Woodford Concerns

AnotherJoe

ZingPowZing wrote: »

If I have been told the above twenty times, then for the 21st time I'll repeat that Hargreaves Lansdown DO charge transaction costs on their funds. To quote them:
"Transaction costs include the explicit costs the manager incurs whilst dealing on behalf of the fund (broker commission, taxes and custodial charges) as well a measure of the fund's trading performance when buying and selling underlying investments."
To be fair, the charges projected are too low to be a big driver of profits for Hargreaves Lansdown; and some contributors say the practice of shuffling one holding between funds would be unlikely or forbidden.
But I do think it is naive to imagine that HL's business model is reliant solely on the fees they charge their clients; anymore than Aapl rely solely on the sale of iphones to generate profit.
The Woodford fiasco illustrates how the interests of Hargreaves Lansdown intertwine with various favoured funds. I don't know in how many funds Woodford is buried beneath a list of "top ten holdings" but, since a quarter of Hargreaves Lansdown customers are affected, if you are one, it may be prudent to check.
"Buyer beware" sure, yet, that Woodford's funds continue to leach fees while their investors watch, only seems like insult on top of misfortune.

The context you have quite clearly used "transaction charges" in relates to the client buying and selling of funds, because you accused HL of encouraging customers to change funds in order that transaction fees can be charged.
Do you acknowledge that HL do not charge for the buying or selling of funds ?

danm

arnoldy wrote: »

There is a nasty smell in the room over the Hargreaves Landsdown Corporate morals and behaviours that NO AMMOUNT of window opening or HL PR air freshener will clear.


It's the relentless plugging of Woodford on their discredited lists whilst simultaneously selling down Woodford in their own MM funds that makes you want to heave.

nothing inherently wrong with this assuming they have the appropriate chinese walls and controls in place.


if your statement said "plugging of Woodford on their discredited lists whilst simultaneously BUYING Woodford" other things equal you should have the same alarm bells that they are pumping the fund for their own gain


your post infers they did not have internal controls around this but has this been proven? (i have not been following this that closely tbh)

[Deleted User]

AnotherJoe wrote: »

The context you have quite clearly used "transaction charges" in relates to the client buying and selling of funds, because you accused HL of encouraging customers to change funds in order that transaction fees can be charged.

No. See #1505

Do you acknowledge that HL do not charge for the buying or selling of funds ?

Gladly.

[Deleted User]

coyrls wrote: »

ZingPowZing, you appear to be making the following accusations:

Firstly that Hargreaves Lansdown’s management of their multi manager funds involves moving portions of their holdings in the underlying funds between different multi manager funds in the name of risk management. You have no evidence that such movements take place.

I wondered whether such movements are explicitly prohibited in regulation because, if they're not, then a firm could encourage the practice, as a legitimate way of maximising profit. And, of course, if a brokerage fee applies in those circumstances, it would not be "fraud" but "adding value" by keeping the brokerage in-house. If I had a responsibility to shareholders and the practice is allowed, it would be under consideration. Sue me!

But, of course, I'm happy to learn that the practice is forbidden or rather, not happening, as bowlhead appears to be claiming.

To be fair to Hargreaves Lansdown, these possible conflicts (or confluence) of interests are not confined to them but across the whole financial services industry. For example, another 3/4 million are invested in True Potential.

talexuser

Slater & Gordon is "looking into" the merits of a class action against Hargreaves Lansdown for the 291,000 investors who went through HL with their Wealth List.

Sailtheworld

talexuser wrote: »

Slater & Gordon is "looking into" the merits of a class action against Hargreaves Lansdown for the 291,000 investors who went through HL with their Wealth List.

Presumably the argument is that the 'Wealth List' represents advice and/ or a recommendation.

It's probably doomed to failure. It's simple to prove the Wealth List didn't constitute advice because no invoices were generated for such advice. It's simple to prove it wasn't a recommendation because, before buying, all investors ticked the box to acknowledge funds on the Wealth List shouldn't be construed as recommendations or advice.

I suppose they could argue that there's an element of negligence in Woodford even appearing on the list or the list purported to be advice or a recommendation.

All a bit of a long shot but then investor loses money and looks for compensation cases usually are.

Skibunny40

Sailtheworld wrote: »

Presumably the argument is that the 'Wealth List' represents advice and/ or a recommendation.

It's probably doomed to failure. It's simple to prove the Wealth List didn't constitute advice because no invoices were generated for such advice. It's simple to prove it wasn't a recommendation because, before buying, all investors ticked the box to acknowledge funds on the Wealth List shouldn't be construed as recommendations or advice.

I suppose they could argue that there's an element of negligence in Woodford even appearing on the list or the list purported to be advice or a recommendation.

All a bit of a long shot but then investor loses money and looks for compensation cases usually are.

I agree, but I'd be curious to see exactly what HL says the point of the lists were, if not recommendations or advice. What did they hope to achieve for their clients by producing the list?

Thrugelmir

Skibunny40 wrote: »

I agree, but I'd be curious to see exactly what HL says the point of the lists were, if not recommendations or advice. What did they hope to achieve for their clients by producing the list?

Narrowing down the options available from the thousands of choices in the marketplace.

Investors themselves brought the Woodford Empire down.

seacaitch

Skibunny40 wrote: »

I agree, but I'd be curious to see exactly what HL says the point of the lists were, if not recommendations or advice. What did they hope to achieve for their clients by producing the list?

The lists are marketing material designed to attract new customers - people with no/little investing experience - to the HL platform.

It's very clever, because although it isn't investment advice it's often interpreted by novice potential customers as offering some guidelines as to where to stick their money, helping them overcome the big hurdle that new potential investors face in not knowing how or where to begin or who to trust.

If you can snag investment customers at the outset, you can often keep them for years/decades, such that the relationship becomes very profitable, hence HL's success, where customers happily pay advised-like fees for non-advised service.

But, if it turns out a lot of customers feel their trust has been abused, HL will have a big problem that could tarnish its reputation with both existing customers and worse still future potential customers, impacting growth.

I don't know what will happen. It could all blow over in time, and back to the races for HL, or it might prove a major turning point. We'll find out in good time.

eskbanker

Skibunny40 wrote: »

I agree, but I'd be curious to see exactly what HL says the point of the lists were, if not recommendations or advice. What did they hope to achieve for their clients by producing the list?

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