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  • FIRST POST
    • fronty
    • By fronty 10th Nov 19, 1:09 PM
    • 62Posts
    • 13Thanks
    fronty
    Wow, HL SIPP charges are something else!
    • #1
    • 10th Nov 19, 1:09 PM
    Wow, HL SIPP charges are something else! 10th Nov 19 at 1:09 PM
    I use HL for my ISA, really happy with the platform although I know it's not the cheapest out there (in fact it may be the most expensive for all I know). Anyway, I just checked to see how much it would cost to hold a SIPP with them, based on a valuation of 380K, it would cost me 120 PER MONTH!!! (1,450 per year)

    Wow! Unless I have misunderstood their charges that seems like a ridiculous amount to pay.

    I have signed up to II's SIPP as I don't like % fees, but I was just interested to see how much they would charge.

    There must be a lot of people out there paying well over the odds.
Page 1
    • NedS
    • By NedS 10th Nov 19, 1:14 PM
    • 165 Posts
    • 97 Thanks
    NedS
    • #2
    • 10th Nov 19, 1:14 PM
    • #2
    • 10th Nov 19, 1:14 PM
    It depends what you hold in your portfolio. If it's mostly funds, then yes there is a 0.45% fee, but shares, ITs and ETFs are capped at 200 per year, so on a 380K portfolio that works out at around 0.0525% which seems pretty good to me.
    • westv
    • By westv 10th Nov 19, 1:36 PM
    • 4,911 Posts
    • 2,481 Thanks
    westv
    • #3
    • 10th Nov 19, 1:36 PM
    • #3
    • 10th Nov 19, 1:36 PM
    Why is it cheaper to hold shares rather than funds? Is it because you are more likely to what to sell/buy and incur fees with shares than you are with funds?
    • fronty
    • By fronty 10th Nov 19, 1:49 PM
    • 62 Posts
    • 13 Thanks
    fronty
    • #4
    • 10th Nov 19, 1:49 PM
    • #4
    • 10th Nov 19, 1:49 PM
    It depends what you hold in your portfolio. If it's mostly funds, then yes there is a 0.45% fee, but shares, ITs and ETFs are capped at 200 per year, so on a 380K portfolio that works out at around 0.0525% which seems pretty good to me.
    Originally posted by NedS
    Just funds in my pension.
    • Albermarle
    • By Albermarle 10th Nov 19, 2:23 PM
    • 1,748 Posts
    • 1,126 Thanks
    Albermarle
    • #5
    • 10th Nov 19, 2:23 PM
    • #5
    • 10th Nov 19, 2:23 PM
    Why is it cheaper to hold shares rather than funds? Is it because you are more likely to what to sell/buy and incur fees with shares than you are with funds?
    I have asked the same question myself and the answer seems to be mainly pricing for different types of customers and competition .
    The bulk of investors own funds/OEICS and are not so price sensitive, and just want things easy.
    So HL ( for example ) make it easy ( no charges for buying or selling funds) and charge 0.45% .
    However they are aware larger more savvy investors will not pay , when they can get lower charges elsewhere. Also these type of investors are more likely to be investing in shares/IT's/ ETF's so they cap the charges for these , although they charge for each trade. Also the 0.45% drops to 0.2%? if you have more than 250K.
    Fidelity and A J Bell do something very similar and they are a bit cheaper than HL anyway .
    I have signed up to II's SIPP as I don't like % fees
    For the majority of investors with larger funds the fixed fee platforms work out cheaper, but they do tend to have more extra charges (for drawdown for example ) whereas HL and Fidelity regular charges cover almost everything else, apart from trades. If you hold mainly ETF's/IT's/shares with these two % based platforms , then the charges are very competitive , especially in the drawdown/decumulation phase.
    • EdSwippet
    • By EdSwippet 10th Nov 19, 4:08 PM
    • 1,046 Posts
    • 1,061 Thanks
    EdSwippet
    • #6
    • 10th Nov 19, 4:08 PM
    • #6
    • 10th Nov 19, 4:08 PM
    Why is it cheaper to hold shares rather than funds? Is it because you are more likely to what to sell/buy and incur fees with shares than you are with funds?
    Originally posted by westv
    I think the honest answer to this is, because they can get away with it.

