The impact of Interactive Investor’s fee hikes felt akin to a great disturbance in the Force. As if millions (give or take) of Monevator voices cried out in great annoyance…
As well they might. Discount broker Interactive Investor (iii) had previously been our go-to no-fee broker. Now it wants to bombard us with account management charges and dealing fees that put a big brake on the returns of passive investors with small portfolios.
You can read the what, why, and how bad here. This post is all about alternative no-fee discount broker options. The community is frothing with anger and people want away from iii. So where to go?
The good old days of fee-free accounts – that let you buy and sell index funds without paying a brass wazoo – are still in full swing, although complications abound.
Top pick: TD Direct Investing
There’s a lot to like here.
No management fee…
- … if you have a regular investment ISA or trading account.
- …or you have over £5,100 in a trading ISA.
- …or you have over £7,500 in a trading account (or you have made a single trade in the previous quarter).
- Otherwise you’ll be charged £36 per year for the trading ISA and £15 per quarter for the trading account.
You don’t even need to trade every month to qualify for a regular investment ISA, so this is a great option for most passive investors.
No fund trading fees
- Unit Trusts and OEICs (i.e. all index funds) trade gratis.
- Exchange Traded Funds (ETFs) trade at £12.50, or can be bought for £1.50 through the regular investment scheme.
Retail Distribution Review (RDR) adapted
- From July 1, TD is introducing a platform fee. But this one isn’t like the Hargreaves Lansdown flat-rate slap in the face.
- The platform fee of 0.35% is only charged if your fund pays over 0.5% trail commission. Otherwise the charge is zero.
I have yet to find an index fund that pays over 0.4% trail commission. Most pay 0.1% to 0.3%, including all the funds in The Slow and Steady portfolio.
As a result, passive investors shouldn’t get whacked for a platform fee with TD Direct. What’s more, you should get a little back, as all trail commission will now be rebated. And if you’re guiltily hiding a few active funds that do pay over the 0.5% threshold then your trail commission rebate will more than cover the 0.35% platform fee.
While there’s no guarantee that things won’t change, it’s worth underlining that TD Direct has decided to rebate 100% of trail commission even before the FSA has made a final decision on whether execution-only platforms can keep it or not.
That means TD Direct should be prepared if the FSA decides to end trail commission. And its solution is far more favourable to small investors than either iii or Hargreaves Lansdown has managed.
Should you want to leave though, TD will transfer out the entire account for £55.
Selftrade
Selftrade is another good choice, because it has also recently changed its pricing structure. The following package applies from 1 July.
No management fee
- Beware there is an inactivity fee of £10.50 per quarter.
- It’s easily avoided if you make a single trade (even reinvesting a dividend) in the previous quarter.
No fund trading fees
- Funds are free to buy – although they cost £12.50 to sell.
- ETFs can also be bought for £1.50 in the regular investment scheme.
- You could argue the selling price is actually a barrier to churn, putting investors off whimsical performance chasing.
Exit fee cashback
- Selftrade will pay up to £100 per account you transfer to it (maxing out at £300). That could make a swift exit from iii relatively pain-free, as its transfer fees are £15 per investment.
Transfer fees (to leave) at Selftrade are £15 per investment. There’s no mention of trail commission rebates and it doesn’t peddle any of that platform fee / custody fee aggro.
iWeb
iWeb is the best ‘clean’ discount broker choice available. There’s no management fee excuse-me of any sort. The only snag is that it hasn’t responded to RDR yet.
- No management fee.
- No fund-dealing fee – ETFs are £10 to trade, regular investment is £2.
- No platform fee, no custody fee.
- No trail commission rebate.
- Transfers out – £25 per investment.
This is execution-only as it used to be. A no-frills service, but that’s what you’re paying for.
Cavendish Online
I tend to be drawn to discount brokers over fund supermarkets because they generally offer ETFs as well as index funds.
If you’re not bothered about ETFs, then plenty of fund supermarkets – such as Cavendish Online – offer no-fee accounts where you can trade funds without charge.
Most offer some level of trail commission rebate, although they may yet have to change their terms pending the outcome of RDR.
Note that Cavendish doesn’t have the L&G All Stocks Gilt Index fund. Replace it with the HSBC UK Gilt index fund instead.
Hargreaves Lansdown
If all this fee-fighting faff makes you think, ‘Soddit, I just want life to be simple,’ then you can buy a complete, diversified, off-the-shelf portfolio in the shape of a Vanguard LifeStrategy fund.
You’ll pay a platform fee for the fund of £24 per year in a Hargreaves Lansdown ISA, and that’s it (other than the fund’s TER et cetera). Trading is free and Vanguard will even rebalance your fund-of-funds automatically.
But if you want to build your own portfolio of Vanguard funds then your best option may be to bring Alliance Trust or Bestinvest into play.
A major downside of Hargreaves Lansdown is that it levies an extra 0.5% charge (max £45) if you hold ETFs, bonds, shares, or investment trusts in an ISA. This charge does not apply to the Fund & Share account.
The upside is that the platform fee is Hargreaves Lansdown‘s response to RDR.
Bestinvest
Bestinvest is interesting because it enables you to avoid fees initially, but offers the option to add Vanguard funds later, if you’re prepared to accept a custody charge. But keep in mind that Bestinvest hasn’t reacted to RDR yet.
No management fee
- If you buy from an approved list of funds that stump up trail commission.
- The entire Slow & Steady portfolio is on this list, bar the L&G All Stocks Gilt Index fund. Replace it with HSBC UK Gilt Index instead.
