Hargreaves Lansdown Vantage ISA (Investment Trust) - tips on minimising charges?

Doc_N

Switched recently from Alliance Trust Savings following recommendations on another thread.

£45 pa maximum annual management charge very reasonable, but I'm sure they'll be wanting to make up for that with other charges.

Does anyone investing in Investment Trusts through HL have any tips on how best to arrange things to keep other charges to an absolute minimum?

le_loup

Don't trade.

Doc_N

le_loup wrote: »

Don't trade.

Thanks - I take your point entirely. I'm looking a little deeper than that, though, at how best to arrange an account with them to keep their charges to a minimum.

I'm looking to drip-feed a monthly sum into the account to be invested into Alliance Trust.

As I see it, there's a £45 pa annual management charge, plus charges for reinvestment of dividends (1% - £1 minimum, £10 maximum), and £1.50 every month to purchase the Alliance Trust shares from the incoming direct debit.

So total annual charges of:

£45 management charge
£18 share purchases
£40 maximum for reinvesting 4 Alliance Trust dividend payments

Seems pretty reasonable to me, and a good deal cheaper than Alliance Trust Savings, but am I missing something here? Are there any other fees hidden away that might bite?

Alexland

How about sticking the dividends in a fund until you have enough accumulated to justify a trade once a year? Assume the dividends are not so substantial that they would incur a 0.45% custody fee in excess of the 3 saved trade costs?

Doc_N

Thanks - I'll look into that.

ivormonee

I find HL very pricey. The 0.45% is the highest I believe for platform percentage based fees and their dealing charges of £11.95 are also on the higher end of the scale. They have added charges for other things, eg. £10 if you need them to send you a statement in the post, £50 account closure fee (as well as £25 per line of stock exit fees) if/ when you ever decide to leave.

There are cheaper alternatives!

Doc_N

ivormonee wrote: »

I find HL very pricey. The 0.45% is the highest I believe for platform percentage based fees and their dealing charges of £11.95 are also on the higher end of the scale. They have added charges for other things, eg. £10 if you need them to send you a statement in the post, £50 account closure fee (as well as £25 per line of stock exit fees) if/ when you ever decide to leave.

There are cheaper alternatives!

I do agree - though for investment trusts that 0.45% is capped at £45 pa, and that makes it pretty competitive, given the level of customer service.

Alliance Trust Savings (the savings arm of Alliance Trust PLC) charges £120 pa for pretty shabby customer service, so for me it's an improvement. There are cheaper vehicles, but I think that for ITs it's not bad.

redux

Alexland wrote: »

How about sticking the dividends in a fund until you have enough accumulated to justify a trade once a year? Assume the dividends are not so substantial that they would incur a 0.45% custody fee in excess of the 3 saved trade costs?

But that's £12, versus the 1% fee on reinvestment within a few days, possibly as low as £1

So on Alliance Trust, with 4 dividends coming to about 1.7%, someone would need to have £70,000 or more invested before it became cheaper to wait.

We don't know how much the OP is talking about, but some investors might have diversified into several investment trusts by the time they have over £100,000, so this consideration may not affect many.

Another point though - for lower dividends, and if someone is not making monthly investments, it might be worth fine tuning the threshold for dividend reinvestment. By default it's £10, but a slight increase might leave just enough cash left over to cover the annual fees.

Alexland

It was just a suggestion - as you say we don't know how much the OP is talking about as to if it would be better for their circumstances.

Doc_N

Certainly the default £10 reinvestment figure needs looking at and I've changed it to something higher.

Haven't quite worked out yet how the fees are funded. There's a vague threat of selling shares to cover the fees but no way of having them dealt with by direct debit.

Tom99

Can you not somehow use the £1.50 regular investment option to reinvest the 4 dividends? That's what I do with large dividends at Halifax Sharedealing rather than use the reinvest dividend option, which with them is 2% or £12.50.