(not) HL anymore because of costs

Robie

Hi

My wife always had her ISA with HL going back about 15 years. She has about 63K in it with about 18 funds (too many in eyes but she was/is happy with them). Anyway, she finds that the cost of HL is just too much by them charging .45%.

She wants to move away from HL. I think Cavendishonline is best for her as she is not a frequent trader (apart from investing monthly).

So, the questions.
1. As the transfer out of HL is £25 per fund, she would have to pay at least £450 + the account closing fee. Therefore, should see sell the the funds and then move the 'cash' to Cavendish (& buy the funds again thru Cavendish)? What is the advantage/disadvantage of doing this?
2. Is she better off paying £450 and transferring to Cavendish (as it means no selling and not being out of the market)?
3. Is there something else I have not thought of which some of you may be aware of?
4. When should she do this, i.e. move to Cavendish? Now or in April after the 5th?

Thanks.
Robie

Linton

What about combining all the funds into a global index fund and just paying £25 to transfer that?

Robie

Linton wrote: »

What about combining all the funds into a global index fund and just paying £25 to transfer that?

Thanks for quick response Linton. Sorry, not quite with you on this.

1. How can she combine into one index fund (which one)? So, are you saying that she sells each fund and buy into a global index one?
2. Which global index?
3. Also, assuming she can & does do as you suggest, once with Cavensih, does she go back to buying each fund with Cavendish by selling bits from the global index fund?

Sorry, for so many questions.

She has the following funds:

BlackRock Corporate Bond
BlackRock Latin America Fund (Offshore)
City Financial Absolute Equity
Fidelity Extra Income
Fidelity Wealthbuilder
First State Global Resources Fund
Henderson China Opportunities
Jupiter Strategic Bond
Lindsell Train Global Equity
Man GLG Japan CoreAlpha
Marlborough Global Bond
Marlborough Multi Cap Income
Neptune Russia & Greater Russia
Newton Asian Income
Rathbone Global Opportunities
Royal London Sterling Extra Yield Bond
Schroder Income Maximiser
Schroder UK Dynamic Absolute Return
Standard Life Inv Global Smaller Companies
Unicorn UK Income Fund

Thanks.
Robie

Linton

It doesnt matter which global index fund you use - any one will behave much the same as the overall world market and very roughly the same as her current portfolio. So she simply sells all her current funds and puts the money into her chosen global index fund. And then once the global index fund reaches Cavendish she sells that and buys her individual funds.

She will be out of the market for 1 day whilst each fund is sold and bought but in the global market during the transfer process. So its mid-way between the extremes of transferring each fund individually and transferring in cash with only a small extra small cost.

jimjames

Linton wrote: »

What about combining all the funds into a global index fund and just paying £25 to transfer that?

Good suggestion, certainly one way to avoid being totally out of the market and to minimise fees.

Robie

Linton wrote: »

It doesnt matter which global index fund you use - any one will behave much the same as the overall world market and very roughly the same as her current portfolio. So she simply sells all her current funds and puts the money into her chosen global index fund. And then once the global index fund reaches Cavendish she sells that and buys her individual funds.

She will be out of the market for 1 day whilst each fund is sold and bought but in the global market during the transfer process. So its mid-way between the extremes of transferring each fund individually and transferring in cash with only a small extra small cost.

Thank you for clearing that up Linton - makes sense now.

Presumeably, the timing is not important since we are not actually taking money out of ISA and putting it back in. Perhaps, best to do this during Feb/early March to avoid all the hasles of last minutes ISA purchases.

Thanks once again.
Robie

zagfles

HL are known to negotiate charges so you could try asking them to cut the charge.

Superscrooge

I'm doubtful that HL will negotiate exit fees when you are leaving them? But you lose nothing by asking?

It might be worth taking the opportunity to reassess your investing objectives and whether you need so many funds? 20 different funds is a high number for a £63k investment.

jimjames

Robie wrote: »

She wants to move away from HL. I think Cavendishonline is best for her as she is not a frequent trader (apart from investing monthly).

I'm with Cavendish but I'm also with iWeb. I use Cavendish for regular savings into my ISA but iWeb for the main part of my portfolio. Paying £25 one off fee made sense to me as it means I then have no further annual fees except trading which on my main portfolio is minimal. You might want to separate them if it's more cost effective. You'll also save £50 HL fee if you leave account open I believe.

zagfles

Superscrooge wrote: »

I'm doubtful that HL will negotiate exit fees when you are leaving them? But you lose nothing by asking?

I meant on the platform charge not the exit charge. Then OP wouldn't need to transfer. Cost seems to be only reason for wanting to transfer out.

See https://forums.moneysavingexpert.com/discussion/4889890

masonic

zagfles wrote: »

I meant on the platform charge not the exit charge. Then OP wouldn't need to transfer. Cost seems to be only reason for wanting to transfer out.

See https://forums.moneysavingexpert.com/discussion/4889890

That poll doesn't show the number of people who were unsuccessful in negotiating at the time the fees were introduced, which seemed to include most people who didn't have a six figure sum invested with HL. Chances of negotiating now after having paid the new fees for a couple of years are about as good as negotiating a free exit (i.e. close to zero) in my view. But it costs nothing to ask...

An alternative option to slash the fees paid to HL is to sell up all of the funds and reinvest into investment trusts and ETFs, where the charge is capped at £45, but trading fees must be paid.