- The custody charge is £15 per quarter if you buy any Vanguard funds, other funds that don’t pay enough trail commission, ETFs, or shares.
No fund trading fees
- ETFs trade at £12.50 and there’s no mention of regular investing.
Exit fee cashback
- Bestinvest will give you a golden hello worth up to £500 to cover your exit fees from another platform.
Bestinvest doesn’t muck about with trail commission rebates. Instead it offers cashback through a loyalty scheme. El cheapo passive investors don’t count as loyal citizens of the Bestinvest kingdom.
Transfer fees are £25 per investment plus £60 to close an ISA account.
Should you move?
Switching platforms is not something to be done lightly. The costs and hassle mount up.
It would cost £105 to get the seven-fund Slow & Steady portfolio out of iii, due to its transfer fee of £15 per investment. That’s versus £80 to stay put for a year, plus any trading charges incurred on top of that.
UPDATE: iii waive transfer fees. Since this post was written, it looks like iii’s customer service department has been napalmed by angry soon-to-be-ex customers as they’ve decided to drop their transfer fees, if you ring 0845 200 3637 by 31 July 2012.
Needless to say, virtually all platforms charge zip to transfer in.
If you do go for it then make sure you ask for an in specie transfer (sometimes known as reregistration).
That way your funds aren’t caught out of the market for any period, and you don’t miss the massive rally that’s bound to be just around the corner if you cash out.
You’ll also retain the goodness of your ISA wrapper that you’d lose if you manually sold up to avoid transfer fees.
But the big question is whether it’s worth moving before the FSA has decided to ban trail commission or not. See here for a fuller discussion of this issue.
That decision is due before the end of 2012, and may yet shift the landscape for execution-only platforms running to catch up.
At worst, iii customers will pay £40 in management charges during that period, so it could be worth waiting to see where the chips fall rather than constantly chasing after the last free platform in town.
Don’t want to wait? Then platforms that already charge a fee and rebate 100% of trail commission seem best positioned to deal with the post-RDR world without more major upheaval. Ask your choice if it will cover your transfer fees away from iii.
In the meantime, you could join the ranks of angry Interactive Investor customers pressing the company to waive its fees.1
With any luck, if the FSA does ban trail commission then our fund TERs will deflate a bit, and we’ll still be able to find a good quality platform that doesn’t penalise small investors with infernal flat-rate fees.
Until then…
Take it steady,
The Accumulator
- Look out for forum member Fagun’s complaint template in particular. [↩]
Comments on this entry are closed.
Thanks, priceless information once again.
TD Direct looks compelling, though I’m concerned by their “Trading commissions from £8.95 [per trade]” within an ISA, as noted on their website – that could be a deal killer for a regular investor. I don’t see anything on there that suggests this is waived for index funds, but I don’t doubt that you’ve done your homework more rigorously than I have!
the vanguard life strategy 100% equity accum(global)
can you regular save in isa?
the fund price is £9,571
so if your investing £50 a month you get percentage return of fund end of year
thx
Great write-up, something to mull over while I decide on how to play this!
I don’t suppose you have any thoughts regarding The Share Centre?
Great write up!!
To those that invest ONLY in HSBC passive index fund, looks like it is also a good option to invest directly with HSBC investment at no dealing cost. But draw back is they have no online interface to buy and sell and have to do everything in writing/ by phone.
Thanks for the broker reviews, TD direct are high on my list for simple trading account, but not sure I will keep my holdings above the £7,500 value required to avoid the inactivty charges.
I notice that both RBS/Natwest run on the TD Direct platform, and don’t charge the inactivty fee if your holdings (shares/cash) are worth more than £2,000 so easier to meet, although their trade fee is higher at £15. Plus might be another catch I can’t see yet.
Thanks again.
One other thing it’s worth noting about HL is that they only reinvest dividends once they reach £200 – for most of my holdings it will be several years before this happens!
Guy
I think based on the faff factor, I may move my III ISA to H-L and adopt
90% Vanguard LifeStrategy 60 % Equity Fund
5% BlackRock Emerging Markets Equity Tracker
5% BlackRock Global Property Secs. Eq. Tracker
Will pay all contributions into the Vanguard fund, and then rebalance each quarter (whenever I can be bothered) to bring the other 2 funds into line (I will miss some of my ETF’s though 🙁 ).
Having so many HSBC funds with III used to drive me mad and the £1.50 dealing fee for many of the ETF’s/IT’s limited me to one regular trade a month (£18 a year) so an extra £6 a year for a small compact practically catatonic portfolio might be the way forward (at least I wont have loads of lines to transfer if it all changes again!)
TDW is one of my three brokers and if anyone is interested I’ve had no issues with them. They have some good on-site tools, better than my other brokers. There are tools for funds too, but I mainly use the ones for shares (yes, I like to play on the dark side!) Navigating the site takes a bit of getting used too as compared to my other brokers’ sites.
Great analysis The Accumulator. Thanks.
Does the account value of £5100 take into account losses? E.g. If I have £6k in there but am at a 50% loss, do I qualify for no fees?
I have a selection of funds held at Fidelity FundsNetwork – don’t seem to be any charges here unless I’m missing something…?
I use TD Direct so can say what the current situation is, as far as I’ve experienced. (I’m a little worried they will slap on extras later.)
Simon:
– Buying & selling ETFs and shares costs £12.50. (The lower rates are if you make loads of trades, though my first trade was the cheaper rate.)
– Buying and selling funds is free (though a minority of active funds have a non-zero ISC).
