Hargreaves Lansdown v Brookes MacDonald

zagfles

barnstar2077 said:

Donnymad said:

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?

Millions smoke, it doesn't stop people dying of lung cancer though.  People are stupid. 

Indeed they are. The difference is you didn't get "health advisers" suggesting that smoking was a good idea.

zagfles

Donnymad said:

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!

The layers of charges on charges here is totally ridiculous. I thought the HL Portfolio + service was intended for "DIY" investors who want to be about as DIY as buying a wardrobe from IKEA and getting someone else to build it. The idea you pay for advice (one layer) and that is to buy fund of fund (two more layers of charges) on top of the platform fee (fourth layer) is totally OTT. 

The platform fee at HL, which everyone seems to bang on about, is 0.45% is a bit more expensive than most at 0.25-0.35% or so typical, isn't the main issue, you're paying a tenth or 2 of a percent more than typical, it's the fact that you're paying advice fees, then paying for a multi-manager fund, which pays a "meta fund" manager to select underlying funds with their own charges, which then select underlying equities.  

However you invest, if you're paying much over 1% in total, platform, funds and advice, you're paying more than is necessary. Unless you have a requirement for specialised tailored advice. Many here will be paying under 0.5% total.

grumiofoundation

zagfles said:

barnstar2077 said:

Donnymad said:

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?

Millions smoke, it doesn't stop people dying of lung cancer though.  People are stupid. 

Indeed they are. The difference is you didn't get "health advisers" suggesting that smoking was a good idea.

https://www.history.com/news/cigarette-ads-doctors-smoking-endorsement

Exiled_Tyke

zagfles said:

Donnymad said:

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!

The layers of charges on charges here is totally ridiculous. I thought the HL Portfolio + service was intended for "DIY" investors who want to be about as DIY as buying a wardrobe from IKEA and getting someone else to build it. The idea you pay for advice (one layer) and that is to buy fund of fund (two more layers of charges) on top of the platform fee (fourth layer) is totally OTT. 

The platform fee at HL, which everyone seems to bang on about, is 0.45% is a bit more expensive than most at 0.25-0.35% or so typical, isn't the main issue, you're paying a tenth or 2 of a percent more than typical, it's the fact that you're paying advice fees, then paying for a multi-manager fund, which pays a "meta fund" manager to select underlying funds with their own charges, which then select underlying equities.  

However you invest, if you're paying much over 1% in total, platform, funds and advice, you're paying more than is necessary. Unless you have a requirement for specialised tailored advice. Many here will be paying under 0.5% total.

I reckon this is the best summary of the situation and personally I've never been a fan of multi-manager funds as I've always seen them as a totally unnecessary additional layer.  I've always wondered why people go with them, when they can simply look up the mix of funds chosen and DIY them if that's what they want. 

 I've been very happy with H-L although I know they are not the cheapest and I've had to do a fair amount of work myself to manage my portfolio. That said when I joined them I saved a fortune on the fees quoted by the IFA who was touting for my business.  There's only a handful of IFAs I trust. Most were raking the cash in for themselves with little regard for their clients and only cleaned up their acts they were forced to. 

 It is also worth bearing in mind that H-L is one of the cheaper platforms when it comes to drawing pensions, so an investor close to retirement may be better off staying with them. 

Donnymad

bowlhead99 said:

Donnymad said:
Thank you, Bowlhead, for your very interesting comments! It is true that iWeb doesn’t not offer the service that I am looking for. As mentioned in my original post the main reason for seeking an alternative to H.L. is to reduce my investment charges. If only they were just “getting on for £1000 a year on £200k of investment”!

The platform service that HL offer is literally priced at 'only', getting on for the £1000 per year per £200k, because at HL it's a standard rate of 0.45%, compared to a few fivers a year of dealing fee to adjust your fund holdings if held on IWeb.  So that's the bit that's directly comparable.

You're also paying advice fees and fund management fees, so of course that 0.45% is not all you're paying at the moment.

