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.
Mar 082013
 

As mentioned by users of this site and elsewhere, TD Direct Investing UK has informed non-residents in a number of countries that it will be closing their accounts. Japanese residents seem to be the most commonly affected, but some clients in the Middle East have apparently been told the same.

I had been expecting that the firm might start to steer non-residents towards TD Direct Investing International in Luxembourg (formerly known as Internaxx) instead of the UK arm, but it seems that some of the users who are having their accounts closed have been told that TDDII won’t accept them either.

Exactly what lies behind this isn’t clear – areas such as complying with money laundering regulations are an obvious possibility, but the underlying reason could be a wider drive to simply admin and cut costs. Regardless, the extremely short notice period means that many affected clients are understandably not very satisfied.

There’s a discussion on the UK stock broker accounts for non-residents post about alternative providers, although the choice among UK-domiciled brokers is likely to be slim.

Jan 232013
 

In recent days, a few people have noted that UK broker Selftrade has stopped opening new client accounts. The text on the account page has been reading “We are undertaking a review to enhance some of our processes, so we are unable to progress your application at this time”, which could mean anything.

Today, an article on Money Marketing sheds a little bit more light:

Execution-only platform Selftrade has stopped taking on new customers with the platform voluntarily varying its permissions following discussions with the FSA.

Exactly what’s going on is still not clear, but the involvement of the regulator will not reassure some users. For obvious reasons then, Selftrade is at pains to stress that whatever it is has not involved any losses to clients or the firm: Continue reading »

Jan 222013
 

Justin Modray of Candid Money has launched a rather useful new tool for UK fund investors: An interactive fund platform comparison that lets you check how much a given fund or basket of funds will cost you across multiple platforms and helps identify the best fund supermarket/discount broker combination for your needs.

So far there are six fund supermarket/broker combinations on there – Alliance Trust Savings, Bestinvest, Cavdenish Online, Clubfinance Frequent Trader, Interactive Investor and rPlan. Several others are on the way – ICICI and TD Direct Investing (which are both Cofunds brokers, like ICICI) and Sippdeal.

The notable omission is Hargreaves Lansdown, which has declined to take part. Given how uncompetitive its charges look these days, that’s no surprise.

It would perhaps be handy to have Saxo’s Modern Wealth Management service in there as well at some point, but other than that the tool covers all the providers currently included in the UK fund supermarket comparison table on this site.

Jan 212013
 

I’ve updated the TD Direct Investing profile and the UK international stock brokers and online brokers tables to reflect the new fees announced a while ago. They won’t take effect until the beginning of February, but obviously at this juncture nobody should be signing up on the basis of the current fees.

I’ve also overhauled the Barclays Stockbrokers profile to merge the entries for the International Trader and Foreign Dealing Account into one record – it seems slightly more logical that way, since an investor can run both services within the same account.