Feb 052014
 

Of all Hargreaves Lansdown’s new charges, the least popular with clients was the decision to levy a separate charge for holding investment trusts, whether in a dealing account, ISA or SIPP. Given the amount of criticism and illwill this has generated, it’s not entirely surprising to see that the firm has now changed its mind.

Investments trusts will now be bundled with shares, ETFs and bonds for custody fee purposes. There will be no charge for holding any of these in a dealing account. In an ISA, there will be a fee of 0.45% capped at £45, while a SIPP will incur 0.45% capped at £200.

There are still much cheaper providers for holding all of these assets for most investors (see the UK online broker comparison table for suggestions), but this certainly removes a very hard-to-justify charge and it’s good to see that clients were able to make the firm back down.

Feb 032014
 

A few more of the UK brokers who announced their clean fund pricing in the last couple of weeks also announced revised charges for shares at the same time. The main changes were:

  • Halifax Share Dealing will raise its online dealing rate for shares from £11.95 to £12.50. Telephone deals move to a flat rate of £25. Foreign currency charges for international shares rise from 1% to 1.25%. Charges for corporate actions have mostly been dropped. Transfer out fees from a dealing account or ISA remain £25 per investment, but the total has been capped at £125. Changes take effect 31st March 2014.
  • iWeb Share Dealing, which is the Halifax service under a different, mostly cheaper (but still-Halifax-owned) brand, has apparently also some similar changes, dropping corporate action fees and capping transfer out charges at £125. The ISA closure fee (previously £50) has also been removed. Less positively, the regular dealing option for stocks will also disappear (it seems to be retained under the Halifax service). (There’s no statement about this on the website – the update solely concerns fund charging – but iWeb clients say they’ve received an email about the changes.) Changes take effect 31st March 2014.
  • BestInvest has replaced its quarterly custody charge for shares (£12.5+VAT in a dealing account or ISA and £25+VAT in a SIPP), with a new fee covering all investments (eg both shares and funds) [PDF]. For  a dealing account, this is 0.4% up to £250,000, 0.2% between £250,000 and £1,000,000, and no further charge for holdings above £1,000,000; for a SIPP, the tiers are 0.3% and 0.2% (yes, the SIPP fee is less than an ISA or dealing account). Changes take effect from 1st March 2014.
  • Barclays Stockbrokers has reduced UK dealing commissions by £1 per trade and reduced the tier sizes for frequent trader rates. Clients who make 1-9 trades per month will pay £11.95 per deal, those make 10-19 will pay £8.95 and those who make 20 or more will pay £5.95 (previous commissions were £12.95 for 1-14 trades, £9.95 for 15-24 trades and £5.95 for 25+ trades). The ISA administration fee is now £30+VAT per year for all ISA sizes (previously it was £50+VAT for accounts over £7,500). Changes take effect from 1 March 2014.

The UK stockbroker comparison table, the UK international stockbroker table and the individual entries in the broker directory have been updated.

Feb 012014
 

The ban on UK execution-only brokers receiving trail commission takes effect in April 2014, so the few providers who have not yet announced their revised charges have been rushing to do so.

Fidelity FundsNetwork

Taking FundsNetwork first, Fidelity will be charging a relatively straightforward 0.35% on fund holdings up to £250,000 and 0.2% from £250,000 to £1,000,000 (stocks, investment trusts and ETFs are not affected – the Fidelity share dealing service is a white label service operated by Charles Stanley). There’s no minimum charge.

That’s towards the middle of the pack on costs – the lack of a minimum fee means it’s better than some for smaller portfolios, but will be beaten by – for example – Charles Stanley Direct (Charles Stanley’s own d2c fund and share platform, not to be confused with the aforementioned white label share dealing operated for Fidelity).

If you’d prefer to use the FundsNetwork platform anyway, Fidelity’s direct pricing can still be beaten by using Cavendish Online, which is an execution-only broker that uses Funds Network. The cost here is 0.25%, with FundsNetwork taking 0.2% and Cavendish getting 0.05%.  (This is Fidelity’s pricing for intermediaries of 0.25%, announced a couple of years ago, but with the fee split between Fidelity and Cavendish and a waiver of the £45 account fee.)

So at present, there is no reason that I’m aware of to go direct to Fidelity (and never has been – FundsNetwork has always been cheaper via Cavendish and other intermediaries.)

Changes take effect from 9th February 2014.
Continue reading »

Jan 192014
 

Hargreaves Lansdown has finally unveiled its new charging structure to comply with the impending ban on platform receiving trail commissions from funds. As with other firms, this represents a major shake-up of its business model for funds, but the impact on equity investors was limited. The major changes are:

  • The custody fee for equities, ETFs and investment trusts in an ISA or SIPP was cut to 0.45% per year, from 0.5%, in line with the new charge for funds. The caps of £45 for an ISA and £200 for a SIPP remain unchanged.
  • Investment trusts held in a regular dealing account will also be charged at 0.45% (max £45), as in an ISA. The new charge does not apply to shares and ETFs. This decision seems to be proving unpopular along clients and understandably so. It might reflect a fear that clients could begin switching out of open-end funds (especially non-trail paying ones where custody fees were relatively low under the old model, but will now be 0.45%) into investment trusts.
  • There is now a £10+VAT fee for some corporate actions (rights issues and other events “requiring us to seek and act on your instructions”).
  • Closing an account will now carry a £25+VAT fee.

