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Hargreaves to cut investor costs and £2 passive fee

The introduction of new platform rules will see Hargreaves Lansdown overhaul its pricing structure to become 'more competitive'.


by Michelle McGagh on Apr 30, 2013 at 13:51

Hargreaves to cut investor costs and £2 passive fee

The country’s biggest discount broker Hargreaves Lansdown plans to reduce its charges and scrap a controversial £2 flat fee on passive investments as part of a shake-up that will make platform charges more transparent.

The Financial Conduct Authority (FCA) has delivered its final ruling on platform rules and banned fund manager rebates to platforms. These rebates allowed fund managers and platforms to agree a behind-the-scenes cost for funds and then for the platform to add a non-explicit charge on top for its services; this was known as bundled charging as the consumer paid one fee made up of a number of different charges.

Currently 43% of the assets held on Hargreaves Lansdown (HRGV.L) are in investments that don’t pay commission, including passive funds, ETFs, investment trusts, shares and cash.

Under the new rules charges must be unbundled and the fund manager charge and platform fee expressed separately. These changes mirror those in the financial advice world, where the retail distribution review (RDR) has banned life companies paying commission to advisers and made the adviser’s charges transparent.

Ian Gorham (pictured), chief executive of Hargreaves Lansdown, expects the platform’s prices to reduce under the unbundled charging structure and that the platform ‘will become more competitive than people expect’.

Change in pricing

Consumers will see a percentage and tiered pricing structure introduced, meaning they will pay a percentage of their assets as a fee but the percentage will decrease as their assets on the platform increase.

‘Tiered and percentage is best. Percentage is better for small investors and if you look at our average investment it is usually small, we want to be a friend of the small investor,’ said Gorham.

‘We want to appeal to small investors but also acknowledge the larger ones. If you've got £1 million, £2 million or £3 million [the tiered structure] makes sense.'

Gorham said in 18 months-time Hargreaves Lansdown would ‘still be good value’ but could not give final details of a pricing structure, more details of which are due in the autumn.

‘For example, an ISA charge is 0.6%, so we look after your ISA for £60 a year,’ he said. ‘At the other end, if you have £3 million, 0.6% is a lot of money so high-net-worth clients will do better because we are applying a tiered approach.

‘Around 75% of our investors have less than £100,000…it doesn’t mean we won’t reduce the 0.6%…we can negotiate a cut on the 0.6%. We will be more competitive than we are now, what I would say is that this is an opportunity for us to look at our prices but it’s not as simple as saying it’s going to go from 0.6% to 0.55%.’

Gorham added that the cost ratio of the business means that it cannot charge less than 0.28% because the company would make a loss.

Passive investors

It is not just overall costs that Hargreaves is rethinking. It also plans to change its monthly flat-fee of £2 that it charges on passive funds. Introduced in November 2011, the fee encountered criticism for making the tracker funds expensive to invest in.

‘It has been interesting but we may change it,’ said Gorham. ‘It works because it allows better access to passive funds. We have to charge something and the £2 a month fee worked-ish.

‘The flat-fee is not good for small investors so we may take the opportunity to change it.’

Clean share classes

Under the new platform rules, it is not just Hargreaves Lansdown that will be forced to make their prices transparent; fund managers will also have to introduce ‘clean share classes’ or a set price for their fund so the investor knows what they are paying.

A number of fund managers have come forward to announce new prices for funds, typically 0.75%, and Hargreaves Lansdown plans to have clean share classes on its platform by 1 January 2014.

However, Gorham said he will not accept the first price offered and is ‘putting out to tender’ to fund groups, which are expected to come back with a cheaper price than 0.75%, a saving that will be passed on to consumers under the new rules.

Some platforms, such as Alliance Trust Savings have already introduced thousands of clean share classes at the increasingly industry-standard price of 0.75% but Gorham said ‘when it comes to commission-free funds we are not just going to accept the price’.

‘Of course, [fund managers] would prefer we just accepted [0.75%] but we are not going to, we will get a better price,’ he said.

Gorham added that it would be ‘unusual’ for all companies to charge the same for their funds and that if the market colluded on a price ‘it must surely attract regulatory attention’.

