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Don't understand Hargreaves and Lansdown charges

Hi all,

I have opened an a Hargreaves and Lansdown Portfolio plus using a Fund and Share account, under the impression that the amc would be 1.79%, which i am fine in paying as long as i make a tidy profit(which i am at the moment).

However i wasn't sure if this was the case so i emailed them and inquiry on what the charges are and what the best options are for me as i have used my ISA allowance for this tax year and this is what they said:
In regards to the Adventurous Income Portfolio + the charge would contain the 0.45% p.a. annual management charge on the stock value, further to this there is a 1.34% p.a. on going charge on that Adventurous Income portfolio in focus. The way the charges are applied to your account is the 0.45% annual management charge is taken against the cash available on the account and the 1.34% on going charge is reflected in the unit price of the funds inside of the portfolio.

Now what on earth does that mean!?!

I have invested 2K, however with Hargreaves they don't let invest the full amount into stocks and shares so there £9.00 left over that is just sitting on the account, which i assuming will pay for stuff like switch funds or investing in other stocks and shares. I don't plan to do this i literally wanted a no fuss stick money into a fund and watch it grow type investment as i am not that familiar with the stock market enough.

Can anyone help?

Comments

  • dunstonh
    dunstonh Posts: 119,883 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    under the impression that the amc would be 1.79%

    That is high by 2015 standards. And you are not even paying for cost of advice in that. Not even sure if the cost of platform is in that either.
    Now what on earth does that mean!?!

    0.45% is the platform charge. 1.34% is the investment charge for that particular fund.
    however with Hargreaves they don't let invest the full amount into stocks and shares so there £9.00 left over that is just sitting on the account, which i assuming will pay for stuff like switch funds or investing in other stocks and shares.

    You need money in the cash account to pay the charges of the platform.
    . I don't plan to do this i literally wanted a no fuss stick money into a fund and watch it grow type investment as i am not that familiar with the stock market enough.

    You would have been better off investing off platform directly then. Using a platform with a cash account requires you to ensure there is sufficient cash to pay the charges. A single fund investment direct with fund house would also be cheaper (although you would likely use an alternative fund to achieve that).
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • westy22
    westy22 Posts: 1,105 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    The £9 you have sitting in the cash account is reserved by them to pay the HL 0.45% platform charge (£2,000 x 0.45% = £9.00)
    Old dog but always delighted to learn new tricks!
  • ColdIron
    ColdIron Posts: 9,911 Forumite
    Part of the Furniture 1,000 Posts Hung up my suit! Name Dropper
    Hargreaves Lansdown are expensive compared to others, though for some people they can justify the higher fees, but that aside ...

    If you are investing for growth (which I assume you are since you said 'i literally wanted a no fuss stick money into a fund and watch it grow type investment') why did you choose the Adventurous Income Portfolio over the Adventurous Growth Portfolio?

    They are very different with different goals and performance
    Adventurous Income Portfolio
    HL Multi-Manager Income & Growth 80%
    HL Multi-Manager Special Situations 20%
    Charge 1.34% OCF + 0.45% platform fee = 1.79%

    Adventurous Growth Portfolio
    HL Multi-Manager Special Situations 80%
    HL Multi-Manager Income & Growth 20%
    Charge 1.46% OCF + 0.45% platform fee = 1.91%

    The income fund you chose focuses on income which I presume you don't need, while obviously the growth fund has a growth focus
  • bigadaj
    bigadaj Posts: 11,531 Forumite
    Ninth Anniversary 10,000 Posts Name Dropper
    You could look at something like vanguard life strategy thorough Charles Stanley direct for example, total cost of around 0.5%. That isn't advice just another option you should be considering.

    Paying 1.79% maybe doesn't sound like a lot, but with an average return of say 7%, 3% inflation and 4% growth, then your paying over 25% of your profit to hl, rather than 7-8%.

    The actual numbers are fairly small as £2k isn't going to make you a multi millionaire anytime soon, but the principle is the same, and money is better in your pocket than hls, even if it is only £25 a year ish.
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