Hargreaves Lansdown v Brookes MacDonald

Donnymad

I have been investing with Hargreaves Lansdown for the last few years. My assets are in the Portfolio Management Service, which invests in so-called Multi Management Funds. It is only recently that I have become more aware of the charges for their services such Advisory and Account Management, 0.44% and 0.49% respectively. These sound reasonable enough but their Investment Charges are a significant 1.61%, giving a total of 2.54%. Obviously, quite a substantial proportion of my gains have been wiped out by these charges, and I have been thinking if the time has come to move elsewhere. 

I am well aware that financial advice comes at a price, and I do not consider myself confident enough to make important decisions. 

I was surprised, therefore, on voicing my concerns to H.L. that it was they who suggested that I move my investments to another platform called Brooks Macdonald. H.L. would continue to provide Advisory Service, but the total Brookes Macdonald charges would be 1.74%, about 31% less. 

Over the last 5 years an equivalent investment in Brooks Macdonald would have out-performed Hargreaves Lansdown by 41%.

Just why would H.L. recommend/suggest moving platforms? What link, if any, is there between H.L. and B.M.? How do H.L. stand to gain if I move my investments? It doesn’t make sense to me but I’m obviously missing something here! Any explanations, please?

Thank-you!

Another_Saver

Both are pretty expensive and unlikely to return anymore than a cheap equivalent multi asset fund like Vanguard Lifestrategy or HSBC Global Strategy, BlackRock MyMap, iShares Consensus etc. over the longer term

Thrugelmir

You'd simply be invested in Brooks Macdonald funds while remaining with HL.  

Michael121

Another_Saver said:

Both are pretty expensive and unlikely to return anymore than a cheap equivalent multi asset fund like Vanguard Lifestrategy or HSBC Global Strategy, BlackRock MyMap, iShares Consensus etc. over the longer term

I would use the word extortionate!! 2.5% how is that even legal. 

Donnymad

Many thanks to you guys! Any suggestions what I should be doing in regards to a different investment strategy? At an age of 77, I am somewhat risk averse, but if I can find some funds/unit trusts, etc, that offer a reasonable return at a lower cost then I can relax for my remaining years! 😀

threlkeld53

Donnymad said:

Many thanks to you guys! Any suggestions what I should be doing in regards to a different investment strategy? At an age of 77, I am somewhat risk averse, but if I can find some funds/unit trusts, etc, that offer a reasonable return at a lower cost then I can relax for my remaining years! 😀

If the funds that you are currently invested in can be done through iweb, you'd save a lot of charges, presuming that you'd be able to transfer to iweb.
If you are risk averse and want to invest in Vanguard, what about VLS20, VLS40 or VLS60?

bowlhead99

Michael121 said:
2.5% how is that even legal. 

I suppose it's because under capitalism, people are allowed to charge money for products and services, including financial products and services - and the purchasers can decide which ones they'd like to buy.

Donnymad

threlkeld53 said:

Donnymad said:

Many thanks to you guys! Any suggestions what I should be doing in regards to a different investment strategy? At an age of 77, I am somewhat risk averse, but if I can find some funds/unit trusts, etc, that offer a reasonable return at a lower cost then I can relax for my remaining years! 😀

If the funds that you are currently invested in can be done through iweb, you'd save a lot of charges, presuming that you'd be able to transfer to iweb.
If you are risk averse and want to invest in Vanguard, what about VLS20, VLS40 or VLS60?

Cheers, Threlkeld! Definitely some food for thought there. Thanks!

dunstonh

I was surprised, therefore, on voicing my concerns to H.L. that it was they who suggested that I move my investments to another platform called Brooks Macdonald. 

Brooks Macdonald are a DFM. Not a platform.   HL are restricted.  How and who they offer investments is limited.

Just why would H.L. recommend/suggest moving platforms? What link, if any, is there between H.L. and B.M.? How do H.L. stand to gain if I move my investments? It doesn’t make sense to me but I’m obviously missing something here! Any explanations, please?

As they are not recommending you change platform, they still earn their platform charge and their ongoing adviser charge.  You just pay the BM fee on top (which is also VATable).

Your choice should be to either DIY or use an IFA.  Not expensive options like the one you are in or the one being proposed.

NottinghamKnight

Michael121 said:

Another_Saver said:

Both are pretty expensive and unlikely to return anymore than a cheap equivalent multi asset fund like Vanguard Lifestrategy or HSBC Global Strategy, BlackRock MyMap, iShares Consensus etc. over the longer term

I would use the word extortionate!! 2.5% how is that even legal. 

Because people who are not educated are allowed to spend their money on anything they want. It's not as bad a decision as buying drugs; on a slightly more sensible comparison the motoring boards are filled with people who have paid £10k for a £5k car, which is then financed at interest rates of 50 per cent APR. The industry is guilty of giving the impression that the process is more complicated than it is, there is an issue with education, and certainly numeracy. but people have a responsibility to themselves and their family to achieve a level of knowledge that protects them from excessive fees and charges and the government or legislation can not protect people from themselves. 

Donnymad

Thanks, dunstonh. I wouldn’t be too confident in DIY investments so I think that I will investigate the possibility of using an IFA...if I can find one!

Mind you, the service that I have received from H.L. over the years has been good, along with some decent returns...it’s just that I have only now  awakened to the fact that a good proportion of these returns has gone in charges. More fool me! 🤦‍♂️

I understand that about 1.4 million people are invested with the company, so they can’t all be as concerned as me, eh?