Negotiating lower platform fee with Hargreaves Lansdown

sebtomato

under_the_radar wrote: »

You may think it's a joke that HL can get away with pricing like Waitrose, and claim it's justified by providing a higher standard of service, but they explicitly compared themselves with Waitrose when they introduced their post-platform-review charging scheme in 2014.

I don't think it's a joke that some company can charge more for their services than others, but often the price difference is not just on the service difference/factual advantages but also on the brand/perception too or large market shares, which can only last for so long.

There is no denying that Hargreaves Lansdown do provide overall better services than many other platforms: better website, more analysis tools, instant cash loading (no need to wait for transaction to clear), newsletters, many of active funds have lower funds fee negotiated etc. They are also the biggest investment platform in the UK and themselves part of the FTSE100, which I guess gives a sense of stability/security to investors (compared to smaller players), and that by itself is worth something.

However, on the negative side, some of their top fund advice has turned out to be not so favourable to investors (top funds not just recommended on actual performance, which it should have been), and because competition increasing now, their fees look a bit high, particularly on large portfolios with passive trackers (where doing a lot of research is less relevant).

For a large investors with lots of passive index funds, paying 0.45% to HL per year (decreasing to 0.25% beyond £250K) compared to 0.15% with Vanguard (decreasing to 0% beyond £250K) for instance starts to be questionable in term of value provided.

For some other investors with different profiles and more active funds, doing more research and needing more guidance (assuming such advice can be trusted), it can be a different value proposition.

Brian65

quirkydeptless wrote: »

I'm all passive ETFs in my HL ISA now. A capped £45 is considerably less than if my ISA was in funds. The trading cost of £11.95 ..

Free with x-o or iweb, and less than half as much to trade.
I wouldn't bother to try and negotiate, I'd just move - and not just to save money.
I'd rather support a platform that was breaking the cartel and reducing fees for our benefit, rather than support one who was taking me for a mug and ripping me off.

NedS

sebtomato wrote: »

For a large investors with lots of passive index funds, paying 0.45% to HL per year (decreasing to 0.25% beyond £250K) compared to 0.15% with Vanguard (decreasing to 0% beyond £250K) for instance starts to be questionable in term of value provided.

Large investors with passive funds would be better using comparable ETFs to track the index of interest where platform fees are capped at £200 pa, equivalent to 0.08% on a SIPP with £250,000 invested.

chucknorris

sebtomato wrote: »

Hi,

HL charges 0.45% on investments up to £250K, and then 0.25% on investments above £250K for its platform fee.

In comparison, Vanguard only charges 0.15%...

I understand that HL might provide better tools, choice, discount on some fund fees etc. but if most of my investment is going to be against Vanguard trackers, and the fund fees are the same between platforms, HL is starting to look costly.

Has anyone managed to negociate more favorable platform fee with HL? Surely, they would prefer to give some discount as opposed to losing long term customers to cheaper platforms?

Thanks,
S.

You have to be a very big player/investor to negotiate such deals, a friend of mine did manage to negotiate a lower percentage commission with Betfair, but he was trading millions on a weekly basis. They also gave him annual jollies, once they gave him a holiday for 2 in Australia with centre court tickets everyday for the Australian Open (tennis) and all expenses paid (not sure about drinks) in a 5 start hotel, that was for the duration of the whole tournament. They also flew first class too (although he used to fly first or business class himself routinely anyway). But he literally was their biggest punter (although I believe there was another one quite close to him). I know because while we were out one night in London, I got talking to a guy at the bar while we were waiting to get served, It turned out he worked for Betfair, and when I said I was with my friend, they asked if they could join us and meet him (it was a good night).

Both my wife and I (combined) have over £3m invested with HL, but we are probably very small fry compared to their largest investors.

chucknorris

NedS wrote: »

Large investors with passive funds would be better using comparable ETFs to track the index of interest where platform fees are capped at £200 pa, equivalent to 0.08% on a SIPP with £250,000 invested.

That is exactly what we are doing. The ISA is also capped at £45, and the fund and share account is free (apart from the spread, and buying and selling fees).

A_T

I imagine it all depends on who's doing the negotiating. If you've got a 250K SIPP and you're paying the full 0.45% fee then the HL sales staff might well offer you a reduced fee if you phone them and say you want to leave. Even if they reduced it to 0.30% you'd still be a very profitable customer for them.

Albermarle

HL sales staff might well offer you a reduced fee if you phone them and say you want to leave.

If you go back earlier in the thread , this was seen as highly unlikely , as someone might start shooting their mouth off on social media . Then HL would have a big queue of people all asking for the same discount .

sebtomato

chucknorris wrote: »

Both my wife and I (combined) have over £3m invested with HL, but we are probably very small fry compared to their largest investors.

Have you negotiated some better fees from them?

eskbanker

A_T wrote: »

I imagine it all depends on who's doing the negotiating. If you've got a 250K SIPP and you're paying the full 0.45% fee then the HL sales staff might well offer you a reduced fee if you phone them and say you want to leave. Even if they reduced it to 0.30% you'd still be a very profitable customer for them.

In the absence of any reports of anyone actually succeeding in doing this (in recent years), that's just more hypothesising, and it's perhaps worth bearing in mind that, according to https://www.hl.co.uk/about-us:

we are trusted with more than £85 billion by 1,136,000 clients

i.e. the average balance is about £75K and so the notion that a SIPP of £250K makes the holder a major player with influence and clout is somewhat unlikely!

sebtomato

eskbanker wrote: »

In the absence of any reports of anyone actually succeeding in doing this (in recent years), that's just more hypothesising, and it's perhaps worth bearing in mind that, according to https://www.hl.co.uk/about-us:i.e. the average balance is about £75K and so the notion that a SIPP of £250K makes the holder a major player with influence and clout is somewhat unlikely!

Or could you look at it the opposite way: if the average is £75K of investment with HL, and if there is a lot of deviation, then they could have 80% of their customers with only £50K on average, and 20% with the rest of the investments (so an average of £174,000), making an investor with £250K a "good customer" (as opposed to a major player)...

Maybe a major player would be someone with "only" £1M anyway, as any bigger customer wouldn't use HL/a retail platform anyway.

Just looking at total invested value and averages doesn't really tell much. Same applies to salaries/income in the UK (the distribution curve is far from linear, and I can only assume the investment curve at HL has the top tiers holding a lot more of the money).