New Fidelity Charges Huge Increase - Better elsewhere?

Tom_Brine

Hi All

Firstly to go over my set up

I have a stocks and shares ISA through Cavendish Online. Currently I invest £125 a month into the Scottish Mortgage Investment Trust and have 273.53 shares currently in the ISA worth £1188.53 (as of today).

I have to pay 0.5% stamp duty on each monthly purchase working out at 62p. I also have to pay 0.2% service fee to fidelity and 0.05% advisor fee to Cavendish online. Last month this charge was a grand total of 19p.

Perfect for the beginner investor. Low charges and I am happy with the return to date on the "fund" (Investment Trust)

However this morning I have received a letter informing me of Fidelitys wonderful new share dealing service. Wonderful I thought, I can now transfer share from my work schemes into my ISA. Then I saw the changes to their fee structure.

Firstly the platform fees still apply, so I will still have the 0.25% combined fee. I will also still have stamp duty to pay. However I will now also have to pay an additional £1.50 per deal. So each time my monthly investment goes through they will charge me this on top of what I am currently charged.

So last months charge of 81p will now be £2.31 a 185% increase.

To make matters worse dividend reinvestments will now also incur the £1.50 fee. So my last dividend of £1.87 would become £0.37 reinvested.

There is also the small matter of where they take the charges from. As scottish mortgage is my only holding if I do not have enough cash in the account (currently no cash held as all money is invested each month) they will sell my shares to pay for the charges. This is fine as that is what currently happens. Unlike currently they will only sell full shares and also will charge me the £1.50 for the transaction.

Obviously this means that I am starting to look elsewhere for my ISA as all of those fees would take a huge chunk out of my returns on the shares.

Is anyone else getting a raw deal on this with the changes. I understand if I held a fund only the service would stay the same only with the added option of share dealing. However as I make a regular contribution to an IT it seems I am getting truely hosed with these changes.

Any recommendations for a cheaper or similar service to that which I currently receive would be much appreciated. Of course the other option is to stop the monthly investment and just make one large purchase for the year, only incurring one set of £1.50 transaction charges. But then there's the dividend reinvestment charges which will all but destroy my dividends for many years.

Frustrating for sure

A_T

Dealing in shares is never much cheaper than £1.50 per trade through a regular monthly investment.

I believe Halifax Sharedealing costs £2 per regular trade and an annual ISA fee of £12.50.

Also I understand Selftrade charge £1.50 per monthly trade. The only other charge is an inactivity fee of £10 per quarter if there is no trades.

ColdIron

I'm surprised anyone allowed you to purchase shares without any transaction cost, you've had a very good deal to date. £1.50 is about as cheap as it gets and far from a 'raw deal' or being 'truly hosed'. The simple fact is that investing tiny sums in shares is rarely economic and most people would be better served by funds at these levels. The obvious solution to your problem as you have guessed is to purchase them less frequently. There are a few providers that do not charge an annual fee to hold shares so you could shave off a few pennies by moving to one of them. Given SMT shares trade at about £4.35 it's hard to see a solution to your £1.87 dividend reinvestment problem even without the extra charge, perhaps put them towards the fees to avoid selling down and maybe just chuck a fiver in from time to time?

A_T

OP in addition to what you mention you were also paying a 0.1% fee each time you dealt in an IT.

cloud_dog

Question...do you need to be buying within an ISA?

I know all the benefits of doing so but, do you need to at this point in time? You have a personal CGT allowance for this tax year of £11300 (I believe). So this amount is on top of what you contributed to purchase the investment.

At £125pm / £1500py, even with the continued stonking performance for SMT that is going to take you a few years to build up.

You could always invest direct with Ballie Gifford,and then sell move in to an ISA or bed & ISA them when you near the CGT limits etc etc.

Tom_Brine

Yes I agree I am of the opinion that my dividends would now be better paid as cash in order to fund the share dealing charges.

I did pay the 0.1 dealing fee yes.

I have come to the conclusion that the share dealing price is indeed a good deal compared to the market. However my monthly purchase plan suddenly does not make much sense under that set up.

The question of do I need an ISA is interesting. Looking at the Baillie Gifford share plan there are no charges bar the stamp duty and dealing fees which would allow me to make monthly investments much as I do now. There is however a withdrawal fee which I don't currently have. Some more research is required.

Im also thinking should I pay a large lump sum now whilst I have the good set up I have before Fidelity switches to its new platform. An imminent holiday is making that far from easy.

Thanks for all of your responses.

choochootrain

It would be nice for Cavendish to also contact their customers directly about the new charging structure. I too received this letter from Fidelity today but the Cavendish website makes no mention of the changes.

Tom_Brine

choochootrain wrote: »

It would be nice for Cavendish to also contact their customers directly about the new charging structure. I too received this letter from Fidelity today but the Cavendish website makes no mention of the changes.

Especially with the huge difference it means to some of their customers. If you only deal in funds its fine, If you are on one of their IT or EFT "funds" and a small time investor it's massive! Are you in a similar position?

choochootrain

Tom_Brine wrote: »

Especially with the huge difference it means to some of their customers. If you only deal in funds its fine, If you are on one of their IT or EFT "funds" and a small time investor it's massive! Are you in a similar position?

Yeah, it was one of the better platforms for those holding smaller amounts in ITs. At £10 per transaction I'd have to be buying or selling £10,000 worth at a time to equal the old 0.1% fee. I'm going to contact Cavendish to confirm the changes in dealing fees before making any decision.

AlanP_2

There was a situation a year or so ago where Fidelity bought a £45 charge in, didn't apply for those going through Cavendish so certainly worth checking the new charges do apply to you.

greendoor665

I got the letter from Fidelity, read 'share dealing' and thought "this doesn't apply to me" and filed it. This thread has made me re-open it!

I just opened an ISA through Cavendish with a lump sum and am planning to invest another lump sum in December. If the new charges apply to Cavendish investors then it looks like for this I'll be charged £3 instead of 0.1%. Luckily that's not too much more with the amount I am planning to invest, but that's only because I am buying just 1 ETF (along with funds).