The new charges will take effect from 1st March (with the exception of the account closure fee, which comes in from June). I have updated Hargreaves Lansdown’s entry in the broker directory and the UK online stockbroker table.

The impact on investors who hold funds will be much greater. Many should be better off, as the combination of the 0.45% custody charge and lower TERs on clean share classes of funds should mean lower total costs than on the old commission-paying share classes. However, some investors – for example those who hold Vanguard index funds, which didn’t pay trail and were previously subject to a fixed custody charge of a few pounds per year – will often be much worse off, as they will now attract the uncapped 0.45% fee.

I’ll overhaul the UK fund supermarket table when brokers have finished announced their revised pricing; at the moment, the industry is in flux and picking a platform is difficult because there is little clarity on which will still look cheap in a few months. In the meantime, Justin Modray’s Candid Money is doing an excellent job of tracking what each broker has announced so far on funds.

Jan 042014
 

Alliance Trust Savings has announced some changes to its fees [PDF] and I’ve updated the stockbroker directory entry to reflect this. The main points are:

  • The fee for a regular dealing account and an ISA rises from £10+VAT per quarter to £18.75+VAT per quarter. The annual fee for a Sipp rises from £135+VAT to £155+VAT.
  • Charges for corporate actions have been removed
  • Transfer out fees are now a flat fee for transferring the whole account rather than a per-investment fee. This is quite an interesting decision since almost all UK brokers charge a per-investment fee and might reflect recent cases where the FSA/FCA has forced providers to waive transfer charges when increasing their fees (a precedent that AJ Bell Youinvest/Sippdeal now seems ready to try to fight over its latest fee changes).

I’ve also updated the entry for Youinvest, having confirmed that the new FX commission of 1% will also apply to non-CREST stocks (for these, there was previously an FX charge of 0.25%, but a £10 custody and settlement supplement which has now been absorbed into the FX fee). Dividends will be converted to GBP at a FX commission of 0.5%, unchanged from the previous rate).

I’ve also updated the comparison of ISAs for international dealing, the UK international stockbroker table and the UK online stockbroker table to reflect these changes. In addition, the Share Centre has been added to the broker directory; this is a popular broker, although not an especially obvious choice for international dealing.

Nov 302013
 

Sippdeal – up to now one of the cheaper UK brokers for international dealing – has rebranded itself in an effort to shed its SIPP-only association, changing to the rather clunky-sounding AJ Bell Youinvest. More importantly, it’s announced a new charging scheme to bring its business model into line with the Financial Conduct Authority’s platform review and the resulting ban on execution-only brokers receiving trail commission.

Unfortunately, Youinvest has combined this with another rather unwelcome fee change that will be much more of an issue for international investors, even though few people seem to be picking up on it so far. Full details of all the changes are listed on the Youinvest website [PDF], but the key points are: Continue reading »

Oct 302013
 

Update 04/01/2014: I’ve done a small update on this article to reflect AJ Bell Youinvest/Sippdeal’s increased FX costs and Alliance Trust Savings’ increased ISA fee.

 Update 30/11/2013: Sippdeal has announced an increased FX fee (as well as rebranding as AJ Bell Youinvest) – see this post for more. I’ll update the comparison table when I have more details, but it looks like it will no longer be the cheapest option, although the lack of an ISA admin fee should still make it one of the cheapest for smaller ISAs. For now, adding £57.6 to the figures below should give you the estimated annual cost under the new charges.

Since quite a few UK stockbrokers have changed their fees over the past year, I’ve updated my calculations for the cheapest ISAs for buying international stocks.

Full details of charges, changes and costs are listed in the tables below, but the main conclusions are:

  • Sippdeal now appears to be the cheapest for dealing in foreign stocks that can be traded as CREST Depository Interests (ie major US, Canadian and European companies). It also offers some other markets that can’t be settled in CREST, although these will be more expensive.
  • The main caveat to this whether Sippdeal’s current pricing structure – no account fees, no inactivity fees and no custody charges for CREST-settled stocks – can continue in the post-RDR world. I would not be surprised to see some kind of account fees come in over the next year or so, but I would expect the firm to remain one of the most cost-effective.
  • iDealing comes in as only slightly more expensive than Sippdeal, due solely to the annual account fee it charges. It does not offer the non-CDI markets that Sippdeal offers, making it a slightly less flexible option.
  • Following AJ Bell Youinvest’s increase in FX commissions to 1% (from 0.5% or less – depending on deal size – previously), it no longer offers such a cheap service and is now beaten by iDealing. Youinvest offers a a wider range of markets (ie the ability to access some non-CREST markets – iDealing may be willing to deal in some other markets on request, but is likely to require fairly large deal sizes), still remains one of the cheapest options and gets consistently good feedback for customer service, but can no longer be said to be the standout choice.
  • Saxo Bank (or Saxo Capital Markets as it’s gradually rebranding itself) is relatively cheap, but has restructured its ISA service since last year. The mass-market Modern Wealth Management offering has closed down, to be replaced by an ISA offering on the main Saxo Trader platform. This offers more markets but carries a high £50,000 minimum account size for an ISA (the regular Saxo trading account still requires a lower minimum of £5,000 in the UK)
  • Very broadly, holding US and European shares in an ISA can make sense for most investors using the cheapest brokers, but holding shares from other markets will arguably only be cost effective for larger investors. Continue reading »
Oct 022013
 