– The regular trading is a monthly scheme where you set up a direct debit. You can set up a chain of purchases you want to make and it fills all the ones you have enough money in the account for once a month. (Note that the amount can be more or less than the DD and there is no penalty for not having enough funds. You can also alter the trades you want to make at any time.) Shares and ETFs cost £1.50 whereas funds are still free. It’s a pretty good deal though until a week ago I had issues trying to actually add some funds.
The £5100 is based on the current value (i.e. including losses) based on the last day of May. Therefore, you have nearly 1 year to get to that amount. (Or you could just upgrade you account to regular investing and not have to worry about that either.)
The site tools are the Morningstar ones and are pretty handy (you can X-Ray your portfolio, for example). you can create a test portfolio of shares / ETFs (but not funds) and x-ray that too.
The only downside is their currency conversion rates if you buy non £ denominated shares (2%) and their current lack of Vanguard OEICs.
Hi all,
I attempted to make a spreadsheet to try and figure out which alternative platform may be worth switching to. It may help you.
https://docs.google.com/spreadsheet/ccc?key=0AhPotLU0DadMdEY4dl8xb21wQ0dCNDVWZ2FQZnNfc0E#gid=0
I see a bunch of people have visited it so hope it is helping.
For my two pennies worth, I think iweb looks to be the no-brainer choice. However, it obviously hasn’t reacted to the upcoming RDR stuff so there may be a charge coming though. Selftrade, TD Waterhouse, x-0, SVS, and HL all count themselves out instantly because of their ridiculous dividend reinvestment policies. If any of you hold shares then div reinvestment is really important and these five either don’t do reinvestment or charge too much for it. My second option would be the Share Centre who seem really nice, do excellent write ups on the markets and shares, and have already introduced their costs too. If you just hold funds with them then costs are zilch.
Waiting though till later in the year to make a choice is not an option though as several people are suggesting. If you wait, you will definitely incur selling costs on your funds sold after 1 July. (£10 per transaction) Selling the fund and doing an in-specie transfer now is the only way to avoid the £15 transfer per line of stock.
Hi,
Team Dave wrote:
“Selling the fund and doing an in-specie transfer now is the only way to avoid the £15 transfer per line of stock.”
I have some funds with II. I gather that by using the strategy you mention I can avoid the transfer fees but keep my ISA wrapper.
I know that by selling all the funds (and then rebuying them) I risk being out of the market for a bit. I’m happy to take my chances. But are there any other hidden costs I need to worry about, like stamp duty?
Thanks.
What are your thoughts on Motley Fool?
My ‘portfolio’ is very poor. I need to rebalance. I’m thinking a tracker and MAYBE some of the funds mentioned here… would I need to use a “platform” like iii or simple a site like x-0?
To me inactivity charges are as bad as admin fees – thus the number 2 on this list, for example, doesn’t get my vote.
Does anyone know what the minimum fund purchase is for TD Direct (specifically for the HSBC tracker offerings).
This would be a regular monthly investment if it makes a difference…
iii used to be just £20 per fund, per purchase.
Hi TA
Great summary. I’ve been with TD Waterhouse (oops TD Direct) since early 2008. I have no complaints. For the simple trades that I execute they provide everything I could possibly want.
Cheers
RIT
The problem for me is that whilst a have a relatively modest total investment pot in my ISA account I have quite a large number of individual holdings (29 separate shares) on iii, which means a transfer fee of £435 (payback period of 5.5 years @ £80 pa). So, whilst I am really annoyed at the way iii has introduced the new fees, I’m not sure it would be financially wise to switch. I’m effectively trapped by iii.
teamdave: for TD then if you have regular dealing set up then I suppose you could manually tweak it to re-invest your dividends. Not ideal but not bad.
Jonny: For regular investing it’s £50 for a fund, and £25 for a share or ETF, though the latter has a £1.50 fee so I’m uncomfortable putting in less than £250. Plus, don’t forget that you’ll need to sell you holding at some point so if getting an ETF, you’ll want to make many drips!
For 1 offs, it depends on the fund but is often £500. This will help:
http://lt.morningstar.com/e4e1fvybwy/fundquickrank/default.aspx
(It’s the TD branded Morningstar fund listings; note that the ISCs & minimum investments are different (better) via TD than the main Morningstar site.)
I would note that Alliance Trust have frequent offers like free dealing for some CEFs which are quite good, and HL have better ISC reductions for the more active funds, but I’m sticking with TD.
I’m still concerned they will spring a surprise on us later in the year though!
Found my solution.
Hargreaves & Lansdown fund & share account.
No admin charges.
I don’t need an ISA.
I’ll transfer the one share I have to the account.. and then buy the Vanguard Life Strategy fund as my entire investment strategy.
Sorted, unless I’ve missed something?
gman:
The HL Fund and Share account still has the £2 a month fee for Vanguard funds. I don’t think it has any advantages over their ISA. Unless you have any particular reason not to, I would go the ISA route.
That said, I would say that VLS via HL is an excellent all-in-one solution and £24 a year is good value.
@Greg
Yes, the £2 per month charge applies whether in an ISA or a Fund & Share account but the HL Fund & Share account does not charge the additional 0.5% (max £45 pa) that is charged in their S&S ISA
@teamdave
Great work on the spreadsheet, together with this article this is a great help to all looking to move away from iii, thanks so much to everyone.
Cant see the share centre offer £300 for transfer on their site though will phone and check this out.
@geo the bit on transferring an isa and help on costs is here:
http://www.share.com/a/isa-transfer.html
@westy22
That HL 0.5% (max £45 pa) isn’t in addition to the £2 per month charge on some funds – its for shares, ITs, bonds, ETFs. Funds are (currently) either free or have that £1 or £2 per month charge.
