Hargreaves Lansdown

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  • #16809
    Mark Bentley
    Keymaster

    Ok – that makes sense then. No reason to suspect any “funny business” going on!


    #17026
    Cliff Weight
    Participant

    Investors Chronicle wrote up the chronic service problems of the platforms see https://www.investorschronicle.co.uk/news/2021/02/22/platform-service-creaks-with-customer-surge/ and included this quote from Cliff Weight of ShareSoc:

    Cliff Weight, director of individual investors campaigning group ShareSoc, said “Hargreaves Lansdown’s customers having to wait 34 minutes to talk to someone is awful and should be unacceptable. The Financial Conduct Authority and the Competition and Markets Authority looked at platforms a couple of years ago, but seemed to have allowed high cost, poor service, quasi-monopolistic behaviour to continue. They need to go back and have another look at platforms.”

    #17244
    Phillip Moores
    Participant

    Hi,
    I wonder if anyone can educate me on the Hargreaves’ philosophy of charging on funds but not shares (including ETFs). It makes it appear that its significantly better value to hold ETFs rather than funds*, but I suspicious this isn’t the whole picture.

    How come platforms treat funds differently?

    * at least for low-trading, buy-and-hold investors.

    #17245
    Colm Maguire
    Participant

    As you realise, no fees to trade funds.
    As I invested more and more in funds in my SIPP the costs went up steeply. I kept my funds in my SIPP and shares in my ISA. In the end I moved the SIPP to another platform but not the ISA. I wonder if HL think that investors get tired o stockpicking and move into funds as a result.
    Certainly customer inertia is one reason why HL makes so much profit.
    uk.stockbrokers.co/compare is useful

    #17249
    Mike Dennis
    Participant

    Hi Phillip.
    Good question. I know of no good reason why HL charge such a high custody fee on funds but not on other holdings. I believe its a hangover from the “old days” when fund transactions and holdings were treated very differently to those in shares or ETFs. The whole fund market and supply chain used to be an opaque system of charges and commissions which the average investor found difficult to understand but who ultimately paid the price for this opacity. RDR sorted out a lot of this and created “clean” funds where brokers no longer received back commission from fund managers. But there still remained a difference between trading and holding (custody) charges for shares and those for funds. With the increasing use of online trading platforms for both shares and funds, it has brought these differences into stark relief because the user perceives no obvious difference between the two that could justify the difference in charges.

    Many brokers now charge exactly the same fee structure for trading and holding shares and funds (for example, Interactive Investor) which tells you all you need to know about the relative underlying costs associated with trading and holding both assets. I therefore think the main reason that HL continue to resist this simplification is that their business is heavily biased toward customers who have modest portfolios consisting mainly of funds which they trade very infrequently. So, to change their fee structure for funds to the same as shares would be commercial suicide. So, as long as the majority of their customers continue to tolerate this fee structure and choose not to switch to a lower cost broker, the longer HL will hang onto it.


    #17286
    Peter Reiss
    Participant

    My wife has used HL for many years and as she does not trade very often, they provide a satisfactory service. I look after her investments and my chief beef with them is their insistence on running separate Capital and Income accounts. I have never been able to fathom out the reason and as I run a number of portfolios at home, carefully logging all entries, including dividends as they are declared, with dedicated bank balances for each, reconciliation with HL takes a lot of time and head scratching. It was for this reason that before the IPO when Barclays decided to ruin a good service (I Had been with them since the late 1980’s) I moved my substantial ISA to AJ Bell. Whilst there have been a few glitches along the way, they do listen to constructive criticism and respond swiftly to problems.

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