Wealth 150 becomes 30

Gorham said another benefit of unbundled charging would be that it would prove that fund managers are not able to buy their way on to the Hargreaves Lansdown’s ‘Wealth 150’ list with bigger kickbacks to the platform, which the platform has been accused of in the past.

However, he said price would still remain a criteria when assessing a fund’s suitability for the list as ‘price and [fund manager] expenses detract from returns’ although there was no point having ‘a fund [on the list] that is cheap but performing dreadfully’.

The Wealth 150 could be revitalised as there is a diminishing number of funds that make the list, which currently stands at just under 100.

Gorham said that the list operated on a ‘two-tier system; you’re on the list or you’re not’. But a three-tier system could be introduced whereby funds try and battle their way on to a Wealth 30 of core funds that is then expanded out to cover all sectors that investors want to invest in.

Future of investment

Currently, just 20% of Britons own investments compared to 50% in the US and 80% in Sweden. In the UK the average amount invested in equity per person is £9,776, compared to $38,710 in the US.

Gorham said that for countries where investment engagement is high, pension policy has been key. For example in Sweden there is a policy of funded pension promises.

He believes that the recently introduced system of auto-enrolment into workplace pensions in the UK will help raise investment engagement levels, but the RDR will mean advisers will focus on high-net-worth clients leaving a number of ‘orphan clients’.

‘The [orphan client] market will divided into two types; those who go self-directed for the first time and anecdotally the number of people calling in and saying “what is an ISA” is greater,’ said Gorham.

‘But some people will not be able to get over the hurdle to go self-directed and will still need to be advised.’

Gorham hopes that Hargreaves Lansdown will be able to pick up the clients who still want advice but are not profitable for IFAs by introducing a telephone advice service. It is currently looking at how to reduce the minimum asset level for advice from £50,000 to £20,000.

‘We are looking at telephone advice which is more scalable,’ said Gorham. ‘If a client comes along and needs advice, we can give it, but if they want to be self-directed, they can do that too.’ 

53 comments so far. Why not have your say?

Ian Phillips

Apr 30, 2013 at 14:18

What, the devil, is "bps" ?

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Old Skool

Apr 30, 2013 at 14:25

bps means "basis points" which are 0.01% so 28 bps is 0.28% (0.28 per cent)

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Michelle McGagh (Citywire)

Apr 30, 2013 at 14:26

Hello Ian,

I've tweaked the story to % rather than bps so hopefully it will make it clearer.



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Andy Y

Apr 30, 2013 at 14:29

Another industry temr that nobody explains; it stands for "basis points", as in percentage basis points. So 60bps = 0.60%.

This would be £60 on a £10,000 investment but a lot bigger slice of a £3m pot!

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Apr 30, 2013 at 14:31

Basis points. 100bps = 1%

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Apr 30, 2013 at 14:32

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Apr 30, 2013 at 14:34

Basis points, equal to one one-hundredth of a percentage point. Financial people use that term a lot. Gorham should have used 'normal' language in view of the range of people (us) likely to be reading his words.

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Apr 30, 2013 at 14:41

charles stanley direct here i come already using clean funds and charging 0,25%

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Richard Jackson

Apr 30, 2013 at 14:46

This sounds very expensive for any investor, like me who holds almost wholly shares in individual companies with HL.

On a portfolio of £300k+ I would be paying £1,000 a year even if HL kept their %ge of assets charge 'at cost' - i.e. 0.28% as cited in the article.

That sounds expensive to me. Can anybody recommend a good alernative to HL once these fees are introduced who can hold a few shares (UK and other EU) for me?

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Anonymous 1 needed this 'off the record'

Apr 30, 2013 at 15:38

i pay 50bps to lansdown to hold my shares &investment trusts so i guess that thats the sort of money that they will want to hold funds- max of £500

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Ian Phillips

Apr 30, 2013 at 15:41

Thank you everyone.......I'll now be ok when I next visit a City Winebar!

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Apr 30, 2013 at 15:48

Try looking at iWeb for shareholdings and TD Direct for shares held in an ISA. Both are user-friendly and were offering the best deal last time I checked.

