Broker charges, locked in?

moneytroll

This seems to happen so much: I find a good broker, transfer my assets, they change their charges and I am locked in as it becomes too expensive to move.
Recently, AJ Bell / YouInvest changed their charges and it seems too expensive to hold shares with them, compared with my other brokers. Does anybody know if there is a policy (in general) where you have some sort of 'cooling off' period, where you can move to another broker (if you are unhappy with the charges), free of charge? I motly buy shares and investment trusts and I really dislike quarterly/monthly charges. Interactive Investor is ok although I came very close of moving as well. At least you can offset the monthly charge against trading. But since I don't trade much, I don't like it. In any case, please advise how to avoid these pitfalls and if there is some sort of standard or right in the industry, which would enable unhappy customers to move, free of charge. I have hundreds of shares and it is completely uneconomical to move, when they charge you £10-15 per line of stock.  And also broker recommendations would be nice...
Thanks,
Moneytroll

eskbanker

moneytroll said:

Recently, AJ Bell / YouInvest changed their charges and it seems too expensive to hold shares with them, compared with my other brokers.

[...]

And also broker recommendations would be nice...

Surely if your objection is that AJ Bell's new charges exceed those of your other brokers then moving your investments to one of those other brokers would be an obvious way forward?

moneytroll said:

Does anybody know if there is a policy (in general) where you have some sort of 'cooling off' period, where you can move to another broker (if you are unhappy with the charges), free of charge?

There is normally a 14-day cooling off period after opening most financial products, but obviously that doesn't provide any protection against long-term price changes.  It's sometimes the case that providers will waive exit fees after price changes but impossible to generalise about this being a policy.

moneytroll said:

I have hundreds of shares and it is completely uneconomical to move, when they charge you £10-15 per line of stock.

Hundreds of shares or hundreds of lines of stock?  If the latter, it does sound an inefficient way of investing, and particularly susceptible to pricing changes, so if price and flexibility are important to you then you may need to rethink your investing style.


In terms of evaluating broker pricing, there are various comparison sites, including:

http://monevator.com/compare-the-brokers/

http://www.comparefundplatforms.com/

https://forums.moneysavingexpert.com/discussion/5583030rel="nofollow" href="https://www.boringmoney.co.uk/calculator/">https://www.boringmoney.co.uk/calculator/

ivormonee

moneytroll said:

I have hundreds of shares and it is completely uneconomical to move, when they charge you £10-15 per line of stock.  And also broker recommendations would be nice...

If by this you mean you have shares in hundreds of different companies then that does seem like a lot. It would cost you literally thousands of pounds to move! Unfortunately AJBell is one of the few companies that like to charge customers if they wish to move; it's one way where they can either squeeze as much as they can out of you before you go or make you stay so they can carry on fleecing you.

It's a win-win for them (lose-lose for the customer!). If you can escape, somehow, then based on your situation of lots of trades, an understandable disdain of exit charges and a dislike of platform fees it may be that iWeb fits the bill; it certainly ticks the boxes that you've highlighted.

moneytroll

eskbanker said:

It's not practical to move due to many lines of stock, as I wrote.
I have many stocks because it is a large portfolio (and built over many years, with many demergers etc plus i don't really like to sell as I don't know when to do this). I sometimes sell to increase portfolio yield or de-risk (if one investment becomes too large).

moneytroll

ivormonee said:

If by this you mean you have shares in hundreds of different companies then that does seem like a lot. It would cost you literally thousands of pounds to move! Unfortunately AJBell is one of the few companies that like to charge customers if they wish to move; it's one way where they can either squeeze as much as they can out of you before you go or make you stay so they can carry on fleecing you.

It's a win-win for them (lose-lose for the customer!). If you can escape, somehow, then based on your situation of lots of trades, an understandable disdain of exit charges and a dislike of platform fees it may be that iWeb fits the bill; it certainly ticks the boxes that you've highlighted.

It may be possible to come to a solution, from the sounds of it. (They don't like to see customers go, especially high net worth customers). I will report back. I have been with them (and chose them0 because they never charged any custodian fees. i think the trades used to be among the cheapest in the industry (£5 from memory, no custodian charges). They slowly 'progressed' and now it is at the point that I am fed up and ready to move. Some brokers offer 'money back' if you move to them to cover the cost of transfer but I don't know of any at the moment that do this. (Plus they may lock one in just the same and change their charges later). I am surprised there is no regulation on this (the 'locking in' part, where it becomes prohibitively expensive to move). I guess not enough complaints.

eskbanker

moneytroll said:

eskbanker said:

It's not practical to move due to many lines of stock, as I wrote.
I have many stocks because it is a large portfolio (and built over many years, with many demergers etc plus i don't really like to sell as I don't know when to do this). I sometimes sell to increase portfolio yield or de-risk (if one investment becomes too large).

