Fund Platform Charges and Choices

cynicaldoc

I'm sure this has been done for death and I apologise in advance for any repetition. I have tried to search the fora but I haven't found anything specific to me.

Currently I have £3k in HL S+S ISA at the end of my first year of investment. I went with HL because of the recommendations about its simplicity and easy user interface. I am now far better read and wonder if I should transfer out to a cheaper platform before I get too deep.

I have 50% in L+G International Index and 50% in Fidelity World Tracker. I add £250-300 per month.

My plan is to hold this for 25-30 years until retirement. Do I bite the bullet and pay to leave HL now to a cheaper platform, such as Cavendish?

LdnFtB

Monevator.com have just released a platform comparison tool which ought to help answer your question.

I think as a general rule of thumb % platforms are cheaper if you have less than £25-30k and fixed fee becomes cheaper above that.

cloud_dog

LdnFtB wrote: »

Monevator.com have just released a platform comparison tool which ought to help answer your question.

Have just had a play with this Monevator tool (from Broker Compare) and it doesn't seem to be applying the charges correctly for HL, it appears to be adding a platform charge of 0.55% rather than 0.45% unless I'm missing something? Have checked iWeb and the charges seem correct.

I think SnowMan's spreadsheet is far superior (accurate / flexibility / information provided).

bigadaj

LdnFtB wrote: »

Monevator.com have just released a platform comparison tool which ought to help answer your question.

I think as a general rule of thumb % platforms are cheaper if you have less than £25-30k and fixed fee becomes cheaper above that.

It depends on how much is being contributed on an ongoing basis and how frequently, that figure probably holds true for minimal trading but with low to medium monthly contributions I'd expect the breakeven point to be considerably higher.


That's not to say that hl are good value, they are at the high end of percentage based charging, and other percentage based platforms can be nearly half the cost.

TrustyOven

cloud_dog wrote: »

Have just had a play with this Monevator tool (from Broker Compare) and it doesn't seem to be applying the charges correctly for HL, it appears to be adding a platform charge of 0.55% rather than 0.45% unless I'm missing something? Have checked iWeb and the charges seem correct.

I think SnowMan's spreadsheet is far superior (accurate / flexibility / information provided).

I've also noticed that the price between Fidelity and Charles Stanley Direct seems wrong.

Expanding the section for them, shows that they are including CSD's exit charge (for transferring to another platform) in the total, which is why Fidelity is cheaper than CSD (Fidelity should be £45 pa (total investments < £7500, therefore £45 pa), but they are showing £40; CSD is £18 pa but the exit charges are making it seem more expensive).

It's possible that the HL charge you are seeing is including the exit charge too.

Edit:
I think there's a calculation problem. How can CSD, £5700 in funds only in an ISA, with 24 trades (2 funds per month), equate to £14 pa custody charges, and £480 exit charges???

Edit 2:
Nevermind on the previous edit. I needed to enter how many funds I hold.
It's still a bit misleading as it includes the exit charge. You don't exit every year, but you do pay annual charges every year.

Edit 3:
OMG nevermind on all the edits. I was looking at the annual data when expanding the section for the platforms, so it was averaging all the costs per year.

ColdIron

I welcome another tool like this but the inclusion of exit charges skews the results for simple comparisons. They have a 'Optional further details' section and it would probably have been better to have an option there to include them on request

TheLastMongoose

As I understand you will be charged to transfer out but you wouldn't be charged to sell the funds and withdraw the money as cash which you can then put in to your chosen platform (I think you have to do this next financial year though due to the government rules). As you aren't using all of your £20k allowance that might be easier and cheaper. I don't know if they would let you empty everything though even if you don't ask to close account. T&C's say they can subtract £25 closure fee if you empty the account.

When I converted my HL S&S ISA to a HL LISA, one of the HL staff told me on the phone that if I leave an account empty they will eventually just close it due to inactivity and I wont be charged(presumably because I haven't asked them to close it). I don't know how reliable that is but it sounds likely. Maybe somebody can confirm this? There is no inactivity fee either so no issue with leaving it unused. In this instance they let me leave it with a balance of zero but I was still keeping my investments with them.

I would make sure you are confident before you move though. HL aren't cheap but at least everything is easy to understand and manage. You are only talking about potential savings of less than £10 year for now.

You have a very similar investment situation to me. I'm curious as to why you have the Fidelity fund in addition to the L&G (my main holding) as they are very similar as far as I can see. Also, if you are investing for retirement have you considered that a SIPP or LISA might be better? I am using a LISA which is one of the reasons i'm with HL.

Alexland

I am amazed that HL allowed you to completely empty your account. I wonder if they decided to write off the fee as you were staying as customer on another new and similar product??

TheLastMongoose

Alexland wrote: »

I am amazed that HL allowed you to completely empty your account. I wonder if they decided to write off the fee as you were staying as customer on another new and similar product??

That may well be the case. I wasn't actually leaving. I did it over the phone. I knew I was on dodgy ground so I tried my best to be friendly. The guy I spoke to didn't hesitate. For the OP it might be worth ringing and asking nicely if they can have all their money and see what they say. It's only a phone call...

cynicaldoc

I have an NHS Pension so I don't have a SIPP or a LISA. I realise we are talking about measly savings at the moment but as my earnings increase and my ISA contributions increase then so will the charges.

At the moment I have 2/3 my money in Lindsell Train Global Equity and 1/3 in SMT. Sorry I edited my first post so many times I must have deleted the bit where I said I was planning on reducing charges (in the form of OTC) even more by moving all this to 50:50 split with L&G IN and Fidelity World. However, I see what you mean about their similarity. Perhaps L&G IN and iShares UK Equity Index would be a better spread.

bigadaj

cynicaldoc wrote: »

I have an NHS Pension so I don't have a SIPP or a LISA. I realise we are talking about measly savings at the moment but as my earnings increase and my ISA contributions increase then so will the charges.

At the moment I have 2/3 my money in Lindsell Train Global Equity and 1/3 in SMT. Sorry I edited my first post so many times I must have deleted the bit where I said I was planning on reducing charges (in the form of OTC) even more by moving all this to 50:50 split with L&G IN and Fidelity World. However, I see what you mean about their similarity. Perhaps L&G IN and iShares UK Equity Index would be a better spread.

There is of course NI reason why you can't have a sipp or Lisa, assuming you are if the correct age for the latter. This may well be more tax efficient but would need to be considered in conjunction with the lifetime allowance in future.

That's a hell of a jump between your current high conviction focused active funds and the broad trackers you're proposing, what is the reason for that change?