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gggggg hjhjkl;'

Apr 30, 2013 at 15:59

Richard, I assume that HL are talking ONLY about funds. I hold my SIPP (all Investment Trusts) with them and pay an annual charge of 0.5% capped at £200.

If anything I would expect this cap to reduce to something like that on ISAs, which is I believe £40.

If they were to charge for shares and Investment Trusts on the funds basis

they would lose many, many customers!!!

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HR Man

Apr 30, 2013 at 16:08

However based on a 300k portfolio the £840 HL charge would be outweighed by a savng of £1,500 for reduced AMC for the clean share class surely? At present those funds that allow commission to be paid are on average 0.5% higher charging than the clean share ones....

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Apr 30, 2013 at 16:31

Richard, you are probably already paying an extra 0.75% in commission on funds that charge 1.5%! When the clean share classes kick in, your management charge will drop to e.g. 0.75% plus whatever extra fee HL decide to charge. Depending on how it works out, that may just be an extra 0.28% on top of 0.75% - i.e. 1.03% compared to the current 1.5% which makes it cheaper. Even if there's a 0.25% loyalty bonus, the comparison would be 1.03% against 1.25%.

If they come up with capped charges the costs will be lower still.

Why start to kick up a fuss about going elsewhere, when the fee structure hasn't been finalised and it's almost certain to be less than you currently accept.

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Apr 30, 2013 at 16:38

As I mentioned last week, HSBC "CLEAN" Tracker funds are actually more than twice as expensive as their "LEGACY" Tracker funds - 0.57% vs 0.28%

Explain that if you can (anyone?)

Gouging in my view.

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Richard Jackson

Apr 30, 2013 at 16:45

I try not to invest in tracker funds or funds so I'm not paying any commission anyway.

What I would be against is getting a %ge annual charge from HL based upon the value of the paper certificates they hold for me.

NB For my SIPP I use Fidelity Moneybuilder UK Index accumulation units with HL which have no HL %ge charge. They have fund manager's expenses of only 0.3% and seem to be the cheapest way of tracking FTSE without doing it manually...

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Keith Snell

Apr 30, 2013 at 16:53

Having tried various alternatives to H-L and returned to them, to date I have not found more reliable information for trading at any lower costs for an equivalent product. I suspect that H-L will wish to be able to show a competitive edge, There is no point changing until all the costs are known. The publishing of league tables of performance such as those by citywire are also of considerable help .

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Apr 30, 2013 at 16:55

Ultimately, regardless of what fees you're paying, it comes down to whether your making money. My HSBC FTSE 250 tracker is up 40%, so I wouldn't be bothered if I was being charged 10%!!!

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Apr 30, 2013 at 17:09

Richard, fair enough - I didn't take in your first post that you were shares only. I'd be amazed if HL decide to only charge a percentage. They do have a strange anomaly now, in having caps of £200 for their SIPP, £45 for their ISA but no charge for the standard Fund and Share account - for shares. I can't see them changing that too much.

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pete rich

Apr 30, 2013 at 17:43

Where's me bargepole. Their share price has increased in proportion with their junk mail marketing costs. And who exactly is the wealth 150 wealthy for as if I need to ask. Avoid at all costs.

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Apr 30, 2013 at 18:03

Pete; are you going to share your real life experience of using HL as to why they need to be avoided at all costs? I've tried Hoodless Brennan, Halifax Share Dealing, III and HL and have no particular complaints about any of them but I do just use HL now, as their platform is the easiest to use, most comprehensive and professional of the ones I have used. Unnecessary mailings I can do without but I can live with that. Doesn't mean I wouldn't move to something else in the future, if the circumstances change e.g. new charging structures but not touching with a bargepole seems a bit extreme!

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Bob M

Apr 30, 2013 at 19:02

I use HL for funds and find them good but obviously am paying for this at the moment through commission. Less good for investment trusts and shares with limited or no reduced charges for regular trading and a limited range of stop loss options, e.g. no trailing stop that tracks a rising share (last time I asked). I use Selftrade for this and am broadly satisfied with them but am disappointed by the very limited range of investment trusts you can by on a regular basis at a reduced charge. I am waiting till the dust settles before deciding on which platform to consolidate both types of holding. Bright ideas welcome.