So for that specific Vanguard fund, its £2 per month whether its in a SIPP, an ISA or an unwrapped share account.
Steve / westy22:
westy22 is assuming gman is keeping his ‘one share’ whereas we’re assuming he sells it to buy the LS fund after! (Thinking about it, I think west22’s assumption is right, as doing it our route one would sell the share and move the cash, surely? It does seem odd having one share, unless it is a CEF, though.)
westy22 is right in that there is a difference between the two account types when holding ETFs/shares – up to £45 pa.
@ David Stuart – you would certainly be able to regularly invest in that fund through Alliance Trust or Hargreaves Lansdown. By regularly invest we’re talking about a specific scheme that allows you to do that. Obviously all brokers will let you give them some money any time you like.
@ Team Dave – It makes much more sense to wait and see what the lie of the land is when the dust is settled than to worry about that one off cost and be forced to move again later. However, I’m coming at this from the point of view of someone who has a portfolio of less than 10 funds rather than someone who perhaps owns a multitude of shares – which may be your POV? Also, I don’t worry about dividend reinvestment as I mostly use accumlation funds and payouts from my distributing funds just get added to regular investment contributions, so the dividend reinvestment charges don’t worry me.
@ Phil – no you’re not. Fidelity is just fine. There are lots of fund supermarkets that do much the same thing, so I rounded up that category under the Cavendish Online pick.
@ Gman – you’re right inactivity fees are just as bad as admin fees if you pay them. However, they should be simple enough to avoid with these picks. The Motley Fool charge £15 every 6 months ISA account management fee so that rules them out for me.
@ Aureus – you don’t directly pay stamp duty unless you’re trading shares, investment trusts or the Vanguard FTSE fund.
@ Andrew – Share Centre doesn’t appear to be doing anything much different that others aren’t. It’s not clear whether its dealing fees apply to funds or not. There’s no admin charge for a Fund ISA but a fairly stiff £15 per quarter if you take a Stocks & Shares ISA that also encompasses ETFs, investment trusts, bonds and shares.
Forgot to say, my thanks to everyone else who’s contributing on here too. It’s great to see everybody rally around and come up with solutions.
platform fees & iii new quarterly charges—within weeks of each other bombshell
ive switched 5 trackers funds to the vanguard life strategy 100% equity accum(global)/
big thx accum for the info
@ Greg
Thanks – yes you are right about me being aware that gman wanted to keep his one shareholding intact as I have been following his ‘journey’ to a new investment platform over on the MSE iii thread 🙂
Oooooh! So if I held ONLY the Vanguard fund in the HL ISA, I would NOT have to pay the £45 admin fee each year? That is even better news…
That merits a second post from me… excellent find and thank you very much!! Looks like I’ll open their ISA with only the Vanguard fund… and I’ll open their normal trading account (fee free) to put my one share inside.
Sorted!!
westy – it’s certainly been a journey – 2-3 nights up until 1am scoping out all the alternatives!! I guess this is my 3rd time lucky post. SO very happy that I’ve found a final solution.
gman
total charges on the vanguard life strategy 100% equity accum(global) in a isa regular saving
0.22%—upfront fee
0.33%—annual management fee
£2 monthly—platform fee
i strongly advise keeping it in an isa
gman
say £50 a month regular savings
£600 year
– 0.22%= -£1.32
-0.33%= -£1.98(value of fund £600)
platform £24
£27.30 a year=0.45%
double check with HL
@ David
I think that should be £27.30 a year= 4.55%
thx–jonny
RED FACE
Yes fees hammer small monthly sums in vanguard ls. A real shame.
I get it yeah… I’m just viewing that £27 as a couple less beers…
In the second and continuing years those fees will become a much smaller part of the total.
I get your point, though… if this was for short term then I’d be better putting it into a savings account.
Considering the wide exposure we get in something like the Vanguard funds, I think it’s pretty good! 🙂
Plus, I think the minimum is £100 for Vanguard so 2.55% max charge in the first year.
its £50 regular saving vanguard if on-line
prob better saving–than lump until bigger portfolio–agree
To be a feature on R4 Moneybox this Saturday, 12 noon.
ii have backed down on exit fees (see website) and now agree to waive fees to anyone who wishes to leave before 30 June.
“@ Aureus – you don’t directly pay stamp duty unless you’re trading shares, investment trusts or the Vanguard FTSE fund.”
Thanks. That’s what I thought. So doesn’t seem to me there’s much disadvantage in selling up then rebuying. The market might go up in the meantime or it might go down.
But I have small bits of money in six different funds so the transfer fees would be a huge bite.
Just got an email from iii tonight saying they will waive all transfer fees if you wish to move as long as you do it in writing before the end of June. So that means you can now avoid having to sell everything first and transfer. Now you can stay in the market and earn all those lovely dividends and huge market upswings that are going to occur….
@John — Be nice if Monevator got a mention on Radio 4! 😉
“Be nice if Monevator got a mention on Radio 4!”
You deserve it – but in view of ii climb down, I suspect it may no longer be a ‘story’?
Just need to decide where to move my business to now.
@ John and Teamdave – great news about the waiver of fees. Thanks for sharing.
@ John and Teamdave – the website says you can leave without paying fees up until July 31. Is that not what you’ve been told? Here’s the website text under Transfer Charges:
“If you do decide to leave us, though, please call us on 0845 200 3637 by 31 July 2012 and we will ensure you have a fee-free exit.”
http://www.iii.co.uk/landing/new-pricing
Just to confirm you can make a minimum investment of £50 a fund in TD Direct’s regular investment ISA. However, there’s no requirement to buy any fund 2 months in succession.
