Broker charges, locked in?

eskbanker

eskbanker said:

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 said:

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 ;-)

Hardly - I've made a number of constructive suggestions on this thread in response to your request for ideas about how to avoid the pitfalls and you've chosen to shoot them down, which is your prerogative.  I've quoted the context to my most recent post above, i.e. you were moaning that it was ridiculous for platforms to levy exit fees, so I was simply highlighting that they're not hidden.

moneytroll said:
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. 

Which is my point - if you're concerned about what you perceive as high exit fees, then considering them when choosing a broker is indeed sensible.  As above, the FCA were looking at them too but decided not to pursue it, so if the regulator has dropped its interest then unfortunately you'll need to recognise that you're pretty much out on your own.  £10 per line is 60% less than they used to charge but your feelings are clearly influenced by the fact that you're running a series of substantial portfolios across different account types for a group of five people, which really isn't as typical as you might think.

moneytroll said:
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).

Despite your claimed success thus far, do you feel that the apparently haphazard and casual approach outlined in the bolded sections is compatible with your duties and responsibilities as a trustee?

AnotherJoe

moneytroll said:

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. 

Two observations;
1. So essentially your "couple hundred" companies is really more like, say 20-25 because that's per portfolio, you just run a lot of portfolios. So, you should look at the exit charges on a per portfolio basis since that's what the individual portfolio owners pay. No one person is paying the total amount for all those changes. Each portfolio ultimately pays its own charges. (And as an aside sometimes transferring in brokers will pay the charges.

2. You don't know what most of these companies do ? !  Wut? Are you serious? And soem people say I'm high risk LOL. How on earth does buying shares inc companies you don't even know what they do fall into being a responsible trustee? 

ivormonee

moneytroll said:

  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. 

I'm not so sure of the legitimacy of the situarion; let me explain: On the one hand the OP, in response to another comment, essentially alluded that they can "perform better than trackers" and have explicitly stated  (as per bold, above) that they beat these with a staggeringly impressive 15-19% IRR, which by far beats any fund/ sector/ portfolio during the period specified (since 2016, as stated). On the face of it, you'd want the OP to manage your portfolio with stellar returns such as this, as they clearly have a real midas touch for overperformance over a fifteen year period!
But then they go on to say (also in bold) that they have done virtually no managing and that they even have no desire to monitor the companies they invest in and in fact "don't even know what they do". This then indicates that the astounding returns achieved, 15-19%, are purely and simply down to luck. What other possible explanation is there?

moneytroll

ivormonee said:

moneytroll said:

  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. 

I'm not so sure of the legitimacy of the situarion; let me explain: On the one hand the OP, in response to another comment, essentially alluded that they can "perform better than trackers" and have explicitly stated  (as per bold, above) that they beat these with a staggeringly impressive 15-19% IRR, which by far beats any fund/ sector/ portfolio during the period specified (since 2016, as stated). On the face of it, you'd want the OP to manage your portfolio with stellar returns such as this, as they clearly have a real midas touch for overperformance over a fifteen year period!
But then they go on to say (also in bold) that they have done virtually no managing and that they even have no desire to monitor the companies they invest in and in fact "don't even know what they do". This then indicates that the astounding returns achieved, 15-19%, are purely and simply down to luck. What other possible explanation is there?

I am not sure the point of this thread was to have to justify an investment "strategy"...Nobody needs to believe the returns, except the people I 'manage' the portfolios for. I already explained that I agree that it was mostly down to luck (timing). But luck is complicated...I dipped my toes into investing in 2006 and bought some funds first. I came across this site and later the fool.co.uk (now shut), tried out various strategies. All of them felt like they had some drawbacks but the one I felt worked best for me was High Yield investing (except I adjusted it a bit, more below). I quickly realised most of the financial industry is based pretty much on !!!!!! (skimming off commission, many different ways, for pretty much average and often less than average returns). I sold all the funds and started buying shares and investment trusts instead. The market tanked in 2008. I went pretty much all in. The market tanked some more. I stopped looking at the market and left the shares alone. In a few years time, the IRR was well above 20%. I did the same around 2013-14 and last March (invested all the money plus used some leverage via IG Index). There is no midas touch involved, that's the whole point. I have no idea what I am doing (when it comes to selecting shares) but at least I know that I don't and what my limitations are. Many 'professionals' don't know this; they think they know what they are doing. It drives them to take more risk (although most have to follow short term benchmarks). The main reason I have beaten the funds is due to timing and very low costs. While I picked some spectacular shares (Bradford Bingley bonds in 2009, Tesla, Novavax, Moderna more recently etc I also had some spectacular losers). I am very conscious of costs (including broker commissions). They and stamp duty really do add up over time. I also am still earning and any excess income would go back into portfolios, especially during the market crashes. It is really not that difficult. You just need to not care so much: have enough interest to do it, but not enough to constantly be fiddling around because that really impacts on returns. 
While I do not necessarily know what the individual companies do, I do know my exposure to any one sector or any one share or how much income is dependent on any one company. I keep immaculate spreadsheet records and benchmark against trackers and funds because I like to see by how much I beat them. 