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Apr 30, 2013 at 19:22

No way! That looks very expensive to me. I am for flat rates and very much against percentages - there is little extra work in handling larger sums within the range of most small private investors. At the moment HL charge a percentage for stocks other than funds, but cap it at a reasonable annual rate. If that were to become more expensive, I'm off. It would be irksome if, having just switched some funds to HL, I had to remove the accounts to a more competitive broker (I also have TD Direct who charge only for dealing, in effect. It's just for eggs-in-baskets reasons that I have HL as well)

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Tony Roberts

Apr 30, 2013 at 20:30

One major step forward for HL would to be more transparent on what an investors total charges are.

Currently if you hold an ISA and a SIPP then you need to work out what they are charging by analysing you various "cash" accounts.

Why dont they show thier charges in summary format on the 6 monthly statement?

Come on HL come clean.....

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May 01, 2013 at 09:00

I don't mind HL charging 0.6% pa as long as I can move everything to a different platform without paying high transfer fees. BestInvest charge £60 pa for an ISA that holds equities, ITs or Vanguard trackers, so anyone with £10k+ would be better moving.

The big problem will be all the direct equities my wife holds with HL outside of a SIPP/ISA (both full) as she has 30+ holdings that would be quite expensive to move or transfer to certificates.

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Anonymous 2 needed this 'off the record'

May 01, 2013 at 17:38

HL Loyalty bonus tax rules

On the back page of issue 102 of The Investment Times from Hargreaves Lansdown is news that HMRC has announced loyalty bonuses received on funds held in nominee accounts, such as the HL Fund & Share Account, will be subject to income tax from the 6th April 2013.

HL estimates that the tax increase will be relatively small for most investors. Does this mean that HL customer’s holdings in their F&S account are relatively small or that the annual loyalty bonus offered is of little monetary significance?

What’s the position with HMRC with regard to the Cross pen (worth at least £180 say HL) which I received for transferring my pension pot or the possibility of winning an Audi A1 in the monthly free prize draw (worth a bit more than £180).

Do I need to declare these as gifts on my tax return?

More importantly, does the above tax on bonuses mean a similar position with other financial platform providers offering inducements to invest?

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Clovis Bassington

May 02, 2013 at 04:19

These proposals seem to make sense for the very small investor and for the very large investor but not those in between where these proposals look expensive and complicated. Hargreaves can expect to disgruntle and loose a lot of their core investors. I have my ISA with them and some of their fees such as on Trackers are annoying already.

Their platform is easy to use. It's fine as long as you keep investments for under a year but the lack of an 'annualised' % return facility, graphing capability etc mean that the reporting is pretty rubbish. Mind you, it's heaven compared to Alliance Trust that I also use, Alliance Trust is so bad that you HAVE to copy to Excel, which ultimately is no bad thing.

Quite why these platforms don't design good Excel templates and make it easy for you to export the data to them is beyond me. It would be quite easy and cheap to arrange which means that someone will probably do it. To Hargreaves, AT and most other city institutions I would say we investors are not actually dim and strangely can sometimes tell the difference between cunning and intelligence.

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May 02, 2013 at 10:56

It seems HL are well aware that if they get the structure wrong lots of people are going to vote with their feet (do they follow these threads do you think?)

I have always thought, that with the quality of service they provide they could obliterate the competition if they undercut everyone else - making more by virtue of market share than they would lose by charging less.

As someone has already said - why can't we have a broken down, annual statement of charges, is that too much to ask?

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May 02, 2013 at 23:06

Glad that the 2 absurd gbp per month fee is going. But much too little information in this article. We need some meat put on the bones.

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David Grieveson

May 03, 2013 at 16:34

"Gorham added that the cost ratio of the business means that it cannot charge less than 0.28% because the company would make a loss."

I must be missing something here. I thought that both Charles Stanley and Fidelity FundsNetwork charge 0.25% on clean funds?

