SIPPS anual management charges for funds

memberme

One of the companies I'm considering moving a lump some to charges annual fund management charges of 0.45% between 0-250k invested. Is this a straight charge on your total money invested in funds so £450 on 100K or 0.45% of any positive return received. I'm new to SIPPS but £450 for management of an execution only setup seems high.

Chickereeeee

http://monevator.com/compare-uk-cheapest-online-brokers/

(and it is (usually) for total money invested in funds)

C

bostonerimus

That 0.45% will be on your account balance. Your instincts are good, however, fund fees, management and platform charges, trading charges and IFA fees are all common in the UK and 0.45% isn't strange. However, these all add up and you should try to reduce them as much as possible.

pip895

HL charges this for investments in funds. nothing charged on any cash balance and the share/etf charges are capped I believe.

memberme

HL have one of the worst trustpilot feedback and ratings. Just spent an hour or so going through several companies......'interactive investing' seem one of the top raters with more competitive charges. I guess you take your chances whoever you go with.....just choosing a good bet that's not always as easy as it seems.

Lokolo

I have only been with HL and CSD, both of which I find their customer service very good. But then again, in the years of doing this I can count on my hands the number of times I've actually needed to call.

EdSwippet

bostonerimus wrote: »

... 0.45% isn't strange.

Actually, Hargreaves Lansdown's 0.45% is pretty much the top end of things as far as pure platform fees go. 0.25% is entirely possible with a number of percentage-based providers. Even Vanguard themselves charge 0.15% on top of their own fund charges in their UK direct-to-customer platform (they don't yet have a SIPP, but claim that they plan to offer one soon).

The way round this situation for some platforms is to hold ETFs rather than funds (where suitable substitute ETFs exist, that is). That can avoid a platform fee, but it introduces a fair bit of extra trading hassle and charges as dividends will usually have to be regularly reinvested.

Assuming the OP really does hold around £100k in funds, a flat-fee provider would definitely be the better route to take. £150-£200/year undercuts all the percentage-based platforms. And of course, for larger holdings the saving becomes even greater.

Personally, I dislike percentage-based fees for platforms on principle, so always use only flat-fee ones. At the moment, even though I hold a lot in Vanguard funds, that dislike extends somewhat to Vanguard's UK platform offering. In my opinion, Vanguard is not really working hard enough on behalf of the UK customer in this respect -- perhaps it will improve as the service evolves.

bowlhead99

memberme wrote: »

One of the companies I'm considering moving a lump some to charges annual fund management charges of 0.45% between 0-250k invested. Is this a straight charge on your total money invested in funds so £450 on 100K or 0.45% of any positive return received. I'm new to SIPPS but £450 for management of an execution only setup seems high.

As you can see from the other posts there are plenty of platforms with lower platform fees. When you're following the links to comparison tables or other providers' offerings and research the market generally, ensure you are comparing like with like. For example, assuming HL is the company about which you're talking, what HL describe as an 'annual fund management charge' of 0.45% is their fee for operating/administering the account charged on a percentage basis on the investment funds you choose to hold, but the funds you hold will also be being charged management fees by the companies that manage them.

So the 0.45% is a platform fee and then there are fees levied by each individual product you hold (which could be 0.1% to 1.5% depending on the particular fund you choose to hold.)Whereas if you compared with a personal pension you could probably get around 0.5% 'all in' if you have a large amount to invest, don't need the functionality of a SIPP and were using simple in-house funds.

Their approach of charging a percentage based fee on 'funds' (OEICS and UTs) but lower transaction-based fees on directly held shares or investment trusts (things traded for you on a stock exchange) is a common charging method but as others pointed out the 0.45% rate is very top end for a simple DIY SIPP. Usually you would only be looking at half a percent or more on providers that let you hold more complicated assets (direct holdings of commercial property, alternative investments etc). One reason they charge a lot is they spend a lot on customer service and they have lots of happy customers. They also have lots of lazy customers who don't shop around for a better price.

memberme wrote: »

HL have one of the worst trustpilot feedback and ratings. Just spent an hour or so going through several companies......'interactive investing' seem one of the top raters with more competitive charges. I guess you take your chances whoever you go with.....just choosing a good bet that's not always as easy as it seems.