Just wanted to add my voice to those saying thanks – a fantastic writeup, and great news that II are allowing fee-free transfers-out after all.
Thanks for a fast analysis and giving us some hope – I had 15 lines to hook out of iii so the pressure brought to get them to drop transfer fees was great.
Must be you that caused TDs phone lines to be down for a while yesterday 😉
The only fees would have been £15 per line of stock, right?
So what’s the process now for leaving iii? Does it HAVE to be in writing? Do you get your stock transferred to another broker first? While this happens you’re not ‘out of the market’ are you? I assume not.
This line is classic:
“We would like people to take the time to fully assess our offer and to consider the positive impact this could have to their investments.”
What are they smoking?
Finally (sorry for all the questions) – since Hargreaves are in your list… I assume they’ve pretty much made all their RDR changes? Or was the £1-2 for some funds something else….?
@ teamdave
Thanks for the spreadsheet! Very useful, I think with the review combined with the hard data in the xls gives me everything I need to make a decision.
I just question the £6.25 quarterly charge for Alliance Trust though. I don’t think I am paying one – and they advertise no inactivity fee or administration charges on their website.
It seems to me if you want the Vanguard funds in acc. flavour and stick to regular investments AT is still the best option out there? Happy to be put right if I have missed something here!
@ Gman – iii say they want you to phone them up. See my previous comment. And yes, there’s some form filling involved. HL’s platform fee was a response to RDR, though it’s impossible to say they’ve made all their changes.
@ Dave – Alliance Trust do charge an admin fee. At the very least on their ISA. Gotta go out, so no time to check their non-ISA trading account.
Re: ATS
They don’t charge an admin fee for a share dealing account unless its an ISA or a SIPP
They do charge for dealing (obviously), but also there are charges at around £30 a time for things like takeovers, rights issues, share tenders etc.
I wouldn’t say they are cheap (unless you have a v large portfolio) but at least you know who you are dealing with and their finanical strength
Its not that I don’t trust them any longer, but is the offer of a ‘fee-free exit route’ the same as waiver of transfer out charges of £15 per line of stock…. mmm just a thought?
HL say dividend returns are priced in—how do you work out what your getting?
dont understand why not seperate
Apparently the Interactive Investor charges will be on moneybox on BBC Radio 4 tomorrow, with a reply from them – wonder if its just the same as their email?
sorry too slow on this! hadn’t seen the comments had doubled since last time I looked and that ii had changed their tune – NICE!
Would TD Investing be a better choice than Hargreaves for investing in Vantage LifeStrategy funds? I’m finding
Apologies, computer error there!
I’m finding it more difficult to check out costs on the TD website. Is there a £1-2 platform fee like for Hargreaves when buying Vantage funds? I can’t see a clear bit on the website detailing this.
I wont have >£5.1k in the account to start with so would be charged the ISA admin fee, correct? (Unless I’ve got a trading account?).
I don’t want to rush into Hargreaves if there are better options, though I think they’re a relatively safe bet.
Can anyone with a TD Direct or Self Trade account say whether gilts (individual issues, e.g. T46) or ETCs (gold specifically, e.g. SGLN) can be regularly invested?
Is it possible to change the regular investments every month (like with III)?
And in the case of TD, which has two regular investment days per month, do you have a choice of day? Can you use both in one month?
Have a question regarding the account management / platform fee for TD. If I have a Trading ISA (with 6k inside) and a Trading Account (with 3k inside), will I still get charged a management fee?
Here’s the reference on the website:
“Account Management Fee £12.50 + VAT per quarter will be charged on all inactive accounts.
This fee will be calculated on inactive TD … An inactive TD Direct Investing Trading Account is defined as an account that, at the close of business on the relevant Quarter Date, has had no trades executed on it since the previous Quarter Date, and has a cash and / or portfolio valuation of £7,500 or less… The Account Management fee does not apply to Certificated Accounts, Trading ISAs, Regular Investment Accounts, Regular Investment ISAs or SIPPs.”
Thanks Monevator personnel and readers for the write-ups and comments – it’s all very useful. Keep sharing! It would be good to hear back from those who’ve switched about how hassle-free or otherwise the process was. I didn’t see the iii bombshell coming at all and thought I was there for the long haul. Now I realize how captive one is to these brokers/platforms I’m wondering whether to just cash the iii ISA in (I also have accounts with MF and Fidelity) and pay a chunk off my mortgage with it instead.
Tyro… I thought the main thing to do was always pay off the biggest debt? Does it makes sense to have savings under the value of your mortgage when the debt interest is going to increase more than savings? I don’t have a mortgage as yet, so it would be good to hear from others on this one.
That’s why I don’t pay into a cash ISA right now – what’s the point? My shares were meant to come up trumps and help me with housing costs, but unfrotunately they tanked 🙁 I think my £50 into the Vanguard fund isn’t too much of a big deal, though – I view it almost as a second pension.
@gman
It all depends on your outlook on things / what you predict.
If your mortgage rate is say 3.5% fixed, and you can get a higher (after tax) return than that in savings, you might as well save (and pay off the mortgage later).
Similarly, if you ‘think’ you can get a higher return for your money investing, that your mortgage rate, it’s maybe worth ‘considering’.
Obviously there’s risk attached (which is why some people prefer to overpay – as that way they are guaranteed to have paid off that proportion of the mortgage). I’m sure there’s a monevator article here somewhere on this.
Re. paying off the bigest debt, there are two trains of thought I know.
