Woodford Concerns

bowlhead99

ZingPowZing wrote: »

It would be interesting to focus on the role of Hargreaves Lansdown in the Woodford Fund fiasco.

Interesting for you given your distaste for them

A quarter of a million HL customers are invested in Woodford funds. How did that happen?

By them having over 1.1m customers and a quarter of them being interested in Woodford products.

Woodford was one of the most prolific fund managers with 20x return in his time at Invesco and a sector-leading performance for the first couple of years running his own fund house. He was on the shortlist of 'best ideas' for years and offered an exclusive lower-fee share class to HL customers due to them giving him lots of business.

The existence of a low fee share class softened the 'total cost of investing' in a Woodford fund via HL, making their high fees for their standard platform services more bearable (because if the customer went elsewhere, they could get lower platform fees but would no longer get the cheapest fund share class).

So it was in HL's interests to keep highlighting the two Woodford fund offerings to investors and for Woodford to keep offering the discount to obtain such exposure.

My suspicion is that HL traded favour on their platform for exposure to Woodford's funds.

The pay-off for HL was that, as long as a Woodford fund was rolled from one of their favoured funds to another (according to the risk profile of the fund) HL accrued brokerage fees on both sides without lifting a finger.

HL's fee structure doesn't result in them earning 'brokerage fees' when their client investor (or an HL-managed fund) subscribes to an open ended fund such as WEIF, or redeems out of it. They charge an ongoing fee as a percentage basis on asset value under administration. So if an investor exits WEIF and subscribes to something else, or an HL-managed fund exits WEIF and another HL-managed fund subscribes into it, HL are making the same ongoing fee before and after, but not an extra transaction fee in between.

Even if HL were taking some sort of 'brokerage' fee when moving a holding in WEIF from one of their multi-manager funds to another (which wouldn't make sense because transactions in WEIF are not brokered on a stock exchange - subscriptions and redemptions are processed by the manager)
, they have not actually been moving WEIF from one fund to another in that way, as far as I can see.

[Deleted User]

By them having over 1.1m customers and a quarter of them being interested in Woodford products.

Is that even defensible? The classic HL investor - when it comes to investment strategy - couldn't find her couch in the living room:- that's why she pays HL.

HL's fee structure doesn't result in them earning 'brokerage fees' when their client investor (or an HL-managed fund) subscribes to an open ended fund such as WEIF, or redeems out of it. They charge an ongoing fee as a percentage basis on asset value under administration. So if an investor exits WEIF and subscribes to something else, or an HL-managed fund exits WEIF and another HL-managed fund subscribes into it, HL are making the same ongoing fee before and after, but not an extra transaction fee in between.

Even if HL were taking some sort of 'brokerage' fee when moving a holding in WEIF from one of their multi-manager funds to another (which wouldn't make sense because transactions in WEIF are not brokered on a stock exchange - subscriptions and redemptions are processed by the manager)
, they have not actually been moving WEIF from one fund to another in that way, as far as I can see.

Short story, bowlhead is saying HL do not charge a brokerage fee under their aegis when they roll a
holding from one fund to another.
Yet brokerage fees do apply to HL clients.

Good opportunity for anyone connected with Hargreaves Lansdown to clear this up, please.

talexuser

ZingPowZing wrote: »

Good opportunity for anyone connected with Hargreaves Lansdown to clear this up, please.

You think? I think they would rather Woodford was wound up as soon as posible and never mentioned again

aroominyork

Welcome to the site, ZingPow. You'll find the regulars on here don't wait for others to clear up what bowlhead says; they wait for bowlhead to clear up what others say.

[Deleted User]

Welcome to the site, ZingPow. You'll find the regulars on here don't wait for others to clear up what bowlhead says; they wait for bowlhead to clear up what others say.

Of course, looking forward to expert opinion..

Short story, bowlhead is saying HL do not charge a brokerage fee under their aegis when they roll a
holding from one fund to another.

Yet brokerage fees do apply to HL clients.

Good opportunity for anyone connected with Hargreaves Lansdown to clear this up, please.

AnotherJoe

HL do not charge for buying or selling funds.
Was that the Q?
(p.s. my only connection to HL is as a customer)

[Deleted User]

No, the question is: Does Hargreaves Lansdown charge a brokerage fee for movement of funds under their aegis?

OldMusicGuy

ZingPowZing wrote: »

By them having over 1.1m customers and a quarter of them being interested in Woodford products.

Is that even defensible? The classic HL investor - when it comes to investment strategy - couldn't find her couch in the living room:- that's why she pays HL.

Good opportunity for anyone connected with Hargreaves Lansdown to clear this up, please.

You don't appear to understand how HL works. Clients do not pay for advice, they pay for the SIPP platform. HL is not advising them on anything unless they engage an HL financial adviser, which will be extra cost (I know because I did this).

So HL is not advising the vast majority of their clients on investment strategy.

There are no charges in the SIPP for fund transfers. I sold my Woodford Income Focus holdings in June 2018 and transferred the money to other funds in my SIPP. It cost nothing (apart from the overall platform fees which are a % of my total SIPP less cash, nothing to do with specific funds).

I do agree that HL is culpable in this case because they bombard their clients with marketing guff which, to the uninitiated, appears like "advice" when in fact it's just marketing. Their "research" function was too positive about Woodford for far too long IMO which again created the impression for the uninitiated that Woodford was a "safe" bet. Definite conflict of interests there IMO.

masonic

ZingPowZing wrote: »

No, the question is: Does Hargreaves Lansdown charge a brokerage fee for movement of funds under their aegis?

A "brokerage fee" is an American term for a fee charged by a broker to execute transactions or provide specialised services. HL would not really be considered a broker for the purposes of this discussion. It does not make its money through transaction fees. It does not charge any transaction fees or commissions for transactions (if that's what you mean by the term "movement") in funds under their aegis.That now includes transfers in and out of their investment platform.

[Deleted User]

HL works. Clients do not pay for advice, they pay for the SIPP platform.

Quite.

And HL control what HL clients see on their platform.


There are no charges in the SIPP for fund transfers.

Not the question. The issue is: if two "house" funds "rebalance" by moving one investment from one to the other, is there a brokerage fee? I don't know, but would appreciate it if a HL spokesperson or other could clarify.