The trustpilot reviews for a lot of financial products are garbage. For example scrolling down that list, three or four of the first ten 'reviews' are complaining about the performance of a particular fund. One person invested £150,000 in a specific fund and it went down by £8000 over four months, while he also invested with while he also invested in a fund from Saga and it went up. So, he rated them two out of five because he didn't like how a specific fund performed (which was the HL UK Select fund which the investment management division of HL manages).

But there are several thousand funds offered from across the whole market and it is unlikely you would have selected that one. Either way, that sort of review on whether someones fund went up or down in value tells you nothing about whether the SIPP was administered efficiently and effectively, direct debits collected on time, reporting accurate, customer services people friendly and efficient etc etc which is what you pay the 0.45% for. The 0.45% (or any platform administration fee from any other administrator) is not buying you any guarantees on investment performance because a SIPP is a self-invested portfolio where you take responsibility for all your own investment decisions unless you are going to pay an independent professional (IFA) for advice on building a suitable portfolio.

Places like Trustpilot often assemble gripes and whinges accumulated over time (because relatively few people can be bothered going along to a website and posting a review to say the service was good or fine) which skew the scores downwards; this happens unless the business is active in getting bad reviews removed or pays their friends and family and other businesses to fill the review site with swathes of positive reviews, which can artificially skew the score the other way. And there is a lot of garbage content on there because some people do not even know what they are buying or want to publicly blame a business for something that's their own fault because they didn't read the terms of service or whatever.

Trustpilot has been going for a decade. In that time they have collected 153 reviews from HL customers. Well, people claiming to be HL customers - I could write a HL Trustpilot review tomorrow without even being a customer. Meanwhile HL itself has been going 30 years plus, havingover 850,000 customer accounts and has been adding them (net customers joining in excess of those leaving) at a rate of 50-100,000 a year for the last five years. So it is probably fair to say that the aggregate two-star review on Trustpilot from 153 alleged customers, is not reflective of the whole.

On here generally people say HL have good service but you pay through the nose for it (£4.50 on a small £1000 SIPP is fine, £450 on £100,000 is v expensive). People abandoning HL to go elsewhere is usually on cost grounds rather than the sort of bad service that those on Trustpilot are complaining about. My parents have ISAs and SIPPs with them and the service has been fine when it has been needed. Though generally service is not needed from day to day or month to month as it is an online easy-to-use platform. We only needed to call to make some enquiries about taking an uncrystallised lump sum from the pension, which was taken care of efficiently. So if a platform is 'reassuringly expensive' but has a decent reputation for service, it is worth questioning whether you will need much help and support anyway.

My parents will be moving elsewhere on grounds of cost because the ISAs are large though my mum's SIPP is small and no real reason to move it. My own SIPP is with AJBell Youinvest and their price structure suits my needs and holdings.

cjv

I finally opened my first Pension yesterday, a SIPP as I am self employed.

I tried to do as much research into charges as possible and although it is specific to my needs and may not be suitable for you I settled on Cavendish Online's "FundSupermarket Pension". I can start, stop, increase/decrease payments when I want.

The total cost for me to invest regularly into a simple Vanguard Lifetstrategy is as follows:

FundsNetwork fee 0.20%
Cavendish Online fee 0.05%
Vanguard Fund Fee 0.22%
So 0.47% total fee

It also states the annual management fee drops from 0.25% to 0.20% if you hold more than £200,000.

No setup costs and free to transfer out, which I am planning to do if going direct to Vanguard is cheaper when they launch their SIPP.

I hope this helps a little, good luck!:)