In the back
[ PLATFORMS & PENSIONS ]
48 / 49
The regulator is keen to see barriers to free movement
between platforms removed so people don’t feel
trapped in a service that is expensive or inappropriate
for their needs
• £1.50 per fund charge to sell funds
in order to pay outstanding fees
trapped in a service that is expensive or
inappropriate for their needs.
I had a quick tot-up of my
investments, working out that if I
held them at Hargreaves before the
exit fees were dropped, it would have
cost me £1,030 to move to another
platform at £25 per holding plus a
£25 + VAT account closure fee.
Hargreaves removed the following
fees too, so they are now free of charge:
• £12.50 internal stock-transfer fee
• £75 plus VAT GAD (government
actuarial department) calculation
fee on pensions
• £25 fee to transfer a nominee
shareholding to a certificate
• £35 cash-transfer fee
• £295 plus VAT early account-
closure fee on drawdown plans
• Charge to reinvest fund income of
1 per cent of trade value (minimum
£1, maximum £10)
FE TRUSTNET
Admittedly, these charges are
rarely encountered on a month-to-
month basis but will add up over the
investment lifecycle.
The key charge to focus on is the
headline platform fee, which remains
unchanged at 0.45 per cent.
Horses for courses
There are two types of platform
investor in the UK: the highly
vociferous “Hargreaves basher”,
whether they are an IFA or customer
of one of Hargreaves’ competitors.
They’re always banging on about cost.
Then there is the “silent majority”
who are customers of Hargreaves – all
1.2 million of them, or around 50 per
cent of the private investor platform
market. These people often mention
the word “value”.
I guess I have always been a basher.
Probably because, until recently, I ran a
competitor of Hargreaves and one of the
very few chinks in its marketing armour
was its pricing. The 0.45 per cent
headline platform fee is just too high
compared with the industry average of
closer to 0.25 per cent.
And while investment performance
can never be guaranteed, charges are
and over the longer term, they have a
habit of adding up. Which brings me
to the point of this article.
If you are a Hargreaves customer,
should you up sticks and leave it
now that the exit charges have been
removed? Or should you appreciate
the increased value that Hargreaves
now offers?
Finally, if you’re using another
platform, should you consider
switching over?
All of these questions do not have a
simple answer, for two key reasons:
• Platforms still make it difficult to
compare their overall costs, because
they have different pricing
strategies
• Every investor’s individual
circumstances are different and
command differing fees for different
types of behaviour
Apples with apples
I still believe that, despite their
protests to the contrary, platforms try
to confuse people with their pricing. It
just isn’t clear, easy to understand or
easy to compare.
ANNUAL CHARGES ON PORTFOLIOS OF FUNDS
Portfolio size
Hargreaves Lansdown
Interactive Investor
£10,000 £45 £119.88
£50,000 £225 £119.88
£100,000 £450 £119.88
£250,000 £1,125 £119.88
Showing platform fee costs only
Source: Platforms’ own websites
trustnet.com