Investment fees?

r_i_c

Hi,

Have received a request from Hargreaves Lansdown for a 'top up' to cover a fee I had no idea was coming or indeed outstanding. The fee concerns my Vantage Fund & Share Account and HL suggest a minimum cash balance of £230. What does this mean please?

I have replied to HL asking exactly what the fee is for - I haven't asked for any financial advice for example and I haven't yet received any dividends from this fund.

Bit confused, any help appreciated with thanks

colsten

It means that HL will shortly be collecting the fees that are due on your account. You can deposit an appropriate cash amount into your Fund & Shares account to cover the fees. If you don't make such a deposit, HL will sell enough of your investments to cover the fees.

The charges will be a percentage of your investments. How much have you invested with them, in what kind of accounts?

You can find details about the HL charges on their website.

r_i_c

Thanks - will update.

So it's an annual charge please?

colsten

http://www.hl.co.uk/investment-services/isa/savings-interest-rates-and-charges

http://www.hl.co.uk/investment-services/fund-and-share-account/charges-and-interest-rates

http://www.hl.co.uk/pensions/sipp/charges-and-interest-rates

http://www.hl.co.uk/investment-services/junior-isa/savings-interest-rates-and-charges

r_i_c

So annual then - not as frightening as it could have been.

There is £198K in the Fund and Share Account.

colsten

They might express the fees as an annual %age but I think they collect them monthly.

Oldbiggles

If investing for the long term and you want to avoid annual fees, management fees and any other fees that financial advisers charge so that they can live the high life, then buy shares in COMPANYS rather than investment FUNDS. If you hold share certificates you will also receive dividends paid directly into your bank account, probably twice a year. There are some big Companies out there and investing directly in them is probably no more risky than investment funds.

bowlhead99

Oldbiggles wrote: »

There are some big Companies out there and investing directly in them is probably no more risky than investment funds.

Correct. If you invest in shares in a company, the worst that can happen is that the shares become absolutely worthless.

Whereas if you invest in a fund that holds shares in fifty companies, a couple might become worthless and the others might reduce in value and lower their dividend payouts for a while before recovering.

So investing in the big company is probably no more risky than investing in that company and a bunch of others via a fund.

No, wait....

r_i_c

colsten wrote: »

They might express the fees as an annual %age but I think they collect them monthly.

Thanks, but monthly?

They're asking for 75 quid - surely this will negate any dividend coming in from the fund?

Please confirm. WOA! Never mind, I just did the maths. Now since we're talking 'money saving' what on earth am I getting from investing in this fund? I have yet to receive any dividend so I cannot easily see whether I am making a plus or a minus here - or just pouring money down the drain?

Advice please - have booked a local IFA but that's not till next week :-o

bowlhead99

!!!!!!. You have been given four different links to the website which tells you the fees. You are the one who decided you were happy with those fees and would become a customer of that website. Why do WE need to confirm - can't you confirm for yourself by following the links that someone spent their time finding for you?

Whether the charge is monthly or quarterly or annually will be explained in the fees section of the website. They have no idea how much dividend income will be earned over the course of the year or when, so they don't know if you'll naturally be bringing in enough cash in time to cover the costs, so they suggest some arbitrary fraction of your portfolio to be always held as cash, and then you'll never run short.

You are of course free to pick a different number so long as you can always pay the fees and they don't need to sell stuff on your behalf.

If your dividend income received in the account is less than half a percent, or is not received as frequently as the demands for periodic fees, you may find that you do indeed have your dividend income "negated" by the fees and need to make manual top ups in cash or through sales.

Solutions include finding a provider who charges less than 0.45% as a platform fee for fund holdings, which is most of them.

steelbru

You sound surprised ?? Surely you read the T&Cs before signing up ?
Shares in individual companies are held free, units in funds are charged at 0.45% of the fund value per annum.
So, if all of your £198,000 is in funds rather than shares, you agreed to pay HL £891 per annum - this is charged monthly, so approx £74 per month, depending on the monthly fund value fluctuations.
HL suggest you hold more than the minimum monthly charge in your cash account, but you don't need to.
Many people with funds of your value will move to a cheaper platform