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dominic lloydsbod

May 04, 2013 at 20:52

Take a step back: HL and the other platforms have revolutionised self-investment; and for all the occasional gripes, that's a big social good.

Interesting to get a snapshot of how HL will respond to the RDR. The only certainty with regulation is that you get unintended consequences (usually on the downside for the consumer).

If HL do follow these threads, anything they do to improve access to Investment Trusts would be good. :-)

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May 04, 2013 at 22:21

'anything they do to improve access to Investment Trusts would be good' ?You've got the same access as to any london stock market share 12 gbp + 0.5% rip off tax and capped isa fee of 45 gbp

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dominic lloydsbod

May 04, 2013 at 22:37

Dear ynys: do what? That doesn't sound v simple: as in pick up phone and buy a few grands' worth at 0-50 bps cost.

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Fund of Funds

May 05, 2013 at 02:44

Why do we have to wait until 2014 for HL to give their new fee structure and start selling clean funds. Their are many of their customers ready to jump ship and waiting until 2014 might be just too long to wait. Customers have seen very little information given to them on the whole subject of RDR from the company and what their policy on fees might be for the future. We usually have to gain information from articles like this one. Just received their current copy of Investment Times where I see nothing mentioned about the subject which currently is a very important issue for investors. Why don't HL increase the current bonus levels to a more realistic rate to customers until they bring in their new pricing structure for customers. That would at least stop customers being tempted by the opposition.

HL have been slow to act to the new environment and have certainly not kept customers up to date with their thoughts and plans on the subject.

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Fund of Funds

May 05, 2013 at 02:46

Why do we have to wait until 2014 for HL to give their new fee structure and start selling clean funds. Their are many of their customers ready to jump ship and waiting until 2014 might be just too long to wait. Customers have seen very little information given to them on the whole subject of RDR from the company and what their policy on fees might be for the future. We usually have to gain information from articles like this one. Just received their current copy of Investment Times where I see nothing mentioned about the subject which currently is a very important issue for investors. Why don't HL increase the current bonus levels to a more realistic rate to customers until they bring in their new pricing structure for customers. That would at least stop customers being tempted by the opposition.

HL have been slow to act to the new environment and have certainly not kept customers up to date with their thoughts and plans on the subject.

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Dennis .

May 05, 2013 at 09:37

Like all organisations they will be analysing their spread of customers, how much they make from each cohort and then planning their marketing response accordingly. A few years ago the mobile phone companies learned that spending advertising money chasing customers who go for the cheapest deals was counterproductive as they will soon move somewhere else. This was known as "churn". Far better to milk your "loyal" client base.

It's a bit like paying tax, most tax comes from those on middle income, there aren't enough rich people to make that much difference to the total tax take, hence the 50% fiasco.

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May 05, 2013 at 10:03

Just make life easy and move to Alliance Trust as have.

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Stephen Lee

May 05, 2013 at 10:09

I have used HL for a number of years and hold virtually all my ISA investments through them. Their analysis tools are easy to use for funds particularly; I always refer to their Wealth 150 list, as well as similar lists from other websites so may be disappointed if they reduce it to just 30.

They provide instant contract notes when dealing unlike, say, Barclays through whom I also buy and sell shares, and from whom I usually have to wait 4-5 days for the note through the post!

HL know they have to remain competitive and I trust them to be so. I will certainly continue to use them.

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Michael Hellman

May 05, 2013 at 10:27

I just remind myself at how awful in the past HL's competitors were. What I do not want to happen are service standards to slip to accommodate a bargain basement fee structure.

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May 05, 2013 at 17:53

@ FundofFunds:

Answer: Because between now and 2014, HL wants to continue to fleece its customers with the hidden charges within its smoke & mirrors 'free' service.

Judging by some of the comments above, many of its customers shouldn't even be allowed to buy a scratch card let alone operate their own investment portfolios.

Fools and their money.....

Get some PROFESSIONAL ADVICE and ask an IFA to explain the various aspects of RDR to you, as well as how HL's model REALLY operates.