    In the 'old days', before the retail distribution review (RDR), holding funds on a platform was generally free, both of annual charges and of any trading fees. This was because the platforms lived off a sizeable backhander from the fund managers, perhaps as much as 1/3 of the then-average 1.5% or so annual management charge for funds.

    The FSA cleared things up with the RDR, by disallowing these backhanders. As a result, the annual charge for most actively managed funds dropped by around 0.5% or so. But the platforms had to make up the shortfall. Some did this by introducing modest across-the-board charges, but some did it by leaving IT and share investors unscathed and recouping everything specifically from fund investors. Arguably this might have left everyone in more or less the same position as before, except for ...

    Caught in the crossfire were folk who held cheap trackers. If you're only paying 0.5% or less for a fund, the removal of any backhander might see your charge drop to 0.3% or so but cannot compensate for a 0.45% added platform charge. Gradually, platforms have settled into percentage-fee and flat-fee models. And gradually, fund charges have been trimmed further so that fees such as HL's inflated 0.45% may now be as much as six or seven times the 0.06% or so you might pay a tracker fund manager for doing the actual work.

    Personally, I find percentage-fee models for platforms distasteful. It simply cannot cost HL more than ten times as much to manage fund holdings than to manage shares and ITs(*), so seven years after the RDR it's clearly now just a case of treating fund investors as cash cows.


    (*) If HL's internal costs for managing fund holdings really are that high, they should just outsource this part of their business to somebody else. Interactive Investor, perhaps.
    • ZingPowZing
    • By ZingPowZing 10th Nov 19, 5:21 PM
    • 248 Posts
    • 88 Thanks
    ZingPowZing
    • #7
    • 10th Nov 19, 5:21 PM
    • #7
    • 10th Nov 19, 5:21 PM
    I think the honest answer to this is, because they can get away with it.
    Originally posted by EdSwippet
    Sounds right.
    • El Torro
    • By El Torro 10th Nov 19, 7:35 PM
    • 462 Posts
    • 450 Thanks
    El Torro
    • #8
    • 10th Nov 19, 7:35 PM
    • #8
    • 10th Nov 19, 7:35 PM
    I use HL for my ISA, really happy with the platform although I know it's not the cheapest out there (in fact it may be the most expensive for all I know). Anyway, I just checked to see how much it would cost to hold a SIPP with them, based on a valuation of 380K, it would cost me 120 PER MONTH!!! (1,450 per year)

    Wow! Unless I have misunderstood their charges that seems like a ridiculous amount to pay.

    I have signed up to II's SIPP as I don't like % fees, but I was just interested to see how much they would charge.

    There must be a lot of people out there paying well over the odds.
    Originally posted by fronty
    As you've discovered if you have a large SIPP, invested 100% in funds, then HL is a very expensive place to put it all.

    HL do have their advantages. They're a large, well established company. Their profits are very healthy, which is more than I can say for many of the other platforms. For this reason they're unlikely to go anywhere. Their customer service has a good reputation and their website is well laid out and easy to understand.

    Also it's prudent to have more than one platform when you have a large SIPP. If you put it all in one and the platform goes bust then it's likely that you'll get your money back. How long will that take though? Having more than one SIPP means more admin for you, but it should also mean that you have access to money when you need it, once you start drawing down.

    HL could be considered as one of your platforms. Ultimately though if you're looking for the cheapest options then HL probably won't be on your short list.
    • fronty
    • By fronty 10th Nov 19, 8:17 PM
    • 62 Posts
    • 13 Thanks
    fronty
    • #9
    • 10th Nov 19, 8:17 PM
    • #9
    • 10th Nov 19, 8:17 PM
    Is it possible to split a SIPP in two?
    • ffacoffipawb
    • By ffacoffipawb 10th Nov 19, 8:23 PM
    • 2,966 Posts
    • 2,083 Thanks
    ffacoffipawb
    Is it possible to split a SIPP in two?
    Originally posted by fronty
    Yes, just do a partial transfer from one pension to another.