1) Pay the debt with the highest rate first – regardless of size, then keep going until all debt is repaid
2) The debt snowball method, where (if you have lots of debts) you pay off the smallest debt first, then the next smallest (regardless of rate) and so on. This gives the psychological benefit of seeing the number of different debts you have reduce. Not the most cost effective, but I can certainly see the logic…
I have rather dispassionately decided that at this time I’m simply going to cash out and watch to see what the FSA does next. My portfolio doesn’t have that much in it (<£5000) and I'm so annoyed at iii for screwing it's customers over. I'm going to defy all money advice and put it in a savings account for a while whilst I decide what to do next. Be damned if I'm paying £80 a year for the privilege of getting a few dividends!
@ Gman – I covered TD’s platform charge in the article, but here are the links you’re looking for:
http://www.tddirectinvesting.co.uk/help/faqquestions/fund-charges-what-are-td-doing/
http://www.tddirectinvesting.co.uk/help/faqquestions/what-is-retail-distribution-review-rdr/
@ Ben – you can change your investments every month with TD. Don’t know about the rest.
@ Millie – sad to hear. Perhaps you’re feeling a little bruised by the market too?
@ Jonny, Tyro – I just pay 50% of new savings towards mortgage and 50% into funds that will hopefully pay off over the long term.
i remember when morgage/endowments were suppose to be the new savior.then then i started getting letters—performance of markets meant endowment might not cover interest-only mortgage.
best thing i ever did was switch to a capital-repayment mortgage with unlimited o/p
if your saving for a deposit—defo cash isa only
Hi Accumulator, I certainly am! The last couple of years have been my first experiments in the market, and now that iii is messing about I just don’t want the bother. I’m sure my savings accounts will thank me though so I’ll just focus on building them up for a while instead!
@gman and others: my mortgage is on a tracker at under 1% at the moment so from a purely financial point of view I’m not strongly motivated to push money towards it …. but the iii imbroglio has just added a large hassle factor into the mix of incentives, and that might just tip me towards paying something off the mortgage rather than having the bother of shunting that chunk of money from one ISA provider to another as they tinker about with arrangements.
Thanks, Accumulator!
Guys, I sent a secure e-mail to iii Friday lunchtime but still no reply. Do they always take so long?
If you’ve got a portfolio of less than £40,000 unless you regularly buy and sell I don’t think it doesn’t make sense to remain with ii investor. But the charges don’t seem that bad for everyone.
If you’ve got 80000 invested with them its equivalent to 0.1% a year and obviously less if you have more.
Therefore if you’ve got a fund/etf with a ter of 0.3% it becomes 0.4% due to their charges.
However they have said that any dealing you do over the course of the month is free up to £20 which further reduces the impact of the charges.
Obviously it was better when there was no charges but I like to spread my money around and use a couple of different brokers in the same way I wouldn’t put all my cash in one bank so I think I’m going to stay.
Have been a satisfied regular investor with Selftrade for years now and couldn’t believe my luck when the new pricing structure was announced! Would recommend.
I’ve just setup a TD regular investing ISA and selected a number of the HSBC tracker funds to drip feed regular contributions into.
I noticed however, that TD are showing a £1.50 commission charge against each index fund purchase yet their literature says fund purchases are commission free. I’m currently querying this with TD, awaiting their response.
Will update here once I’ve heard from them.
Great name, newTDcustomer, how did you come up with that one 😉 TD won’t charge you that £1.50 on funds. It just comes up automatically on their online regular investing system because it’s not as refined as it might be. You’ll also see stamp duty come up in unusual places but I’ve never been overcharged yet.
My transfer to Hargreaves is going smoothly so far. Definitely the one to go for if you’re going for just the one fund. Just hope they don’t slap a fee on their regular trading account.
@ TA
Thanks for clarifying, it’s put my mind at rest. I’ve still not heard back from TD but I guess they are currently inundated with transfers in. If they come back to me with anything different i’ll post back here.
A quick final mention: the Monevator blog is fantastic, thank you for the effort and energy you guys poor into it.
I’ve made a small contribution to a few funds in my iii ISA in this tax year (2012/13). Does this mean that if I transfer over to TD I’m not able to contribute anymore funds this tax year via TD?
If this is the case I may top up my iii account with the remaining allowance for 12/13 and leave as cash before it’s transferred over.
@ NewTD – hey, thank you for those words. Makes all the difference.
@ Jim Bob – if you ‘transfer’ the ISA then you can continue to make contributions. Just make sure you get the correct ‘ISA transfer’ forms from iii.
@TA – Cheers, I don’t think there’s a need for any form filling on the iii side is there?
I’ve completed the ISA transfer form for TD and have checked the box to ensure the transfer is done in the form of cash balance & funds/shares, as far as I’m aware this should ensure the funds are transferred and kept in the market. i.e in specie
@ Jim Bob – you’re right, the form is from TD and that is the in specie option.
Had a response from TD on the £1.50 commision charges listed against my regular investment fund picks on their platform;
“We can confirm that we do not charge commission on funds’ trades. The system is designed to charge £1.50 commission on any trade, however when we buy funds we will take into account the commission discount and no charge will apply”
How do you find out what trail commission each fund has? You said that nothing in your S&S portfolio has anything above 0.4% but I just spoke to TD about possibly opening an account and asked to check if they offer each fund in my current iii account (of which I have about 4 that appear in the S&S portfolio) and also what, if any, their trail commission is. The guy I spoke to said that nothing in my current portfolio has any trail commission that comes back to them but that seems odd to me. He did try and tell me that my L&G UK100 fund was an ETF however so I’m not too sure his advice was sound.
I only hold shares with II so looking for a no AMC account, with low trade costs, has anybody had dealings with simplystockbroking?