There's a very good reason why HL ascended to the FTSE-100. The same one as to why its founders are multi-millionaires and gradually selling-down their holding in the company ahead of 2014 when the tide goes out and they'll be discovered as having been swimming with no costume.

Anyone who uses HL must have more money than sense. And some of them don't have much of the former.

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Dennis .

May 05, 2013 at 18:11

Mr C are you really proposing that we pay some "professional" £200 an hour to explain something as simple as RDR?

ps Remember that a Professional is a someone who belongs to a closed group of people who call themselves a Profession.

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May 05, 2013 at 18:13

> Get some PROFESSIONAL ADVICE and ask an IFA to explain the various aspects of RDR to you

I'd actually trust an IFA to do a decent job of this. No, really!

Of course, there is no way I'd pay one to do it, not to take control of my investments and pensions, because I've been there and done that.

Bitter experience means that I'm now a DIY guy, but I like to think that one that actually understands asset allocation, volatility, rebalancing, and the importance of keeping fees very low.

I also understand the carry forward regulations and pension input periods, which my ex IFA definitely didn't which is something that both said IFA and his insurers are now all too aware off!

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May 05, 2013 at 20:32

@Dennis - Agreed, and when it comes to professions, IFAs are for the most part "B Ark" material.

There are a very limited set of circumstances when I'd suggest people pay them a few bob for advice, but only after doing their own research as the basics are easy to grasp, and for complex stuff you're usually better using an accountant.

I now do all my own PIP calculations (and "what if" modelling") and then pay my accountant for a couple of hours of his time to check my working and give a written OK.

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May 05, 2013 at 20:44

@ sgjhaghsdg

Re your comment "to take control of my investments and pensions" the IFA would have to have full discretionary status to do so. Most do not (and don't want to have). They are ADVISERS; they give advice. The ultimate decision and permission for acting on the advice (eg signature on a piece of paper) comes from the client. So control sits with the investor themselves.

As for your rather poor choice of adviser in the past, I'm afraid that reflects just as badly upon yourself.

Lastly, just because one IFA let you down doesn't mean they're all bad. Indeed the last decade has seen adviser numbers shrunk by c.75%. Those that are left are generally pretty good. They'll always be the odd rogue in any industry be it FS, plumbing, building, accountancy.

On that latter note you will now find that accountants are reluctant to give FS advice because most don't have the required qualifications, PI, access to all the data, or relevant regulatory body membership.

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May 05, 2013 at 21:07

@ Dennis

If you believe that RDR is that simple then clearly you haven't read as much on the topic as you think you have. It goes much further than the main headline-grabbing points which are only the tip of the iceberg. Remember: You don't know what you don't know.

As for your comment re "closed group". Pot & kettle: from your comments you appear to have a closed mind.

Anyway 99% of IFA's these days will entertain a nil-charge initial meeting at which you could ask about matters such as RDR, bundled fund charging models etc

Unfortunately it would seem in these columns that most of the bloggers memories of advisers (independent, tied, multi-tied, restricted or whatever) are stuck in a bygone era. Stop being so bitter and twisted at your own mistakes in picking cr@p advisers in the past and open your mind to the real possibility that actually there are decent IFA's out there....lot's of them.

However there are far fewer now that before. Which is good since the overall quality is much better. I couldn't say the same for the accountancy or legal professions; 140,000 accountants (mostly book-keepers), 130,000 solicitors (inc some of the legal aid dross) but only 20,000 regulated advisers.

Of that 20,000 - which includes a reduced number of bank-based restricted advisers/salesmen, SJP, restricted wealth managers etc - we don't yet know how many are of independent status.

Then there's the raft of investments and investment vehicles that are not directly accessible to the general public - for very good reasons, eg the potential for mis-buying - that may be more suitable to an investor's needs than the off-the-shelf solution they sought themselves.

There's many more advantages to using adviser over the DIY approach but I fear it's only a bunch of Luddites reading this who only focus on costs and previous bad experiences so I won't waste anymore time and effo....

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May 05, 2013 at 21:11

> Lastly, just because one IFA let you down doesn't mean they're all bad.

Agreed, but they all have pretty much the same (rather limited) training, which is why it's always a bit of pot luck.

