S&S ISA transfers - in specie or cash? Involves Vanguard/ii/Wealthsimple/Nutmeg/Open-money/AJ Bell

katieks

Hi

Apologies for complexity of heading but I am planning to do the following:
- transfer 4x JISA from Wealthsimple to Interactive Investor*
- transfer 1x SIPP from Wealthsimple to Vanguard
- transfer 1x LISA from Nutmeg to AJ Bell
- transfer 1x £160k ISA from Open-money to Wealthsimple with a view to then transferring this out of Wealthsimple**

* I have signed up to Interactive Investor with a special offer of £100 cashback (my Vanguard ISA is currently being transferred to them).  To save on the Vanguard fees, I am transferring the four JISAs as II will let me have the JISAs for no extra fees.

**Open-money are charging me £100/fund (!) to transfer out my ISA to another provider.  Wealthsimple will cover this if I transfer it to them in specie but Wealthsimple are advising that I transfer the ISA as cash.  They state for the complications and delay the time out of market is not a concern (noting that this will be 3-4 days they state).  Are they simply trying to avoid paying the fees or is it sage advice?  I've seen some horror stories about delays to in specie transfers.  It's actually put me off involving iWeb.

Very grateful for advice.  The reasons for the moves are mostly to reduce fees as I feel I'm a bit more confident and don't need Wealthsimple/Nutmeg advice.  My Vanguard Lifestrategy funds have done perfectly well and are what I plan to continue with even with non-Vanguard platform.

Many thanks

dunstonh

You can only do inspecie transfers if you hold the UT/OEIC/IT/ETFs in the ceding plan and they or alternative share class are available on the receiving plan.   Plus, whilst the FCA have told providers to support in-specie transfers, not all are ready yet.

 The reasons for the moves are mostly to reduce fees as I feel I'm a bit more confident and don't need Wealthsimple/Nutmeg advice. 

Nutmeg doesn't give advice and Wealthsimple do but only if you select it and pay for it.     
You cant do in specie transfers from Nutmeg as their portfolios are not whole of market but in-house.

- transfer 1x £160k ISA from Open-money to Wealthsimple with a view to then transferring this out of Wealthsimple**

Do you realise that in-specie transfers can take 6 months.   Indeed, I have one currently going that is about to go past that 6 month point.  You could be waiting a long time to complete that double hop.

 Are they simply trying to avoid paying the fees or is it sage advice?

It certainly costs less for a provider to do a cash transfer.  If you were not planning to immediately leave them then in specie would be better.  However, as you are just using them for convenience then cash transfer is probably better.

Alexland

katieks said:

- transfer 4x JISA from Wealthsimple to Interactive Investor*
- transfer 1x SIPP from Wealthsimple to Vanguard
- transfer 1x LISA from Nutmeg to AJ Bell
- transfer 1x £160k ISA from Open-money to Wealthsimple with a view to then transferring this out of Wealthsimple**

* I have signed up to Interactive Investor with a special offer of £100 cashback (my Vanguard ISA is currently being transferred to them).  To save on the Vanguard fees, I am transferring the four JISAs as II will let me have the JISAs for no extra fees.

On the JISAs then consider transferring them to Fidelity as they have no charges to trade or hold funds in child accounts and it doesn't tie you into II's ongoing £120 pa unless you intended to keep the adult ISA with them for the long term? Also at 18 then unless the JISAs are large enough it would be better to mature onto Fidelity's 0.35% charge than the children start paying II their own 4x £120 pa.

If you do intend to stay with II then why wouldn't you also move the £160k ISA directly to II? I don't see why you would want this via Wealthsimple as they almost certainly won't support the same investment choices as Open Money did? £160k is enough money that it's not worth messing around with going through multiple transfers between investments.

iWeb do have a bad reputation for transfers at the moment so understand why you might want to transfer to II for now at least especially if cash although you might want to do an in-speccie of the ISA to iWeb later (after the II cashback clawback period) if it works out cheaper and they fix their transfer delays. We are happy iWeb customers.

dunstonh said:

You cant do in specie transfers from Nutmeg as their portfolios are not whole of market but in-house.

