AJ Bell raising cap on shares custody charge

masonic

janeskips2 said:

Is there a cheaper alternative for foreign shares? None of the platforms with low currency commission geared toward international trading provide SIPP or for that matter ISA. iweb and ii have cheaper fees for UK shares and funds but they charge 1.5% for each currency conversion where AJ Bell is only 1%.

ii allows you to hold foreign currency within a SIPP or trading account to avoid multiple forex charges. However, this is not permitted in any ISA.

I thought Trading212 provided an ISA and had access to some international markets.

janeskips2

Yes with ii SIPP or trading account it is 1.5% on the first buy or sale in case of transfer and then can avoid currency conversion., same with receiving dividends in foreign currency. Holding foreign currency is good for SIPP but 1.5% even if one time is still steep when there are many offering well below 0.5%. I always hear challengers from IG to Fineco offering or expected to offer but when I research there is always some roundabout catch or additional expense. The last time I looked into it HSBC has no commission for USD in their SIPP but the service was not well rated.

Thrugelmir

Appears that customer acccount numbers have risen by 25% but assets under management by only 8%. Suggests that a fair number of commmercially uneconomic acccounts have been opened. Explains why charges are increasing. 

Herbalus

Interesting. Although the charges will not impact those who are uneconomical by not having much invested in the platform! Seems to be overall fee increase for those who have larger portfolios whilst small accounts may be under the prior cap anyway.

I wonder how many of those new accounts are LISAs as they have capped contributions.

george4064

On the back of these fee increases, I have been considering my options with my portfolios (predominately ISA portfolio). I am nervous to move my portfolio across in-case I don't like the new platform, I'm a very experienced investor so don't require any handholding or research.

My portfolios all consist of ETFs/ITs/shares, so any charge caps on exchange traded securities apply to me. In addition I have a few US listed shares in my ISA, however they are small %'s of the whole portfolio.

I have also managed to persuade AJ Bell to allow me to transfer my holdings away without charge, but I have to do it soon. Hence why I am seriously considering transferring now.

On a side note, I also hold a small-ish S&S LISA with AJ Bell and will continue to contribute max for the foreseeable future. However I don't see many alternatives out there, let alone competitive alternatives.

I'm 29 years old, contribute about £1k pm to my ISA/S&S LISA and am not actively contributing to SIPP so this just stays at it is.

Leaning towards iWEB, but wanted to check I haven't missed anything before proceeding. I know Alexland will have something to say! Thanks in advance.


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Alexland

On the ISA if you are doing 12 trades a year on AJ Bell at the scheduled £1.50 rate plus paying the £42 cap that's £60 pa which is exactly the same as doing 12 trades at £5 each on iWeb so I don't see why you would spend £100 setup or go through the hassle of trying to move 15 holdings unless you want the flexibility to do £5 trades anytime? I think there is an error in your spreadsheet in the cells for iWeb 5 and 40 years.
For the small inactive SIPP you wouldn't consider iWeb or Jarvis XO because of their fixed charges and it's not big enough to hit the cap with either AJ Bell or Fidelity so yes that would be better with AJ Bell as their percentage charge is lower.

george4064

Alexland said:

On the ISA if you are doing 12 trades a year on AJ Bell at the scheduled £1.50 rate plus paying the £42 cap that's £60 pa which is exactly the same as doing 12 trades at £5 each on iWeb so I don't see why you would spend £100 setup or go through the hassle of trying to move 15 holdings unless you want the flexibility to do £5 trades anytime? I think there is an error in your spreadsheet in the cells for iWeb 5 and 40 years.
For the small inactive SIPP you wouldn't consider iWeb or Jarvis XO because of their fixed charges and it's not big enough to hit the cap with either AJ Bell or Fidelity so yes that would be better with AJ Bell as their percentage charge is lower.

Thanks for the quick reply.

Firstly, I have fixed the formula for iWeb for 5 and 40 years. The idea was to spread the £100 cost over the time period, however my thinking was flawed!

I generally tend to stick to the monthly £1.50 trades, and rarely (maybe once or twice a year) do ad-hoc trades.

For the ISA, seems it would be best to stay with AJ Bell. For the SIPP it will take me approx 5 years to make it worthwhile to switch over. I feel with SIPP platform considerations I'm not too bothered about costs at drawdown, because its so far away, but definitely will be a consideration in the future.



If I tweak my investments to quarterly, this does make iWeb cheaper for the ISA. However for some reason I doubt the dealing costs saved would outweigh the 'cost' of time out of the market for the 2 months by investing quarterly rather than monthly.

Alexland

There could be an case to move the S&S ISA to iWeb if you considered the additional cost of the adhoc trades and also reduced the trade volumes so that you weren't contributing into the S&S ISAs and LISAs in the same months. This tax year was a bit funny as we were doing a L&G cashback offer (that we deliberately broke the terms of but they haven't asked for the money back) but next tax year we expect to do 4 months of LISA contributions again (so 5 trades inc final bonus) and 8 months of iWeb ISA contributions which brings the iWeb cost down to £40 pa. It's a bit tricky as we need to sync the contributions around the IT dividend reinvestment months and our shifted salary sacrifice pension contributions.

underground99

george4064 said

If I tweak my investments to quarterly, this does make iWeb cheaper for the ISA. However for some reason I doubt the dealing costs saved would outweigh the 'cost' of time out of the market for the 2 months by investing quarterly rather than monthly.

If you generally assume your portfolio would rise by 6% a year over long term that's half a percent per month as a rule of thumb. A whole percent would be very optimistic, so you might as well be conservative in an effort to keep maths simple.

If your trades for a quarter are done in the middle of the last month of the quarter instead of the middle of every month, you have a third of your money going in at the same time as normal, a third of it going in a month late and another third of your money going in two months late. So altogether, it's like having one third of your money going in three months late. 

So simplistically if you were putting in £12k a year (£1k a month) into the ISA and a third of it is getting a three month delay before it starts 'working for you', you could say: a third of all of it (£4k) loses three months of growth (3 x 0.5% = 1.5%).  Assuming the cash is instead sitting idle in a bank account or the cash part of your ISA account, you have missed 1.5% return on the £4k, which is £60. 

However, if actually you would not have put £1k into the ISA account in month 1 of every quarter anyway because you were feeding your LISA that month instead, you're only going to be feeding the ISA with £1k in months 2 and 3 of each quarter.

If you switch that to nothing in month 2 and twice as much in month 3, you're delaying £4k of your money by one month. If being a month late deploying money 'costs' 0.5% on that deployed money, you've cost yourself £20 on the £4k. But you are saving £5 per trade you have avoided 4 trades and saved £20. It's a wash.

george4064

Thanks all.

I am going to transfer the ISA to iWEB. In reality my contributions are more ‘lumpy’ than they are consistent monthly contributions so the higher £5 dealing charge doesn’t bother me. I often go several months without contributions as well as sometimes making ad-hoc trades, which both lean towards iWEB than AJ Bell.

With regards to the SIPP, I will keep it where it is with AJ Bell. I haven’t looked into the drawdown features in much detail (as stated before, I’m very much in accumulation stage atm), but I’ve heard AJ Bell’s drawdown features/functionality is good.