Commisssion free Isa Funds

patgc

I have had stocks and shares Isa's with Aegon previously Nationwide BS for many years but they are asking me "You hold one or more individual products where commission is included in the fund price. You can change to commission-free funds now or we’ll inform you when you need to change." Is this something that I need to address please.

george4064

patgc said:

I have had stocks and shares Isa's with Aegon previously Nationwide BS for many years but they are asking me "You hold one or more individual products where commission is included in the fund price. You can change to commission-free funds now or we’ll inform you when you need to change." Is this something that I need to address please.

I think what they're getting at is that you hold some old 'dirty' funds whilst there are now 'clean' version available of your funds. Ideally you want to be in the new 'clean' share classes, most platforms offer customers to convert their holdings into the clean share classes and this is what Aegon are offering to you.

Generally speaking cleaner share classes are cheaper or cost the same than dirty funds, but always in a simpler format. Compare your existing fund vs the new clean share class and see for yourself the net difference in fees.

More info here: https://www.moneywise.co.uk/news/2018-04-05%E2%80%8C%E2%80%8C/fund-investors-should-be-cheapest-share-class

dunstonh

 Is this something that I need to address please.

In many cases it makes sense.   Most people had their changes made automatically.  However, direct holdings and some pensions did not need to change automatically.   It was up to individuals to decide whether to change or not. In some cases it made sense, in others not.

Nationwide used a version of the Cofunds software.  Nationwide also used more expensive versions of the funds than the whole of market version.  Effectively it added in an extra commission to Nationwide. 

 When Aegon bought Cofunds, it moved to their software.  I believe Nationwide looked at an alternative option for new business but left existing ones where they are.   So, this appears to be a tidy up exercise.  

patgc

I am absolutely at sea about this. Went on Aegon site and clicked to change to commission free funds and ended up with pages of different charges that applied and pages to fill in. Should I just go on and do it regardless ? I am 'Sheilding' from the virus at the moment so cant go out and Aegon havnt been much help when I enquired about this to them.

patgc

dunstonh  or george4064 any help gratefully received.

dunstonh

patgc said:

I am absolutely at sea about this. Went on Aegon site and clicked to change to commission free funds and ended up with pages of different charges that applied and pages to fill in. Should I just go on and do it regardless ? I am 'Sheilding' from the virus at the moment so cant go out and Aegon havnt been much help when I enquired about this to them.

The choice is to remain on commission priced funds or move to commission free funds but with explicit charging.

With commission priced funds, there will just be an ongoing charges figure (OCF).  It may say 1.50% (just example figure).

With explicit charging, the OCF of the fund will be cheaper. It may be say 0.75%.  However, the provider/platform and adviser or distributor will have explicit charges as well.   If there is an advice service, it may cost 0.50% and the provider/platform may cost 0.25%.   So, when you add the three things together (0.75, 0.25 and 0.50) you end up with 1.50%,  Exactly the same.   However, if you are not using an adviser, you would not be paying that fee. So, it would be 0.75+0.25 = 1.00% which is cheaper than the 1.50% you would currently be paying.  (although the bank/building society may insert a fee where the adviser charge would be)

So, you need to find the total charges of what you are currently paying and compare it to the total charges of the alternative.

Aegon havnt been much help when I enquired about this to them.

switching from bundled charging to unbundled charging as a transaction does not require advice.  However, if you start asking questions about which is best, that does fall under advice and Aegon do not hold the regulatory permissions to give you advice.  So, they have to be very careful not to cross that line and will not answer questions that could be considered advice.  They are not being unhelpful on purpose.  They just can't do what you ask of them.