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View the article online at http://citywire.co.uk/wealth-manager/article/a727982

Hargreaves unveils unbundled pricing structure

by Jun Merrett on Jan 15, 2014 at 07:07

The company said in order to offset the effect of these changes it would need to gather an additional £3.5 billion in new assets over the next three years.

Hargreaves has also announced the level of loyalty bonus, or rebate that is passed onto clients for existing fund holdings will be increased to around 0.75% per annum.

The increase in the loyalty bonus on pre-RDR funds with an AMC of 1.5% means that the effective charge is now 0.75%, the same charge as for unbundled funds. Previously the average annual loyalty bonus was 0.17%.

Hargreaves is also removing existing flat £1 or £2 per month platform fees which it had levied on a number of index tracking and other passive funds. Under the new pricing structure it will apply the same tiered pricing across all funds.

The company said that this change meant investors with larger passive holdings would pay more but in an effort to offset this it is launching new ranges of ‘super-low’ cost index tracking funds from Legal & General and BlackRock with AMCs starting at 0.06%.

Examples unbundled funds secured at a lower cost include the Artemis Strategic Assets fund, currently with an AMC of 1.4% but the unbundled AMC will be at 0.66%.

Invesco Perpetual's Tactical bond   AMC's of 1.15% has been dropped to 0.45%. Legal & General's UK 100 Index AMC has gone from 0.65% to 0.06% and Malborough Multi-Cap Income fund has changed from 1.40% to 0.6%.

The new charging structure will apply to all clients, accounts, existing and new fund holdings and has no fund dealing charges for clients placing fund deals and no charges for holding an account with Hargreaves Lansdown.

Ian Gorham (pictured), chief executive of Hargreaves Lansdown, said: ‘We are pleased to announce that we have negotiated new lower cost funds for our clients; changed our pricing structure to the benefit of the majority of our clients and further improved the already excellent service that we provide.

'We have always sought to share our success with clients through using our negotiating power and by continually reinvesting in our service through new technology, more staff, better information on a wider range of investments, or as we have done here, in lower charges for fund.

‘In 2011 we reduced charges for holding and dealing in shares by £9 million when we launched our new low-cost stockbroking service. In 2012 we spent £7m introducing loyalty bonuses in the Vantage Sipp. We are now reducing the cost of investing in funds, saving our clients an estimated £8 million per annum. As a result, most clients will be paying even less when investing through Hargreaves Lansdown.’

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