want to leave? Make the service so good they dont WANT to leave.

Fidelity have zero exit charge...

C

I completely agree. They skew the contract very much in the supplier's favour.

(If the customer does not like the service then they have a significant cost barrier to leaving. However if the supplier does not like the contract, in HL's case, they can change the terms materially and still expect the customer to pay if they don't wish to continue with the amended contract.)