Discount Brokers Q&A

dunstonh

1) How can I compare 'platforms' i.e. what you call supermarkets. There seem to be at least 5.

There are about 25 platforms. On top of that you have some which are white labelled with possible different terms (i.e. shows their trading name but run behind the scenes by a platform provider)

You do your research like you would with any product.

2) How do you raise awareness/ need for TER assessment as a factor in investment management and decision making?

They all show the TER so if you are aware of it then its not a problem.

3) You don't seem to mention the FSA move to risk analysis and portfolio allocation. These were drawn to my attention only when I went to FSA's regarding private pension. But it seems to me to have validity for non pension savings too. You can do this yourself. MSE could give general guidance on asset allocation.

DIY investors dont have to worry about what the FSA thinks. The whole point of DIY is to allow you take your own decisions and your own mistakes. I don't see MSE ever giving asset allocation guidance as its ever changing and many articles dont get updated that often. Plus its an area that Martin says he doesnt get involved in.

4) Investment Trusts. These seem to be worthy of much more coverage on the site. For most people a share plan in an international growth trust or a UK Trust for those needing income seem to be the best long term option.

They are an option but generally considered slightly higher in risk compared to an equivalent unit trust/oeic. Plus, for regulars, they are can actually be more expensive than OEICs. If you know what you want and the risks involved then fine. But this site has far more inexperienced people than experienced. The articles very much focus on keeping it simple at the expense of giving full information.

jonnets

A couple of quick questions please to anyone following this thread:

If you have say £30,000 with two discount brokers and both use the Co-Funds platform are you over the FSCS £50,000 limit if there was a problem at Co-Funds or do you get two lots of protection as you went through two FSA registered brokers?

What do people think about the new commfreefunds broker? OK to use as FSA registered and in the FSCS or stick with experienced brokers?

Many thanks.

dalore

Are there any discount brokers who offer a self-select ISA that lets you trade in NASDAQ listed shares?

Thanks!

dunstonh

If you have say £30,000 with two discount brokers and both use the Co-Funds platform are you over the FSCS £50,000 limit if there was a problem at Co-Funds or do you get two lots of protection as you went through two FSA registered brokers?

Terminology is a bit messy here. The discount brokers are IFAs or agents. You are not using them as product provider. You are using Cofunds. The FSCS limits apply to the product provider, not the agent you used to access the product provider.

What do people think about the new commfreefunds broker? OK to use as FSA registered and in the FSCS or stick with experienced brokers?

Again, terminology is messy. They also use Cofunds as a product provider and they are just agents. so, all three of yours are using cofunds as the platform/product provider.

Whilst they are rebating trail commission, they are not rebating platform commission. Chances are they getting a cut of the platform commission from Cofunds or aim to once they get a certain volume. However, the FSA wants to ban platform commission and that probably only has about 2 years life left in it. Trail commission vanishes in under 13 months and most funds nowadays have no initial charge on them.

I used to use Cofunds a lot (even used them for my own ISA and unwrapped investments) but nowadays I rarely place new money on there as, in my opinion, other platforms have raced forwards and Cofunds have been left behind. They aer still good with very small amounts though. I now prefer the unbundled platforms instead. Maybe Cofunds will come out with a good unbundled platform. I hope so as they were once a force in driving change and improvement but have taken a back seat and got left behind and it would be good to see them back.

dunstonh

As if by magic. Just after posting that, Cofunds has announced their unbundled charging structure and that it will come in during Q3 2012.

They will charge £40 per annum (probably vatable - but it doesnt say) and around 0.25% of assets under management and a further platform charge (currently undisclosed)

http://www.citywire.co.uk/new-model-adviser/cofunds-to-launch-unbundled-charging-in-q3-2012/a523784?ref=new-model-adviser-latest-news-list

Lokolo

dunstonh wrote: »

As if by magic. Just after posting that, Cofunds has announced their unbundled charging structure and that it will come in during Q3 2012.

They will charge £40 per annum (probably vatable - but it doesnt say) and around 0.25% of assets under management and a further platform charge (currently undisclosed)

http://www.citywire.co.uk/new-model-adviser/cofunds-to-launch-unbundled-charging-in-q3-2012/a523784?ref=new-model-adviser-latest-news-list

That's actually pretty expensive to what I thought it would be.... wonder how much HL will charge post RDR.

Joyce_G

I have an existing Stocks & Shares ISA with Santander which has not performed well. I want to know if it is possible to transfer Stocks & Shares ISA funds in the same way Cash ISAs can be transferred to another provider.

jem16

Joyce_G wrote: »

I want to know if it is possible to transfer Stocks & Shares ISA funds in the same way Cash ISAs can be transferred to another provider.

Yes it is.

However make sure you choose somewhere like a funds supermarket as that is where you will have the largest choice of funds rather than just a few as you will with banks.

Remember it's not the provider that performs but the investment funds chosen to go inside the ISA wrapper.

dunstonh

I have an existing Stocks & Shares ISA with Santander which has not performed well.

We could have told you that before you bought it (banks historically suffer poor performance on their funds)

I want to know if it is possible to transfer Stocks & Shares ISA funds in the same way Cash ISAs can be transferred to another provider.

yes. The new provider will have transfer forms to allow this.

gunjin

I know this is not a particularly active forum but am hoping dunstonh or someone else can help me see through the somewhat murky world of fund supermarkets and discount brokers.

I have a six figure sum invested in 15 different funds (non-ISA) through Interactive Investor (III). The were mostly made quite some time ago, are all relatively high risk funds (Asia and other emerging markets etc.) and were intended as very long term investments (5-10 years). I chose III because they had discounted initial charges, no monthly or quarterly charge and did not penalise inactivity (unlike almost every other alternative at the time).

Since then the practice of rebating annual charge commission trails has become commonplace but I have only learnt about it when III announced earlier today that they would be levying a quarterly fee but paying 100% of their commission trail back to investors.

I intend to remain an infrequent investor (maybe 2 transactions/yr at the most) and have been trying to explore what my options are but am being hamstrung by the common practice of obfuscating the actual charges discount brokers would levy for my investment case.

My questions therefore are:
1) I have no doubt that I would see a net benefit from III's rebate minus its £20/quarter fee but does anyone know whether III already rebates its commission trail to any extent? I cannot get through to their support team number to ask.
2) Are there other trustworthy discount brokers that provide a 100% rebate and no monthly/quarterly/annual charge?
3) How easy/costly is it to transfer 15 non-ISA fund holdings to another broker?

Any answers or pointers would be most welcome.