Hargreaves Lansdown SIPP bonus vs charges

galthop

I want to start a SIPP and have been looking at the available options.

Interactive investor have low charges but their reviews are terrible.

Hargreaves Lansdown seems to be rated highly but it comes with high charges so I wasn't looking at them until I saw the comment at the bottom of this page:

http://www.moneywise.co.uk/investing/funds/which-fund-platform-the-cheapest

The comment says:

Whilst the Hargreaves Lansdown GROSS COSTS are accurate there is no mention of the Loyalty Bonuses paid monthly on inclusive funds. This effectively skews the comparison because not all of the competitors offer these payments.
In my experience with both a big four figure ISA and an even larger SIPP account, these bonuses are larger than the fees levied, so that each month there is a NET surplus on the charges and bonuses making the costs to me in terms of cashflow, negative.
As the bonuses are not regarded as new capital (bonuses on investments bought after April 2014 must be left in account, but those attributable to earlier investments can be paid out as cash) they can be left inside the accounts and the fees paid externally, a trick which effectively adds to the maximum limit by which the capital can be increased. Effectively therefore significantly more than the prescribed limit can be added each year to a large account.

Does anyone have experience of this? How much would you need in the SIPP before the charges became comparable to the cheaper SIPP providers?

I will be transferring in a pension worth around £20000 and then putting in 500 a month. I want three or four funds that I will hold for a long time, I dont expect to make many trades.

Thanks for reading.

coyrls

The comment refers to bonuses paid on "inclusive", i.e. "dirty" funds, where HL refund some of the payment they get from the fund managers. It is no longer possible to buy "dirty" funds and existing dirty funds must be converted to clean funds by April 2016 I believe. The whole rationale for getting rid of dirty funds was to make charges more transparent. With transparent charging, HL are indeed expensive.

You can effectively ignore the misleading comment you quote.

zagfles

Why do you think HL are expensive for a £20k SIPP? Looking at the table in the link you posted they are cheaper than most including II. You seem to have it the wrong way round. HL's fee structure make them cheaper for smaller SIPPs, and expensive for larger ones. Although for larger ones they do seem to be open to negotiation on charges as we've seen here.

Re the bonuses - they'll only be higher than the platform charge for "dirty" units ie old style units which include commission, typical dirty charge would be 1.5% or so for a managed fund which HL might rebate 0.75% or so.

They do rebates on clean units too but not as much as the standard platform fee of 0.45%.

Have a look on their website for the funds you're interested in for the OCFs/rebates etc then you can compare the full pacckage to the competition. Also see Snowman's spreadsheet for platform charges http://forums.moneysavingexpert.com/showpost.php?p=64540489&postcount=15

galthop

Thank you for the replies.

I was getting confused, I was looking at the link I posted and another web page. I think I will go with HL.

dunstonh

I will be transferring in a pension worth around £20000 and then putting in 500 a month.

Why you have you chosen HL over a personal pension?

Your focus appears to be on charges given your comments. Yet HL are not cheap. you are looking at 0.45% p.a. as the platform charge with tour investment charges on top and a menu of charges covering a range of admin tasks. Yet you can have a personal pension at 0.4% all in.

galthop

dunstonh wrote: »

Why you have you chosen HL over a personal pension?

Your focus appears to be on charges given your comments. Yet HL are not cheap. you are looking at 0.45% p.a. as the platform charge with tour investment charges on top and a menu of charges covering a range of admin tasks. Yet you can have a personal pension at 0.4% all in.

I'm a beginner when it comes to this stuff. I started researching and read that SIPPs generally have lower charges as you have to do some of the work yourself.

HL look to be at the cheaper end of the scale at the amount I am looking to put in.

I have not committed to anything yet and am happy to look at other options.

zagfles

galthop wrote: »

I'm a beginner when it comes to this stuff. I started researching and read that SIPPs generally have lower charges as you have to do some of the work yourself.

HL look to be at the cheaper end of the scale at the amount I am looking to put in.

I have not committed to anything yet and am happy to look at other options.

SIPPs allow you more choice on what to invest in, and can be more flexible, PPs are generally cheaper if you choose the default in-house funds and don't want to actively manage your investment. But if, say, you use trackers in a SIPP there's really very little in it - HL do some trackers at charges under 0.1%

For PP's have a look at Cavendish http://www.cavendishonline.co.uk/pensions/stakeholder-and-personal-pensions/

Also have a look at the Savings & Investment board here - loads of experienced DIY investors there.

AlanP_2

The Fund Supermarket PP offered by Cavendishonline in conjunction with Fidelity would be an option worth looking at.

dunstonh

I'm a beginner when it comes to this stuff. I started researching and read that SIPPs generally have lower charges as you have to do some of the work yourself.

SIPPs "generally" have higher charges than the alternatives. Some have low charges but it will depend on the provider you choose and the assets you choose to invest in.

Stakeholder pensions are typically aimed at those wanting a basic option with small amounts. Typically lowest cost for small values but not as good as personal pensions on larger values.

Personal pensions fit the middle ground. Typically amongst the cheapest option for £20k+ but also offer a wider range of investments (which could cost more) which have due diligence carried out on them by the provider.

SIPPs are aimed at the more experienced investor wanting to invest in more advanced investment options than a personal pension or stakeholder pension. No due diligence is carried out on the investments by the SIPP provider (this is an area under review at the moment regarding some areas of investment)

They are the generic explanations. Like all generic explanations, there will be exceptions to the rule.

HL look to be at the cheaper end of the scale at the amount I am looking to put in.

HL are one of the more expensive SIPP providers in the DIY market on your value.

zagfles

dunstonh wrote: »

HL are one of the more expensive SIPP providers in the DIY market on your value.

Wrong, they are one of the cheapest for £20k. On £50k they are about average and on £100k+ they are expensive.

Although even if/when the SIPP gets big, they are open to negotiation on charges, see https://forums.moneysavingexpert.com/discussion/comment/64621044#Comment_64621044