Investment fees on Fidelity ISA, 1.8% is that correct please?

BigGirlPants

Good day to you, I've recently been helping a relative check through her investments, and she was very surprised to see the fees that she has been paying on her Fidelity ISA are working out to be around 1.8% annually. 
She was under the impression she would  be paying a smaller amount every month, totalling less than half of a percent.

I just wanted to ask your advice and ask if that is actually the right amount that isas cost to run.
She used to invest with Cavendish online, and  believes everything was switched directly to Fidelity.

 Thank you so much for your help.

grumiofoundation

What is she invested in? 

Has she been paying transaction fees? 

IvanOpinion

Is this from the new cost sheets that we seem to be getting?  Fidelity usually charges 0.35% for the platform (less for larger amounts or specific types of funds).  The rest is likely to be  OCF and transaction charges which are automatically deducted from the funds at source (already reflected in the price).

Could there be one or more fund of funds in there?  Need to know which funds your relative is invested in.

virenque

Platform fee should be 0.25% until circa October 2021 if they've switched from Cavendish.

Albermarle

 just wanted to ask your advice and ask if that is actually the right amount that isas cost to run.

AS said above the ISA costs 0.25% to run ( it is not quite the right terminology but OK) 

The investment funds within the ISA have their own costs . Depending on what has been chosen they could be anything from 0,1% to 2 % . Normally you do not see these costs directly but I think Fidelity maybe do an annual summary where they are included ?

dunstonh

Charges are disclosed and separated as follows:
Platform fee (typically 0.25% but sometimes cheaper - with Cavendish it is 0.25%)
OCF/TER (of the fund)
 Transaction charges (of the fund)
Incidental/other charges (of the fund)
Adviser charge (nil in the case of Cavendish as no advice given)
Total

So, the annual cost disclosure includes all the above.   She can disregard transaction charges and incidental charges as they synthetic and not based on a single calculation.   They come about as a result of an EU directive that is flawed.   

1.8% for a non-advised portfolio is high.  indeed, it is at the higher end for an advised portfolio nowadays.

BigGirlPants

Thank you for thank you for your replies.

The investment is with the Tilney growth portfolio, and when she messaged this was the response.

"I understand you are concerned by the monetary amount of fees shown in your Annual Costs & Charges Summary. Please note that 'Investment Charges' are built into the price of the funds when you buy and sell. These are fees taken by the Fund Managers of each of your investments for the daily running costs of the fund. This is not a Fidelity charge however for full transparency we inform clients of the charges in their Annual Costs & Charges Summary. You do not actually see this transactions coming out of your accounts as they are paid directly from the fund.

The Service charges and Adviser fees are the charges you will see being deducted from your account."

I guess all seems in order it is just a higher cost than she was expecting.
she was unaware of it until she looked at an annual statement which shows all the costs.

She is now looking to possibly keep the ISA wrapper and transfer to another platform with less charges in order to make the most of her investment.

Fidelity also no longer seem to be one of the recommended platforms on here.
She is happy to take some risk and is looking for accumulation and growth rather then having any of the dividends or growth paid out to her currently.
She is looking to to not be actively involved in the day-to-day running of the portfolio, just to place it and then leave it as her nest egg for the future.

Thank you for your advice and assistance. 

grumiofoundation

BigGirlPants said:

Thank you for thank you for your replies.

The investment is with the Tilney growth portfolio, and when she messaged this was the response.

"I understand you are concerned by the monetary amount of fees shown in your Annual Costs & Charges Summary. Please note that 'Investment Charges' are built into the price of the funds when you buy and sell. These are fees taken by the Fund Managers of each of your investments for the daily running costs of the fund. This is not a Fidelity charge however for full transparency we inform clients of the charges in their Annual Costs & Charges Summary. You do not actually see this transactions coming out of your accounts as they are paid directly from the fund.

The Service charges and Adviser fees are the charges you will see being deducted from your account."

I guess all seems in order it is just a higher cost than she was expecting.
she was unaware of it until she looked at an annual statement which shows all the costs.

The majority of the charges are the ongoing charge of the fund (see link):1.43% (income version is the same ongoing charge)
https://www.fidelity.co.uk/factsheet-data/factsheet/IE00BYX8KR56-tilney-growth-portfolio-clean-acc/key-statistics

Plus platform fee 0.35% fidelity 0.25% for cavendish.
Plus other fees - explained better than I could by Dunstonh above.

Why was this investment chosen? 

She is now looking to possibly keep the ISA wrapper and transfer to another platform with less charges in order to make the most of her investment.

Keeping the same investment? In which case the ongoing charge will stay the same.
Fidelity is one of the cheapest % based platforms. 
Depending on the amounts involved a flat fee based platform might be cheaper?

Fidelity also no longer seem to be one of the recommended platforms on here.
She is happy to take some risk and is looking for accumulation and growth rather then having any of the dividends or growth paid out to her currently.

MSE don't technically recommend anything, let alone investment platforms

She is looking to to not be actively involved in the day-to-day running of the portfolio, just to place it and then leave it as her nest egg for the future.

Other multi assest funds are available that are cheaper - see link (over a year old now not sure if there is an updated link) which are viewed as buy and forget funds.
https://monevator.com/passive-fund-of-funds-the-rivals/

dunstonh

The investment is with the Tilney growth portfolio, and when she messaged this was the response.

That is an expensive option and not typically chosen by a DIY investor.   That is the cause of the cost.

She is now looking to possibly keep the ISA wrapper and transfer to another platform with less charges in order to make the most of her investment.

If it is the fund that has high costs, then why is she looking to change the platform?   If the same fund was held on any of the other platforms then it would still have these same fund charges.

Fidelity is a whole of market platform.   Most other platforms are whole of market nowadays.   It isn't the platform charge that is the issue.

BigGirlPants

Sorry I did not make myself clear.
 What I meant was she would like to keep the money in in the ISA but is happy to transfer it to a cheaper fund.
She would like to keep the the income tax advantage of the money remaining in an ISA though rather than catching it in and buying a new one if that makes sense.

if the platform charges of Fidelity are fair than maybe she just needs to look at a similar risk fund with lower transaction charges if I understand the situation properly.

I'm not sure why she he chose this particular fund, she has had this investment for a few years and doesn't remember.

dunstonh

if the platform charges of Fidelity are fair than maybe she just needs to look at a similar risk fund with lower transaction charges if I understand the situation properly.

Ignore the transaction charges (and incidental/other) column on the breakdown.   That is a synthetic calculation rather than a physical charge.  There are multiple calculation methods allowed to create that figure which can result in very different outcomes.   It is also possible that an element of profit or loss can be included in that figure.    It is part of a flawed EU directive called MiFIDII.      The important bit with fund charges is the OCF.