    You can do a partial transfer in from any other pension into Hargreaves Lansdown. I have done this myself (a few times).
    Retired: Financial Independence achieved in June 2019.

    Cofiwch Dryweryn
    • fronty
    • By fronty 10th Nov 19, 9:03 PM
    • 62 Posts
    • 13 Thanks
    fronty
    Interesting, I didn't realise you could do that, I've kicked off a 100% transfer from SL Wrap to II on Friday, maybe once I've got it all into II I'll consider transferring 50% into another SIPP.

    Although TBH, even if the SIPP provider goes bust, the underlying investments will be safe won't they (unless the fund manager goes bust, but even then again the investments should be ring fenced?) So is there really any need to have multiple SIPP providers?

    It looks like you might be referring to when in drawdown. Actually I'm 10-15 years away from that, so I guess I can always transfer into another/multiple schemes nearer the time.
    • Albermarle
    • By Albermarle 11th Nov 19, 11:50 AM
    • 1,748 Posts
    • 1,126 Thanks
    Albermarle
    It's not unheard of for financial providers to have IT meltdowns , so that can be another reason to have more than one . Again though maybe more of an issue in drawdown phase.
    • Malthusian
    • By Malthusian 12th Nov 19, 11:14 AM
    • 6,965 Posts
    • 11,244 Thanks
    Malthusian
    Interesting, I didn't realise you could do that, I've kicked off a 100% transfer from SL Wrap to II on Friday, maybe once I've got it all into II I'll consider transferring 50% into another SIPP.
    Originally posted by fronty
    Just in case it's an issue: You can't do partial transfers on funds in drawdown, only on uncrystallised funds. (A hangover from the pre pension freedoms era.)

    Although TBH, even if the SIPP provider goes bust, the underlying investments will be safe won't they (unless the fund manager goes bust, but even then again the investments should be ring fenced?) So is there really any need to have multiple SIPP providers?
    The main risk is that the platform goes into administration a la Beaufort and SVS, locking you out of your money for around a year or more.

    IT failures shouldn't really be an issue; a catastrophic IT issue would be one that took a few weeks to sort out. If you would be skint if you missed a few weeks' worth of income, you probably need to consider holding more money in your cash account. The main risk you are facing if you have hardly anything in cash is not IT failures or platform failure, but a 2008-style market crash.

    If you don't like holding cash, applying for a credit card is another solution if your credit rating is good. You don't have to use it, it would just be there in case your SIPP became inaccessible or another emergency.
    • Albermarle
    • By Albermarle 12th Nov 19, 11:42 AM
    • 1,748 Posts
    • 1,126 Thanks
    Albermarle
    Interesting, I didn't realise you could do that, I've kicked off a 100% transfer from SL Wrap to II on Friday, maybe once I've got it all into II I'll consider transferring 50% into another SIPP.
    AS you are getting cashback for transferring your pension to II , they may not be so pleased of you than transfer 50% back out again . Better to read the T's & C's about the cashback .
    On another platform I use they reserve the right ask for the money back if you transfer back out again within 18 months .
    • fronty
    • By fronty 12th Nov 19, 11:52 AM
    • 62 Posts
    • 13 Thanks
    fronty
    From their T&C's:

    11. Your ongoing entitlement to any cashback received is subject to you keeping your ii SIPP open for a minimum of 12 months from the date of completion of the last Qualifying Transfer (the "Minimum Term"). We reserve the right to reclaim, and you agree to repay, any cashback amount paid if your ii SIPP is closed or transferred prior to the expiry of the Minimum Term. Please note that the relevant ii SIPP Terms will apply to any such transfer or withdrawal and fees as shown in our Rates & Charges may apply.
    • grnglide
    • By grnglide 12th Nov 19, 5:11 PM
    • 162 Posts
    • 63 Thanks
    grnglide
    ; a catastrophic IT issue would be one that took a few weeks to sort out. If
    To me a "catastrophic" IT failure would be one whereby the platform "lost" a week or more of transactions and could not recover from back up. If they were unable to establish the value of each account this would be "interesting". Most customers don't actually know the detailed value of there accounts.


    I don't think we have had a truly catastrophic failure, just several "near misses" a la TSB etc.
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