Transferring SIPP from Hargreaves Lansdown to Vanguard

GeoffTF

https://forums.moneysavingexpert.com/discussion/comment/82088205#Comment_82088205

A very low fee / zero fee platform - who's paying for this / why is it
free / very low fee? You may be the product, the firm may be building a
customer base to sell to another firm to make a profit, fees are then
hiked.

iWeb/Scottish Widows (owned by Lloyds Banking Group) has had zero platform fees for decades. Barclays has recently matched Scottish Widows' zero platform fees. There is no reason to believe that either Lloyds or Barclays wants to sell the business. They may hope to cross sell more expensive services, but that is another matter.

The spread on ETFs may be wider - a means of making money from
you which you aren't aware of.

That is illegal in Europe. All platforms have to offer best execution and concealed charges are not permitted.

Vanguard's platform fee is low fee.

Vanguard's platform fees are much higher than the zero platform fees available from Lloyds and Barclays. It is also much higher than HSBC charges for large accounts. The SIPPs cost more, but are still cheaper than Vanguard's for large accounts. Interactive Investor (owned by Aberdeen) is also relatively cheap for large accounts.

I've never had a problem with their web site and I wouldn't call it buggy.

I have hit several bugs with Vanguard's website. I now know how to avoid them, and it is possible that some of them have been fixed.

I suspect smaller platforms are more susceptible to fraud and other issues than larger platforms.

Neither Lloyds nor Barclays publish numbers and Vanguard has stopped publishing numbers since it put up its fees. Nonetheless, the historical numbers suggest that Lloyds (Halifax Share Dealing Limited) and Barclays are two of the largest UK investment platforms, and probably larger than Vanguard's UK platform. All three platforms are owned by much larger financial services groups.

I have a free for life account with Vanguard, I also have a Scottish Widows account that I have used for over 15 years. Vanguard is cheaper for me, but the cost difference is negligible (except for the SIPP). Scottish Widows offers a wider range of investments and a better standard of service. Vanguard is notoriously tardy at paying dividends.

FT8

That is illegal in Europe. All platforms have to offer best execution and concealed charges are not permitted.

I wasn't suggesting something illegal. Maybe it should have been worded like this:

Another means of making money from you which you aren't aware of. I don't mean concealed charges nor something else illegal. There are other fees besides the platform fee, dealing fee or absence of interest on cash. etc.

How is a 0% fee or very low fee platform making it's money from your account? I would want to know this before opening an account. I'm wary of receiving a service for no fee. These firms aren't charities. One thing I look for is a clear page about the fees & charges. If its not easy to find & understand, then be wary.

I would be particularly wary of smaller new comers offering very low / no fee. I would be more concerned about these than large established firms.

In the event of a prolonged falling market, retail investors sell en masse, how many of the platforms will remain? I suspect the smaller / cheaper firms will go out of business. There may be periods of time where you can't access your assets whilst brokers are wound up. I believe its possible that some of the investor assets may be used to pay for the winding up. There will be consolidation which may lead to a rise in fees.

BTW Vanguard charges £0 for buying and selling ETFs (two trading points each day) and funds.

Monevator - Broker comparison: cheap investment platforms UK

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GeoffTF

I wasn't suggesting something illegal.

You suggested that platforms make money from spreads. That is illegal.

How is a 0% fee or very low fee platform making it's money from your account?

Halifax Share Dealing Limited publishes accounts and has been consistently profitable. Their iWeb website (now Scottish Widows) used to publish numbers giving a breakdown of what their average customer paid. Their revenue comes from dealing charges, interest on uninvested cash and FX fees. Their SIPPs used to be administered by AJ Bell, but they are now administered in house, so they will now be collecting fees from them.

I would be particularly wary of smaller new comers offering very low / no fee.

I would not put a large account with them. If you are within the FSCS limit and can afford a temporary loss of access to your investments, you should be fine. They will eventually start charging (or put their prices up) or be bought out.

In the event of a prolonged falling market, retail investors sell en masse, how many of the platforms will remain?

AFAIK no investment platform has ever become insolent as a result of falling markets. All the examples that I have seen were the result of maladministration.

There will be consolidation which may lead to a rise in fees.

It looked like that might happen when JC Flowers was gobbling up fixed price brokers, but that has passed. We now have lots of new entrants, and a recent massive price cut from Barclays. Hargreaves Lansdown seems to have taken a big hit as a result of putting its prices up. I recently jumped ship from them.

Luckybonus

Thankyou so much for your reassurance, I only have £6500 in my SIPP. I opened it and put the money in retired managed fund, but have asked to transfer it to the FTSE Global All Cap. I very much appreciate your advice and especially thinking of the FSCS protection, really important to think of.

Much appeciation for your message:) Have a great day

Luckybonus

Thanks so much for the advice, I am super grateful :)

Luckybonus

Many Thanks for your reassurance and advice, it is massively appreciated. Have a good day :)

Luckybonus

Thankyou so much for your help and advice, this is massively helpful :)

Eco_Miser

I believe its possible that some of the investor assets may be used to pay for the winding up.

That is possible. However the FSCS will cover up to £80K per investor to cover that (and any shortfall in the assets).