HL SIPP Block on Trades > 25 pa

diamond9_2

EdInvestor wrote: »

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How many switches are you guys making a year on average?

I might switch about once a month on average. When I was with HBoS, that would be 12 trades a year. Now with HL, I'm split between 4 funds at any one time so switching once a month might be 48 trades a year or even 96 trades if a switch counts as two!

My investment method is basically momentum investing so I switch when trends change.

jamesd

EdInvestor, you do not have to pay a 150 extra charge to deal in shares with the Hargreaves Lansdown Vantage service.

You do have to pay 0.5% of the total value of the investments that don't pay trail commission per year, including shares, capped at 200 + VAT a year (probably per sub-saccount, ISA, SIPP etc.), plus dealing fees per sale and purchase if the deal isn't online unit trust or OEIC trading. This is charged monthly, presumably pro-rata.

So no ongoing direct charge from Hargreaves Lansdown to hold unit trusts and OEICs because the fund manager charges it for them as part of the AMC and passes it on to them in the form of trail commission. There are a few exceptions that pay low or perhaps no trail and have low AMCs and those are identified on the individual fund pages.

jamesd

Sobryma, so far as I can tell the Vantage SIPP Key Features document does not include a clause against short term or excessive trading.

Nor does the Key Features document for the Vantage service contain such a clause in a section applicable to the SIPP. That document has an overall title "KEY FEATURES - HL VANTAGE ISA/FUND & SHARE ACCOUNT" and a section with a bold subheading "How can I deal or switch the investments I hold in my Stocks & Shares ISA or Fund & Share Account?". Within that section is this text, my italics:

"Investments are generally designed as longer term investments. Short-term or excessive trading is discouraged because it may harm performance by disrupting portfolio management strategies and by increasing expenses. Hargreaves Lansdown actively monitor levels of trading and reserves the right to refuse to accept applications from anyone who is considered to have a history of short-term or excessive trading or whose trading has been, or may be, disruptive."

So far as I can see your actions in investing a lump sum over time couldn't be considered by a reasonable person to be short-term, excessive or disruptive even if this clause did exist in the SIPP document.

The SIPP application also references the Hargreaves Lansdown Asset Management Ltd and Hargreaves Lansdown Stockbrokers Terms and Conditions of Business and those do not appear to have such a clause.

The FSA's Principle 7, communications with clients, says that: "A firm must pay due regard to the information needs of its clients, and communicate information to them in a way which is clear, fair and not misleading".

It's always possible that the error is mine and if that is the case I'd very much welcome being told where and how so I can check it and expeditiously recant if it turns out that I have missed it.

As a practical matter, though, this is not of great significance, even though it was determined that it was unfair for banks to close the accounts of those who took legal action against them to recover fees. Better to see if Hargreaves Lansdown offers or could offer some way to do what you want in a manner that seems suitably efficient and cost-effective to them and could be useful to other customers with similar reasonable needs.

diamond9_2

Thanks jamesd. Your investigation supports my recollection of events and documents. Since they accepted my application, I would expect them to honour a trade I requested.

jamesd

diamond9, routine monthly switching is just the sort of thing that I assume they are trying to address. It's the sort of case where them offering a trade top-up might make sense, since you're actively dealing to try to make money and in doing so transferring costs to them. I don't think that it is reasonable to expect them to accept an unlimited number of trades when their business is used that way - you're effectively pushing them to introduce per-deal charging to create a disincentive to do it.

I don't think that the number of trades you're talking about is unreasonable if it was for things like getting money invested with regular purchases but I do think that the way you're using them is gaming the system.

Gaming systems is fair enough per the theory of this site - consumer's revenge - but I'm not so keen when it results in people who are just trying to get their money invested being treated similarly.

Different story for those who are just trying to get invested and maybe make occasional changes. Even if those changes involve a lot of funds and hence a lot of trades.

Sobryma

jamesd - interesting point re terms, I just assumed guilt. The past year I have been switching more than normal due to market conditions, although to debatable gain. In the past I've sliced investments - as funds rose I either invested in new funds or topped up weaker sectors. I've received my bumpf from BestInvest so will have a think over weekend. I do like the idea of their portfolio models but need to consider further.

What REALLY concerns me with HL is that is severe market circumstances they could turn around and say sorry we won't put those trades so I any flight to cash would be pointless...