The problem with the companies detailed is when you have Investment Trusts (ITs). Interactive Investor automatically re-invest dividends from ITs. I have spoken to a number of companies and none do automatic reinvestments for all Its (TD investing will charge £12.50 to reinvest your dividend, Self trade only reinvest in a range of ITs). Investors with ITs should be aware of this before moving from Interactive Investor. Can anyone tell me the name of a company who will automatically re-invest dividends from ITs and have a less expensive charging system that Interactive Investor.
I’m also finding it quite hard to find a company that will enable to switch everything as is. The minimum investment for TD and selftrade on some funds I own is higher than II meaning I would have to increase my monthly amount higher than I would like. For example the L&G Global Emerging fund is £100 minimum with TD and ST while it’s only £20 with II. I could invest every quarter to cover this but then I would lose out on the regular investment commission discount on the 2 or 3 ETFs and Investment trusts I have. Not to mention the gilt funds are not available on either platform too. Head currently banging on wall.
@ Rob – here’s an excellent guide to the level of trail commission that you can expect funds to pay out: https://www.fidelity.co.uk/static/pdf/investor/research_funds/Fund-supermarket-table.pdf
I don’t think you would miss out on regular investment dealing fee by investing in some funds quarterly. You don’t have to invest every month in every fund to get that discount rate. I tend to invest in a fund for a couple of months then switch to another one. I think you could also get away with not trading at all for a couple of months. At least with TD. Not sure about Self-Trade. Have you checked out the minimum investing amounts with iWeb?
@ DM – You can always roll your dividends up into your regular drip-feed amounts to avoid extra charges.
Been with III for over five years and started accounts for my mother and father with them before they broke with the Halifax doing the administration. I do not think their dealing is as reliable as it was.
I already have an account with TD Direct but suspect they will introduce fees in the future as they had them pre 2008. (Staff their sent me the forms for an Isa administered by them run by one of the high street banks when I wanted to move a cash Isa to them!)
Contacted iWeb (administered by Halifax) by email and they claim there is no talk of extra charges there. Less impressive I asked how their £2 Regular Trading worked is it in the same account as standard dealing as Halifax have a weird way of doing it. Got no reply on this just as hint to ring their premium number.
Anybody had any experience of iWeb and can comment on their trading platform and how they do Regular Trading?
Thanks for the reply TA. I hadn’t really thought about chopping and changing as I was hoping to just set it up and leave it for the most part. I also assumed I’d have to buy the same thing for at least a couple of months in order to get the £1.50 commission. However, as long as it’s in the regular investment part of your account you can change it every month if you like (that’s what I’ve just been told at least). So I guess I’ll have to pick up the ETFs every 3 months and maybe the Emerging Markets fund every 6 to cover the minimum. It’s a bit more faffing than I’d like but I suppose it’s better than coughing up £80 a year.
I can’t find any info on iWebs minimum investment amounts though but I think TD may be the way to go. I just may have to swap the gilt funds to something else.
Thanks for your help.
Rob
Thanks TA for reply. Unfortunately not drip feeding at the moment so would just have to let dividends accumulate into a reasonable amount before re-investing.
I have some experience of TD Regular trading and can explain how it works. You have to convert your ISA from a regular one (you cannot go back not that there is much reason to do so) and they are expecting regular amounts to go into the account every month. You can chop and change what you buy every month and add to existing holdings to average down for example but there is a long period (2-3 weeks) after you enter what you want to buy in their screen before the transaction goes ahead on a number of regular trading days. You pick one of these. Not worth buying less than £150-200 a time compared with the regular trading costs for a £1000 deal. Unlike III, where you could decide the night before what you wanted to buy.
This is turning into a real pain in the arse. Despite endless phone calls about how I need to do this and their website being more than a little confusing it turns out that I hadn’t even opened an ISA just a regular old trading account. TD may be the best option but I have no confidence in the people on the end of the phone at all.
Well I phoned Iweb and they claim regular investing goes into the same account and you can do it weekly (which I doubt) and use funds in your account to reinvest dividends in this way. They also claimed to allow limits on International Trades which III does not have. If anybody has an account with them and knows anything about them please say. (I gather they are owned by Halifax so it could be sold off in the future.)
TD Direct has a very high number of markets to trade upon and allows limits on international shares and it is a professional and reliable service. However for regular investing you need a regular investing account and they are expecting you to make regular investments from your bank account not just occasional reinvestment of dividends. If you find the ISA Transfer Form on their site fill it in and send it, I think all will be well. For some reason the staff do not want to do ISA transfers but I did receive a thank you email from the boss when I managed it!
Have been reluctant to do any ship-jumping while everyone is still ‘adjusting’ their fees. Alliance Trust – previously a pretty good option – have whacked up their fees today. The choices are getting fewer and fewer. . .
I wish to invest £100 per month in a fund.
Would it be better to apply direct to the company?
I’m in the process of transferring my ISA from ii to TD.
It seems ii have today taken a £20 quarterly fee out my ISA account which I explicity told them not to do. I was assured this would not happen.
Anyone else in the same boat?
Keep eye on your Inteactive Investor account. They placed a buy order for my from my dividends, then deducted the quarterly charge and then stopped the buy order due to lack of available cash. Very inefficient operation.
@Allan. This is from the II website regarding a fee free exit.
“If we receive your instruction to close your account or stock transfer form before 31 July 2012, you will not need to pay the first quarterly fee. If we receive your instruction / stock transfer form by 5pm on 30 June 2012 the quarterly fee will not be applied to your account – otherwise we will refund the fee as part of a fee free exit.”