Maybe I chose badly, and maybe I trusted their qualifications without fully appreciating that they aren't much more challenging than an A-level, so yes, my fault. Lesson learned, but insurance put me back where I would have been without the diabolically under-informed and innumerate advice that I received from a fully-qualified IFA.

Others are paying many £k pa for IFAs to "manage" their investments without realising how spending just a few hours reading some *good* books can give you massively better long-term results. And no, buying high-TER funds from Messrs H&L is not the answer!

> On that latter note you will now find that accountants are reluctant to give FS advice.

FS = Final Salary? Financial Services?

If the former, this is one area where an IFA should (fingers crossed!) know the ropes. but my experience suggests that you make sure their insurance premiums are up to date and that you get everything in writing.

If the latter, it's a jolly vague term, but between my own research and my accountant's checking, we seem to be working our way through the minefield that an IFA blundered through while losing limbs in the process.

As it happens, I do agree that the remaining IFAs are better than the previous "salesman turned gamekeeper" bunch we used to have, but it still doesn't seem to be a "profession" that attracts the brightest and the best, and the required "qualifications" don't seem to be presenting much of a barrier to entry.

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Dennis .

May 05, 2013 at 21:20

Sounds like Mr C is an IFA. Anyway back to the Daily Mail level of debate as ever on these forums.

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May 05, 2013 at 21:31

> Stop being so bitter and twisted at your own mistakes in picking cr@p advisers in the past and open your mind to the real possibility that actually there are decent IFA's out there....lot's of them.

And how do we sort wheat from chaff? They all have (pretty much) the same qualifications, the same shiny suit, the same well-tailored gold watch, and the same gift for the gab.

Please read the wikipedia article on "The market for lemons".

"that may be more suitable to an investor's needs than the off-the-shelf solution they sought themselves."

My best performing asset class last year was subordinated bank debt. This is barely off-the shelf but I fully understood the risk. An IFA wouldn't have touched this with a barge pole, not least because they (probably) have no understanding of bank capital structure. Oh, and these holdings don't generate any trail.

BTW, before making my final decision to go fully DIY, I contacted another IFA and had a one hour first meeting. He told me that no-one ever made money from equities and suggested I consider moving my entire SIPP over to him so he could use it to provide mezzanine loans to property developers.

Maybe a few years ago he'd have been suggesting that I put my money into Arch Cru, or AIG bonds, while assuring me that these were low risk investments.

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gggggg hjhjkl;'

May 06, 2013 at 17:10

If someone wants or needs to use an IFA that is up to them.

I just hope they do not pick MR C or someone with the same degree of arrogance.

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May 06, 2013 at 18:41

I have met (online) one IFA who comes across as knowledgeable, sensible, and actually likes clients who have interest in investment rather than regarding this as a threat.

Sadly, the vast majority of my direct experience of IFAs (online and IRL) is that that they tend to be arrogant (and often ignorant) middlemen for whom disintermediation can't come soon enough.

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May 06, 2013 at 19:36

I add my vote to the 'used an IFA once (it was actually twice), never again and now much happier with my own efforts' debate.

Regulars will know that the subject of HL's charges are a divisive issue and always bring out the fiercely loyal who won't hear a word said against them, and the (dare I say) enlightened!

I'm in the middle, waiting to hear what the future holds, but prepared to completely re-structure if necessary.

I'm sometimes tempted to write to HL and ask 'please provide me with a breakdown of the charges deducted from my account this/last year?'

If I ever get round to it I will post the details.


P.S. As ever, I acknowledge HL's first class service (but must admit their Investment Times magazine (aka sales catalogue?) goes straight into the recycling and I have no regard whatsoever for the Wealth 150).

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Dennis .

May 06, 2013 at 20:47

Yes it's always interesting/amusing to read the fund managers' reports which are always upbeat. eg The fund is well positioned for the future, Mr X is optimistic about future returns etc I prefer the Chelsea relegation list.

Then there was the classic one about Newton Higher Income which went from HL150, to "this fund does not form part of our research" as if it had never been recommended. The term fund supermarket is very apt.

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