Wednesday, 29 January 2014

Hargreaves Lansdown Price War Increases Costs for Investors

Major fund platform Hargreaves Lansdown recently announced their new pricing model for the implementation of RDR which separates the fees charged by the fund manager from that charged by the fund platform and from the cost of the advice from your adviser. In the past this has all been bundled together in a single fee so there has been no transparency as to how much each element costs.

Hargreaves Lansdown Price War Increases Costs for Investors
Hargreaves Lansdown new Prices Increases Costs for Investors
The new pricing from HL (Hargreaves Lansdown) sheds some more light on this. Where they previously had claimed that their Loyalty Bonus rebates were up to 0.5%, they are now admitting the average is actually only 0.17%. Some funds are paying Hargreaves Lansdown more than the amount the fund manager gets for choosing the investments made.

The headline figure is that Hargreaves Lansdown will now be charging 0.45% of your portfolio for holding it on their platform. Alongside that there are a myriad of other fees they are charging for other services such as closing your account or moving to another provider. They may be transparent but they also are certainly complicated.

Other providers offer lower percentage fees with the likes of Cavendish at 0.25% and Fidelity at 0.35%

Some providers offer fixed fees which can make large investments much cheaper, these include Interactive Investor and Alliance Trust.

One company that has announced pricing today is Halifax Sharedealing. Their pricing looks very competitive for investors who do not trade regularly in their ISA and will only cost £12.50 pa for someone with a £100k portfolio compared to £45 for Hargreaves Lansdown which will work out much cheaper.

http://www.halifax.co.uk/sharedealing/fund-changes/

LangCat has lots of useful analysis on their website and this guide to platforms http://langcatfinancial.co.uk/wp-content/uploads/2013/08/sneaky-peek.pdf