Alliance Trust Savings

RD42

Thinking of transferring my SIPP from HL to Alliance Trust Savings as it seems this would save me about £800 a year in fees.

However I have called Alliance Trust Savings and have been on hold for last 20 minutes (and counting). Is this a reliable company for my SIPP once set up and transferred? (I plan to hold 2 funds, 2 ETFs and 3 shares in it, and pay in money once a year.)

AnotherJoe

Can it be done online? Or, try calling HL, tell them you are looking to transfer, and can they cut you a deal ? ive seen here several times they will drop the .45% fund charge to .25% even if you are below the threshhold for that.

RD42

Thanks - I have tried with HL and they would not drop the costs. I will try with them again once I have sold all my holdings - they will then need to match AT or I will be off....

I like to make sure that someone picks up the phone before I do business online, it's not looking good for AT (24 Minutes on hold and still waiting...)

AnotherJoe

Maybe you need to try someone else rather than AT?

EdSwippet

RD42 wrote: »

Is this a reliable company for my SIPP once set up and transferred?

They've been entirely reliable over the past few years for my SIPP.

Like you, I transferred from a percentage-based platform to Alliance Trust's flat fee structure to save on annual charges. I transferred 'in specie' to avoid having to sell and repurchase. Even though that's more expensive than transferring as cash, it avoided being out of the markets, and I recouped the costs in just a couple of months, after which the savings have been pure gravy.

If Alliance Trust isn't working for you, I'd suggest maybe take a look at Interactive Investor as an alternative. They have a similar flat fee charging framework. If you hunt around on MSE you'll find a really long thread full of whinges about them, but personally I've found them to also be entirely fine for a SIPP full of passive tracker funds.

Personally I have a visceral hatred of percentage-based platform fees for funds. It simply cannot be the case that the costs to a platform of holding a sizeable SIPP full of tracker funds is ten times or more that of holding a sizeable SIPP full of tracker ETFs. All my accounts are with flat fee platforms as a matter of principle.

RD42

Thanks - I will go with AT I think. It took 30 mins for my call to be answered, but it was answered and the chap I spoke to was good - and that ti should not normally take so long to get a call answered.

I agree, I can't see why holding £200K in a couple of funds justifies a higher charge than £100K in 10 funds...

dunstonh

I agree, I can't see why holding £200K in a couple of funds justifies a higher charge than £100K in 10 funds...

Many of the fees that financial firms pay are percentage based too. That includes fees to the FCA, FSCS and FOS.

Liability also increases as the value goes up.

Finally, the percentage model allows for an element of cross subsidy. Although most platforms discount as values get higher.

EdSwippet

dunstonh wrote: »

Many of the fees that financial firms pay are percentage based too. That includes fees to the FCA, FSCS and FOS. Liability also increases as the value goes up.

Yes, that's certainly a factor. But it doesn't explain why a SIPP valued at £1m can be held in tracker ETFs for a few tens of pounds per year, but if held in tracker funds or OEICs the cost for the same SIPP -- holding, arguably, the same underlying stocks, gilts, etc, just in different collectives -- rises to several thousand pounds per year. The total value in both cases is the same.

dunstonh wrote: »

Finally, the percentage model allows for an element of cross subsidy. Although most platforms discount as values get higher.

I think the honest answer is that prior to the RDR the platforms existed on back-handers from the fund managers as their cross subsidy. Post-RDR they had a hole to back-fill, so they now take their cross subsidy directly out of fund investors.

Personally though, I can't see any justification for this cross subsidy beyond the ability of platforms to get away with it. There is no intrinsic reason why fund and OEIC investors should cross subsidise stock, gilt, investment trust and ETF investors.

dunstonh

Yes, that's certainly a factor. But it doesn't explain why a SIPP valued at £1m can be held in tracker ETFs for a few tens of pounds per year, but if held in tracker funds or OEICs the cost for the same SIPP -- holding, arguably, the same underlying stocks, gilts, etc, just in different collectives -- rises to several thousand pounds per year. The total value in both cases is the same.

Most platforms do not differentiate between investment universes to avoid them being biased towards one asset type. There is absolutely no reason why one universe should be priced differently to another in these days of unbundled pricing. I entirely agree that there should not be this difference.

I can also see why the few that do have the difference have arrived at that point from a historical point of view. They should have changed though. Indeed, they may have to as the FCA is looking at platform pricing.

I think the honest answer is that prior to the RDR the platforms existed on back-handers from the fund managers as their cross subsidy. Post-RDR they had a hole to back-fill, so they now take their cross subsidy directly out of fund investors.

Personally though, I can't see any justification for this cross subsidy beyond the ability of platforms to get away with it. There is no intrinsic reason why fund and OEIC investors should cross subsidise stock, gilt, investment trust and ETF investors.

Yes, there is no reason other than financial and it is wrong that investment universe choices should dictate the pricing in an unbundled pricing world as I said above. It is not the norm with most platforms though. However, when i was referring to cross subsidy in my earlier post, I was thinking more about value of assets rather than asset type. i.e. why does someone with £1mill pay so much more than someone with £100k

webnibbler

I moved my SIPP from HL to ATS about three years ago, as it had grown to the point where the flat fees were cheaper. I've had no complaints over the three years at all, although the website itself is a little difficult to understand at times and no way near as clear as the excellent online experience of HL.

Some of the recent warnings of profitability of the ATS platform, the possible take-over of Alliance Trust, board level changes and a Scottish independence vote has been a bit worrisome at times. But any changes are unlikely to be a concern for the ring-fenced holdings of customers (hopefully).

Agree that it's also worth looking at Interactive Investor, especially if you're considering holding an ISA with them too as this will only attract one set of platform fees for two plans. ATS have recently increased fees and may well do so again to keep the platform viable as a business so this may well tip the balance towards Interactive Investor.

xylophone

If you are making a cash transfer to II and then investing in Acc funds, I should think that you'll find II okay and certainly cheaper than HL.