I’ve made a number of updates to the UK online stockbroker comparison table and individual entries for UK international stockbrokers in the directory to reflect fee and service changes over the past few months. Most of these are relatively trivial changes, but there have been a handful of more significant events.

  1. Charles Stanley has stopped offering personal CREST accounts through its online Charles Stanley Direct arm (the former Fastrade service) and has hugely increased the fees for the service through the Charles Stanley telephone broking service (effectively to £420 per year once all fees are taken into account). A number of the firm’s other charges and commissions have also increased recently, suggesting that the traditional brokerage business is now concentrating solely on fairly large clients and steering all smaller accounts to Charles Stanley Direct (which represents its attempt to take on the part of the market currently dominated by Hargreaves Lansdown). Investors looking for a more low-cost CREST sponsorship now seem to be limited to Redmayne Bentley or Stocktrade. The personal CREST account comparison table has been updated accordingly. UPDATE: The Fidelity Share Network service, which is based on Charles Stanley’s online platform, will apparently continue to offer CREST sponsorship on the same terms as before, even though Charles Stanley’s own-brand service won’t.
  2. Meanwhile, Stocktrade has made some fairly significant changes to its service. These include:
    • Many international markets are now available online. Previously overseas stocks could only be dealt by phone.
    • Online and phone dealing rates have been made the same
    • Investors can now hold foreign currency in their accounts, rather than settling only in GBP as before
    • FX conversion fees have been switched to a tiered basis. Under the old charges, Stocktrade followed a rather unusual approach of converting at market rates, but charging a fixed fee for doing so. The new system looks as if it should be more favourable to smaller accounts.
  3. Saxo Bank is introducing an inactivity charge for UK clients – £25/quarter, waived if you trade once in the quarter. The new fee applies to dealing accounts only, not to ISA and SIPP accounts (although these are already subject to annual administration fees). This is obviously a change for the worse for less frequent investors, but is not surprising – there is a clear trend towards charging more admin, inactivity and custody fees among brokers, reflecting the loss of revenue from lower levels of trading activity in recent years.
Apr 262013
 

The UK Financial Conduct Authority (FCA) – the new, allegedly improved successor to the FSA – has published the long-awaited “platform paper” setting out new rules on rebates of fund charges from fund managers to investment platforms.

This follows the Retail Distribution Review rules that came into effect at the beginning of the year, which banned financial advisers from receiving ongoing payments made by fund managers (a practice known as trail commission). The FCA will now bring in something similar for investment platforms, which are the intermediaries where the investor or adviser can access funds from many different fund firms in a single place.

These rules will radically alter the way that UK platforms and fund supermarkets charge for their services, since most currently rely on these rebates as some or all of their charges. In future, they will need to charge investors directly for their services.

For more background on how rebates and charges currently work, see this earlier article on RDR and unbundled pricing. Below is a quick summary of the FCA’s new rules and what they may mean for investors. Continue reading »

Apr 012013
 

There have been a number of changes to services offered by UK brokers over the last few weeks. I’m still in the process of updating all the pages to reflect these, but here’s a brief summary of the major ones:

  • Saxo Bank has closed its Modern Wealth Management service and is transferring existing clients to the Saxo Trader service. This seems to have positive and negative implications: The firm appears to be retreating from the UK fund supermarket business altogether, but is bringing an ISA wrapper to Saxo Trader, which may now be the most cheapest ISA for international markets where CREST settlement isn’t available.
  • Charles Stanley has closed its Fastrade service and relaunched it as Charles Stanley Direct. Changes are extensive – the key ones are that online trading fees have been reduced to £10 per trade, but there is now a custody fee of 0.25% per year (min £20, max £150) waived if you trade more than six times every six months. Given that one of the Fastrade service’s strongest selling points was that it offered at-cost personal CREST membership, the introduction of a custody fee will probably work out as a cost increase for less active traders using it for that purpose.
  • In addition, the number of brokers offering personal CREST membership shrunk further. NatWest Stockbrokers apparently no longer offers this to new clients, so has been removed from the personal CREST accounts comparison table. Fyshe Horton Finney – which offered a relatively expensive personal CREST option – went into administration and its clients were taken on by Redmayne Bentley.
  • iDealing now offers direct access to Euronext Amsterdam and Brussels.