Nutmeg's portfolios are built from fairly common ETFs so it is possible and they do offer it (from memory they charge was £25 per ETF) although the fractional holdings might make it more difficult. Still overall it's not worth doing (just imagine the trade fees to sell down or ongoing manage those ETFs on AJ Bell) so when moving from a robo it's almost always best to do a cash transfer and just accept the time out of the market is the cost of moving away from their bespoke portfolios or products.

katieks

Hi, thanks.  My intention is to stick with larger low-cost passive tracker funds, so I won't be doing lots of trading.  I will definitely consider the above though.

Alexland said:

If you do intend to stay with II then why wouldn't you also move the £160k ISA directly to II? I don't see why you would want this via Wealthsimple as they almost certainly won't support the same investment choices as Open Money did? £160k is enough money that it's not worth messing around with going through multiple transfers between investments.

The reason is that Wealthsimple will pay the £100 per fund (total £1000) for me to move money in specie out of Open-money which Interactive Invester wouldn't do.  Moving cash out of Open-money is free.

katieks

Also, when I say I feel I no longer need Wealthsimple and Nutmeg 'advice', what I mean is that I've decided I no longer wish for their management as my Vanguard funds have kept on par, even outperformed, Open-money.  I  know past doesn't predict future, yadayada, but I'm going to stick with low cost passive tracker funds.  Helps me sleep at night and I don't have the time for active trading.

grumiofoundation

katieks said:

Hi, thanks.  My intention is to stick with larger low-cost passive tracker funds, so I won't be doing lots of trading.  I will definitely consider the above though.

Alexland said:

If you do intend to stay with II then why wouldn't you also move the £160k ISA directly to II? I don't see why you would want this via Wealthsimple as they almost certainly won't support the same investment choices as Open Money did? £160k is enough money that it's not worth messing around with going through multiple transfers between investments.

The reason is that Wealthsimple will pay the £100 per fund (total £1000) for me to move money in specie out of Open-money which Interactive Invester wouldn't do.  Moving cash out of Open-money is free.

Unless you will be keeping the same investments with II as wealthsimple currently have picked for you you are going probably going to be out the markets at some point anyway. Potentially you could end up paying fees to sell investments down the line but wealthsimple should be free to move to cash?.

Firstly can you transfer from wealthsimple to II in-specie or does it have to be in cash? If the latter then you might as well move from open-money to II in cash?

If you can and do transfer in specie, unless you will be keeping the same investments you currently hold with wealthsimple, when you move to ii you will have to sell them (wealthsimple uses ETFs I believe so will cost trading fees) plus if buying funds will be out the markets for a couple of days anyway. 

Alexland

katieks said:

The reason is that Wealthsimple will pay the £100 per fund (total £1000) for me to move money in specie out of Open-money which Interactive Invester wouldn't do.  Moving cash out of Open-money is free.

OK I have had a look at Wealthsimple's transfer webpages and it does seem that they can generally accept your existing portfolio in-specie (assuming they support all the assets used in the Openmoney portfolio) and then would email you before selling anything down to reinvest in their own portfolio. I guess it's at that point you would ask them to reimburse the charges and tell them not to bother as you will be transferring them again to II? You won't be making any friends. Do you know how may funds you would then need to onward transfer (assuming II can also accept them) and then sell down at II? Sounds like a massive faff that could go on for a very long time compared to just accepting hopefully no more than a few weeks out the market transferring to II as cash.

katieks

Alexland said:

You won't be making any friends. 

I'm surprised to see that comment considering we're discussing personal finance.  They withdrew their Black account Priority airport lounge pass just after I joined them.  Nothing given instead or a compensatory reduction in fees. Nada.  In the meanwhile, I have flow to NZ, US, Asia, Africa, despite covid and because of work and not been able to benefit from the airline lounges.  One of the main reasons I opened all my kids JISAs with them to get my total above the threshold for the benefit.  Not feeling very charitable, sorry.

Alexland

katieks said:

I'm surprised to see that comment considering we're discussing personal finance.

It was just a statement of fact they probably won't be very happy to refund your high transfer fees when you intend to immediately transfer out.
As dunstonh describes in specie transfers can take a long time (some of mine have taken over 6 months) particularly with complicated multi fund portfolios arriving in dribs and drabs so to do it twice you could be setting yourself up for around a year of pain during which time you will continue to pay the old charges and be invested in the investments you no longer want to hold.