You asked "please advise how to avoid these pitfalls" - one solution is obviously to have a simpler portfolio that is practical to move, but obviously if you feel the need to stick with your portfolio as is and not move it, then you are indeed hostage to any price changes, unless you're able to negotiate anything with AJ Bell.

moneytroll said:
I am surprised there is no regulation on this (the 'locking in' part, where it becomes prohibitively expensive to move). I guess not enough complaints.

As above, you have painted yourself into a bit of a corner - the FCA was looking into exit fees but, after a couple of players dropped them voluntarily, they abandoned their consultation a few months ago: https://www.fca.org.uk/news/statements/statement-certain-fca-work-light-coronavirus-and-changing-market-conditions

moneytroll

eskbanker said:

Even if one has a 30 stock portfolio, it is ridiculous to have to pay £300 just to move to another broker. It will take several years to make up for the charges. If a broker feels the need to change the charges, they should not be holding customers hostage due to high exit fees (or at least cap them).

eskbanker

moneytroll said:

eskbanker said:

Even if one has a 30 stock portfolio, it is ridiculous to have to pay £300 just to move to another broker. It will take several years to make up for the charges. If a broker feels the need to change the charges, they should not be holding customers hostage due to high exit fees (or at least cap them).

Obviously nobody likes paying exit fees, but comparison sites like https://monevator.com/compare-uk-cheapest-online-brokers/ make it clear which brokers charge them, so nobody can really claim they're a surprise unless they didn't research the platforms adequately in advance, or if the fees were introduced after committing of course. An archived 2014 version of that site suggests that AJ Bell charged £25 per holding back then, what was it when you signed up with them?

moneytroll

Exit fees are not such a surprise. Constant meddling with other fees is, including charging idle fees. Do you just come on here to tell people they should have known better? (Fair enough if you do but it's not going to be a very interesting conversation in the long run ;-)

AnotherJoe

If you literally have stock in  hundreds of different companies all you are doing is building an expensive ersatz tracker.
How can you possibly keep track of them all and know what's what, when to sell, when to top up etc? Even professionally run investment companies with many people managing a fund full time will have far fewer than that. 

Each individual company will also only  be contributing a tiny % (less than 1%) to your investments and so its performance won't matter much either. Rule of thumb here seems to be don't bother with much below 5%, eg 20 investments, not 200. 
i suggest you look at starting to radically slim down. 

moneytroll

AnotherJoe said:

If you literally have stock in  hundreds of different companies all you are doing is building an expensive ersatz tracker.
How can you possibly keep track of them all and know what's what, when to sell, when to top up etc? Even professionally run investment companies with many people managing a fund full time will have far fewer than that. 

Each individual company will also only  be contributing a tiny % (less than 1%) to your investments and so its performance won't matter much either. Rule of thumb here seems to be don't bother with much below 5%, eg 20 investments, not 200. 
i suggest you look at starting to radically slim down. 

It might take too long to explain but I will try.... I basically have 9 accounts with that particular platform: 3 JISAs for my 3 kids, 3 Bare Trust accounts (for same kids), dealing and ISA account for my father in law and a SIPP for another relative. I have managed it for them for years; my returns have always beaten any trackers or indices (15-19% IRR, depending which account, since 2006. No tracker has beaten that). I have done next to no managing, except selecting stocks or tweaking balance a bit, every 6 months or so, with almost no selling (i also don't like paying CGT). I have absolutely no desire to keep on top of any companies. For most of them, I don't even know what they do although i occasionally see one or the other mentioned in a tv advert or on the street. The portfolios are better diversified than trackers. (Trackers are growth-biased; my portfolios are more value-biased and more evenly spread across many industries). I was also lucky with the timing. I invest a lot when the markets crash. I sometimes leverage slightly (no more than 10-20%). I realised early on that majority of companies underperform so what is the point of 'staying on top' of companies. Even the best of companies will encounter unforeseen problems so I buy what is cheap and just hope for the best. And don't sell (for the most part).

The reason I am (slightly) !!!!!! off (and I am sorry for venting here); is that 9x AJ Bell's monthly charges means that AJ Bell is now by far the most expensive broker to stick with. I can swallow III's monthly charges as at least you can offset them against trades. I am also not happy with HSBC's investdirect charges (but more unhappy due to the archaic online system they promise to sort out/update, but never do. You can't even use a debit card to top up and often live quotes are not even available so you have to put in limit orders and hope for the best). And couple of other brokers I can also tolerate. But AJ Bell used to be the cheapest broker; now it is the most expensive one. I like investing. I hate the admin (of moving brokers; keeping on top of what they charge). I cannot consolidate 9 accounts into one, obviously. One broker was shut down (something I could never have imagined would happen: SVS securities). What a nightmare that was. Took over a year to get the shares. I still haven't managed to get everything out. On balance, I would probably pay the charges, rather than have a broker go bust/commit fraud...Still. I feel like there should be a fair standard in the industry. And trapping customers with high exit fees is something to look at. Customers should stay because they are happy with the service and fees, not because they have to (too expensive to transfer). But guessing from the comments, I guess it doesn't apply to many.