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Clients hit out at Hargreaves over monthly platform charge
by Daniel Grote on Nov 21, 2011 at 12:57
Hargreaves Lansdown clients have hit out at the Bristol-based discount broker after it introduced a charge on tracker funds held on its Vantage platform.
Hargreaves has defended the decision explaining the £1 or £2 monthly platform fee will only apply to funds where it currently receives little or no share of the fund manager’s annual management charge. It will apply mostly to tracker fund, but some actively-managed funds will also be affected. Hargreaves said more than 97% of the funds on its platform will continue to carry no extra charge.
It added the platform fee, which will be introduced on 31 December, would replace the funds' 0.5% annual management charge, and argued the extra money it raised would help increase the range of funds it was able to offer on the platform.
However, as the proposed fee will apply to each fund holding the costs will quickly escalate for investors with one or more tracker funds in different Hargreaves Lansdown accounts, and will hit investors with small holdings hardest as it is a fixed sum.
A £2 monthly fee will apply where Hargreaves receives no share of the fund’s annual management charge, and £1 where it does receive a cut.
Investors on Citywire’s consumer website Citywire Money have complained about the charges. One investor wrote: 'I currently hold six HSBC trackers in three different accounts (ISA, Sipp, Vantage). These platform fees will now cost me £432 per year. Time to bail!'
Funds with the new platform fee
Details of the new charge are in the latest edition of Hargreaves Lansdown's Investment Times newsletter.
Tracker funds affected:
Fidelity MoneyBuilder UK Index £2
Henderson UK Index £1
HSBC American Index £2
HSBC European Index £2
HSBC FTSE 100 Index £2
HSBC FTSE 250 Index £2
HSBC FTSE All-Share Index £2
HSBC Japan Index £2
HSBC Pacific Index £2
Legal & General All Stocks Gilt Index Trust £2
Legal & General European Index £1
Legal & General Global Emerging Markets Index £1
Legal & General International Index Trust £1
Legal & General Japan Index £1
Legal & General Pacific Index £1
Legal & General UK 100 Index £1
Legal & General UK Index £2
Legal & General US Index £1
M&G European Index Tracker £2
M&G Index Tracker £2
Other funds affected:
Aviva Inv Higher Income Plus £1
HSBC Gilt & Fixed Interest £1
IFDS Brown Shipley Sterling Bond £1
Legal & General All Stocks Index Linked Gilt £2
Legal & General Fixed Interest £1
Legal & General Managed Income £1
M&G Gilt & Fixed Interest £2
M&G Index Linked Bond £2
Royal London Index Linked Gilt £1
Templeton Global Total Return Bond £1
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7 comments so far. Why not have your say?
Michael Brown
Nov 21, 2011 at 13:27
Well at least they know what they are paying for here ands who is getting it.
It is the rebates that would enlighten the customers the most!
report thisGerry Cooper
Nov 21, 2011 at 13:32
"One investor wrote: 'I currently hold six HSBC trackers in three different accounts (ISA, Sipp, Vantage). These platform fees will now cost me £432 per year. Time to bail!'
So who the hell would want a client who wants it all for free? Not me for sure, and not HL either. It would be interesting to know where he intends to go for his free SIPP.
report thisMarcus Aurelius
Nov 21, 2011 at 13:41
Does anyone know if this applies to ETFs too?
report thisDave
Nov 21, 2011 at 14:01
HL see ETF's as a share and charge a share dealing fee on them like they do for all other shares.
report thisBob Donaldson
Nov 21, 2011 at 14:01
@ Gerry Cooper. Someone should tell the client welcome to the real world where there is no free lunch. It will be interesting to see what a lot of HL clients do once the whole RDR sets in. Perhaps they will finally realise that there is no such thing as 'free'.
report thisDave
Nov 21, 2011 at 14:30
@bob - HL will probably continue on as they always have done before as they are exectution only and RDR won't apply to anything except for their advisory services. This will possibly effect their more charges savy clients, although people with those people probably aren't with HL in the first place as their are more discount brokers about that are cheaper. From HLs point of view, if clients in the tracker funds decide to jump ship it will probably save them money as they weren't earning anything off them in the first place.
report thisMartinifa
Nov 22, 2011 at 10:03
Agree with above, however.
Time for the consumer to wake up to the post RDR world, it is not free and you will pay. Don't complain, this is what you wanted.
You cannot say the charges are not clear and frankly I think you will find this is the tip of a very big cost increase going forward accross the whole industry. What they have done is charge the cheapest charging option as HL are not making any money on them, HL is not a public service and needs to be paid for the service. There is no longer a free ride post RDR.
The regulator, which, consumers beleive they are charged to much, the fact is in most cases they have paid way to little. RDR has highlight this fact, the rich will pay less and the poor will not be able to afford the services.
Don't say you were not warned.
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