As suggested upthread, seek advice independently (local IFA) and that will be the start of a route to get hooked up with a suitable platform - which will be less than 0.45% a year on the amount of money you have - and suitable investments - which should also be cheaper than what you are paying the HL's funds-of-fees (I mean multimanager funds-of-funds).

Thanks Bowlhead!
I’ve started my search for a IFA, but I am not too sure exactly what they provide other than financial advice! For instance, do they actually do the buying and selling of funds/shares via a particular platform, (like H.L.), or would I have to do that myself? What other services do they provide?
Thanks again!

Albermarle

Donnymad said:

bowlhead99 said:

Donnymad said:
Thank you, Bowlhead, for your very interesting comments! It is true that iWeb doesn’t not offer the service that I am looking for. As mentioned in my original post the main reason for seeking an alternative to H.L. is to reduce my investment charges. If only they were just “getting on for £1000 a year on £200k of investment”!

The platform service that HL offer is literally priced at 'only', getting on for the £1000 per year per £200k, because at HL it's a standard rate of 0.45%, compared to a few fivers a year of dealing fee to adjust your fund holdings if held on IWeb.  So that's the bit that's directly comparable.

You're also paying advice fees and fund management fees, so of course that 0.45% is not all you're paying at the moment.

As suggested upthread, seek advice independently (local IFA) and that will be the start of a route to get hooked up with a suitable platform - which will be less than 0.45% a year on the amount of money you have - and suitable investments - which should also be cheaper than what you are paying the HL's funds-of-fees (I mean multimanager funds-of-funds).

Thanks Bowlhead!
I’ve started my search for a IFA, but I am not too sure exactly what they provide other than financial advice! For instance, do they actually do the buying and selling of funds/shares via a particular platform, (like H.L.), or would I have to do that myself? What other services do they provide?
Thanks again!

You can have a one off review with an IFA . They will assess your overall financial position, goals , attitude to risk etc and advise on a course of action and suggestions for an investment portfolio. Then you go away and make and monitor the investments yourself . You may go back every few years for a review. This is known as transactional relationship and you pay by the hour I think.
However the more usual route is that you pay an initial fee and then a % of the total funds involved each year - an ongoing relationship , with ( hopefully) regular reviews . The IFA manages the buying and selling on a platform/with a provider.

Donnymad

Thanks, Albermarle. As long as I don’t have to make the important buying/selling decisions then I don’t mind paying a reasonable charge to the IFA. Leaving H.L. after 10+ years just might be a good decision...that is, if the IFA can deliver similar returns!

pip895

Donnymad said:

Thanks, Albermarle. As long as I don’t have to make the important buying/selling decisions then I don’t mind paying a reasonable charge to the IFA. Leaving H.L. after 10+ years just might be a good decision...that is, if the IFA can deliver similar returns!

The returns you get in the next ten years will be much more to do with the market than who you pick to advise you.  I would have a backstop position of looking at passive investing.  This at its simplest removes from you the need to make any buy/sell decisions in the future and at worst gives you a simple framework for making such decisions.   

I would start with analysing your current portfolio to work out the equity percentage and pick a passive fund that mirrors that. If for example you find you have 60% equity you could compare your 10 year returns with those of Vanguard Lifestrategy 60%.  If your current portfolio performed better, then your backstop should probably be staying with HL.  If worse then consider a move to passive investments - this forum could advise on the best fund/s and platform. 

This may be immaterial if you find a local IFA you are really happy with and is low cost -  it is best to have a fallback position as my experience is that they are a rare breed. 

Albermarle

If your current portfolio performed better, then your backstop should probably be staying with HL. 

The issue is not so much wether the OP should  stay with HL as an investment platform or not , but whether all the expensive add on services they are paying for are worth it .

Exiled_Tyke

Albermarle said:

If your current portfolio performed better, then your backstop should probably be staying with HL. 

The issue is not so much wether the OP should  stay with HL as an investment platform or not , but whether all the expensive add on services they are paying for are worth it .

I tend to agree. A little (and I mean a little) research into how funds and platforms work and then some reading up on some inexpensive, reliable funds which match the attitude to risk and the problem is solved.