IG launches new stockbroking service

IG, one of the best-known spreadbetting and CFD providers, has branched out with a new execution-only stockbroking service. At present, the firm offers dealing in stocks listed in the UK, USA, Germany, Ireland and the Netherlands, with other international markets likely to be added in the future.

I’ve added a page with details of charges to the broker directory and also included it in the execution-only and international broker comparison tables. Overall, it appears to be a competitively priced service with a handful of particularly notable points:


Stockopedia adds US stock data

There’s a clear shortage of fundamental data services for private investors who want reliable information on global markets at a reasonable price. So I’m glad to see that Stockopedia has now added US stocks to its UK and European coverage.

For those who haven’t yet come across Stockopedia, the site provides a huge range of valuation measures and screening tools, including screens based on popular strategies and the styles of notable investing. The underlying fundamental information comes from Thomson Reuters, but all valuation metrics are calculated in-house.

This may not sound like a big deal, but ensuring that financial statistics are calculated in a consistent, accurate and meaningful way across an entire dataset is more difficult than it sounds. Stockopedia’s data quality is superior to any other website that I’ve seen and in some respects seems better than the high-end professional services from Reuters and Bloomberg.


Au revoir Selftrade

The long-running farce at UK broker Selftrade finally seems to be drawing to a conclusion. Parent company Boursorama announced in its Q1 results [PDF] that it plans to transfer all Selftrade accounts to Equiniti.

This isn’t a huge surprise, as it’s been obvious for some months that Boursorama was looking for an exit. Details are scant, but it doesn’t sound as if it expects to get much out of the deal.

Given that Selftrade was previously one of the strongest brands in the UK market, that’s testament to the amount of damage wrought by the year-long suspension on opening new accounts and the recent requests for very intrusive financial information from existing clients. The whole affair has been a masterclass in how to lose the trust of your customers.


Are SIPPs now better than ISAs?

The proposed changes to UK pension rules announced in the March 2014 Budget will make Self-Invested Personal Pensions (SIPPs) far more flexible. From April 2015, investors should be able to withdraw as much of their SIPP fund as they want immediately on retirement.

Since the choice between a SIPP and an Individual Savings Account (ISA) is a trade off between flexibility and tax relief, many investors will feel that this tips the balance in favour of SIPPs. But while the changes are welcome, I think it makes less difference than you’d expect.

Unlike some finance writers that I generally agree with (this piece on Monevator, for example), I think that the practical advantages of SIPPs over ISAs are easy to overstate. To see why, let’s look at how much the added tax relief from a SIPP is really worth for the average investor.


Alliance Trust Savings and VAT

Alliance Trust Savings’ announcement that it will no longer be charging VAT [PDF] on the account fees for its dealing and ISA accounts is a small but welcome saving for clients, with quarterly fees falling from £22.50 to £18.75. But it illustrates a peculiar inconsistency in how UK brokers treat account administration fees and VAT.

HMRC guidance says that charges for certain investment services are not subject to VAT, as this notice sets out. These include brokerage commissions and fees for stock custody, dividend handling and implementing corporate actions.

As a result, if a firm charges an investor a “custody fee” or an “account fee” to cover custody and servicing for their investments, that fee is exempt from VAT. However, if the fee is instead a broader administration fee that pays for other services, the fee will not be exempt.


HL backs down on investment trust charges

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.


Share dealing charges – Halifax, iWeb, BestInvest and Barclays

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.


Fund charging – Fidelity FundsNetwork, Barclays Stockbrokers, BestInvest, Halifax, iWeb and iDealing

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.


Hargreaves Lansdown unveils new charges

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.


Alliance Trust and Youinvest updates

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.