What i also noticed early on is that if you pick 30 shares from various industries at random (big caps), the majority of those picks will do worse than the average. The reason for this is that it is only down to a handful of shares who will go on and on and on to pull the whole portfolio above average (which will eventually happen, if you leave everything alone). There are problems with both value and growth investing: with value, people sell too early and throw money at below average performers. With growth investing: people pay way too much money for overpriced companies. If you leave it alone, you don't need to think about any of this. Anyway, I came here to sort out the broker situation and instead, people latch on on something I haven't asked about. But hopefully this will be helpful to someone else. This site used to be full of financial advisors; now they must have become bitter or something.

eskbanker

moneytroll said:
I am not sure the point of this thread was to have to justify an investment "strategy"

But the point is that your chosen investment "strategy" is a direct contributory factor to the situation you now find yourself in, as you've constructed something too difficult and cumbersome to move and therefore effectively locked yourself in....

moneytroll said:
I came here to sort out the broker situation

Genuinely curious, how did you expect anyone on here to sort out the situation?  You don't want to stay with AJ Bell but don't feel you can move either, so (having already suggested negotiation or simplification, while highlighting lack of regulator interest) I really can't see what else you expected to hear?

cloud_dog

As others have mentioned the problem you are needing to address is, unfortunately, one of your own making.  A couple of suggestions that may / may not be palatable.

1. Could you rationalise your investment in to fewer investments?  It may compromise your existing strategy but may help you achieve your longer term goal.  For example if you hold a number of FTSE100 companies could you not simply switch those investments in to a FTSE100 ETF in order to transfer?  (replace as appropriate)
2. Jarvis X-O currently do not apply annual charges for GIA/ISA/JISA, and charge £5.95 per transaction (no OEICs)

moneytroll

eskbanker said:

"Which is my point - if you're concerned about what you perceive as high exit fees, then considering them when choosing a broker is indeed sensible.  As above, the FCA were looking at them too but decided not to pursue it, so if the regulator has dropped its interest then unfortunately you'll need to recognise that you're pretty much out on your own.  £10 per line is 60% less than they used to charge but your feelings are clearly influenced by the fact that you're running a series of substantial portfolios across different account types for a group of five people, which really isn't as typical as you might think."

At the time when I chose AJ Bell (from memory), all brokers were charging exit fees. However the majority of brokers also offered cashback, to cover transferring shares to them. I never really thought that brokers would stop offering this incentive (I now don't know of any broker that does this now). I don't think it is either fair or helpful to keep banging on about how "I should have known" because it doesn't help the situation now nor did this apply back then. I can't remember if it was you who provided a link to the FCA site where they looked at the exit fees issue, but you omitted from your post that the reason the FCA dropped the discussions is because many brokers in fact dropped charging exit fees. clearly because many customers must complain about this and they felt it was unreasonable to charge them (or are you going to tell me they dropped them out of their own good will?). I came to ask here whether it has become a standard in the industry to be able to insist on waiving exit fees or whether other customers / clients found other ways around such charges, to make the move to another broker more smoothly. If that's not the case, you can just say so and omit the patronising tone of "you should have known better".

"Despite your claimed success thus far, do you feel that the apparently haphazard and casual approach outlined in the bolded sections is compatible with your duties and responsibilities as a trustee?"

Are you an IFA, is this what it is? Nothing has changed then.

moneytroll

cloud_dog said:

As others have mentioned the problem you are needing to address is, unfortunately, one of your own making.  A couple of suggestions that may / may not be palatable.

1. Could you rationalise your investment in to fewer investments?  It may compromise your existing strategy but may help you achieve your longer term goal.  For example if you hold a number of FTSE100 companies could you not simply switch those investments in to a FTSE100 ETF in order to transfer?  (replace as appropriate)
2. Jarvis X-O currently do not apply annual charges for GIA/ISA/JISA, and charge £5.95 per transaction (no OEICs)

1. Not really because I will be paying a ton of commission and stamp duties (implicitly or explicitly). Plus trackers do not invest the way that I do.
2. I will need to find a broker that does Bare Trusts (Junior accounts); maybe HL might be suitable (although many years ago it was one of the more expensive brokers that charged a %age on the assets held). My general complaint is how the brokers rotate and change their charges. It is their right to do this but as customers, we should have a right to decide to move and be able to do so without having to pay thousands of pounds. It is just my opinion.

moneytroll

AnotherJoe said:

Two observations;
1. So essentially your "couple hundred" companies is really more like, say 20-25 because that's per portfolio, you just run a lot of portfolios. So, you should look at the exit charges on a per portfolio basis since that's what the individual portfolio owners pay. No one person is paying the total amount for all those changes. Each portfolio ultimately pays its own charges. (And as an aside sometimes transferring in brokers will pay the charges.

2. You don't know what most of these companies do ? !  Wut? Are you serious? And soem people say I'm high risk LOL. How on earth does buying shares inc companies you don't even know what they do fall into being a responsible trustee? 

1. JISAs have maybe 20 shares each; Bare Trusts are a lot bigger and have maybe 60 shares each. I don't know why this is so surprising since a typical UK income investment trust (which my portfolios resemble closest) would hold about 80 shares. The most concentrated IT holds perhaps 40 shares.
2. I don't, for the most part. I only know what industries/sectors they are involved in, to make sure I am not over-exposed to any one sector (this lessons was learnt quickly in 2008/banks) and that's all I need to know.

ivormonee

cloud_dog said:

Jarvis X-O currently do not apply annual charges for GIA/ISA/JISA, and charge £5.95 per transaction (no OEICs)

This is true but I think the OP would get a massive shock if/ when s/he ever decides to move from X-O at a later date as their exit charges are relatively prohibitive. Given that the OP has hundreds of lines of stock (did I read 300, somewhere?) across five or six accounts, then X-O's exit fees would be £60 per each ISA account plus £18 per line of stock, which would potentially cost 300 x £18 = £5,400 to transfer the lot out to another platform!