The last part of the last sentence suggests they will refund it if they take it before they receive the transfer order. I need to check my own account too but I will be making sure its refunded if they take it.
Hi Rob.
Your probably correct- but I suspect the £20 will not be returned within the ISA wrapper. I was assured when I spoke to them that the £20 would not be taken out my ISA- I even offered to put £20 cash into my trading account to ensure my ISA would not be touched- no need I was told.
I’m annoyed at ii for telling me blatant lies more than anything. Anyway, I will persue as I’ve got all the details of my phone call.
The more I look into the options, the more tempted I become to just swallow the iii charges, and do a couple of trades a quarter to ‘use up’ the £20… My portfolio is small (£5k) with 9 separate stocks in it – I don’t do funds or anything more exotic than straight equities, so all the fund fee benefits are useless to me.
TD have an annual fee if your portfolio is below £5,100 (counted at the end of May – who knows where we’ll be by then???). DRIP service costs £1.50 and you must have at least £10 divi to reinvest – eg my BP holding was top-sliced and I’ve therefore dropped the quarterly divi to about £7. I couldn’t reinvest that with TD. iii only charge the stamp duty, and you can reinvest any amount sufficient for a single share.
SelfTrade also charge £1.50 for DRIP service – with 20 divi payouts per year in my portfolio, that’s £30 gone straightaway. They also seem to only allow you to have current and ex-FTSE100 shares. Transferring for me would mean at least one stock I hold would have to be liquidated, and I’d have to realise a £400 loss which I’m hopeful of seeing recover…
So it seems whether I stay or go, the provider will take a similar slice of my meagre wealth, and at least the iii fees can be offset against trading commission, so I may as well stay and trade a little bit more, develop a more nimble style.
Either way, it seems the landscape has become more hostile for the small investor.
@Macs – I’ve ended up doing exactly what you’re thinking of – I’ve got about 15K so far in my ISA (about 10 trackers/investment trusts) but the flat-rate DRIP charges / minimum dividend value put me off moving to TD who I was initially going to transfer to.
Thanks for that, Andrew – glad it’s not just me 🙂
Hi, I’ve got a question about switching:
“You’ll also retain the goodness of your ISA wrapper that you’d lose if you manually sold up to avoid transfer fees.”
– I was planning to sell all my holdings in my ISA, and then transfer out only the cash to a new provider. So I will be out of the market but only pay the transfer fee and also the selling charges, which still come up to cheaper than £15 per line. Please can anyone tell me if this is alright to do? Thank you!
Hi Jessica,
As long as you go through an official transfer process then you won’t lose your ISA’s tax shield, hopefully this piece makes things clearer: http://monevator.com/how-to-transfer-a-stocks-and-shares-isa/
I made the jump to iWeb as they confirmed no annual admin charges.
– Setting up online was simple and took 10 mins, only opened a share dealing account as I use Cavendish online for funds.
– Sent II a secure message that I was moving before the dead line and they confirmed there would be no £20 charge.
They did ask/request for the transfer to be completed by end of July.
– Sent transfer form (pretty simple) to iWeb by post.
I’ll let you know how fast/smooth the transfer is.
I only registered an account on Fidelity Fundsnetwork yesterday. I am very surprised no one has recommended it as as far as I know it doesn’t charge admin fees and most of the tracker funds are available.
Is there anyone else using Fidelity as a platform for tracker funds? Or shall I move to TD?
@ Newbie – Fidelity is a decent choice as long as the funds you want are available there. Last time I looked at Fidelity it didn’t have the ETFs I wanted.
Newbie – I use fidelity for fund management via an execution company called cavendishonline.co.uk (reduced charges and trail paid direct) but the fundsnetwork is quick and reliable service.
But in my case fidelity has limited funds and for share dealing they are expensive and provide limited service.
Hi, I have a question about DRIP charges. I think I’ve just worked out that Hargreaves Lansdown are a nightmare for DRIP charging – at least i think they are, or are not following orders to reinvest.
As DRIP seems the key to best returns on shares, can anyone recommend the best for this? think I’m going to end up keeping my shares & funds on separate platforms at this rate 🙁
@Newbie – I’ve been using Fidelity for years for buying cheap index funds in an ISA only (I don’t buy anything else). I was also a bit worried that I was doing something wrong as Fidelity rarely seems to get a look-in on investment forums. However I’ve not yet spotted any catch. No obvious charges beyond the index fund TER that I’ve noticed [yet]. I’ve moved in ISAs from elsewhere smoothly (they occasionally do cashback deals). I’ve also switched between trackers with no problems.
Finally my II share dealing account has zeroised (sorry Americanism) after completing the move forms back in early July and shares have moved out.
My iweb account is still empty, hoping the move will take only the 3 days of the bank holiday.
iii are certainly dragging their heels with the transfers. 3 inveset trusts have been moved but I’m still waiting for the funds to transfer. Deliberate? Maybe. But I’m glad I’m getting shot of them now.
I’ve also noticed that dividends from two investment trusts that were transferred from iii to TD at the beginning of August were credited to my iii account at the end of August, after they were transferred. Is that to be expected as a transfer is (still) being completed or are iii just being monumentally rubbish? Of course I would hate for any future dividends to wind up being sent to these guys after I’d left. And I wouldn’t put it past them to do it.
Hi Accumulator
really looking forward to the dividend series.
I had a look into TD – which account are people using for passive investing that is largely ISA based with perhaps some extra on top? TD web site has so many accounts…
Finally my shares have appeard on iweb sharedealing.
Smooth enough in that all moved and there was little confusion, a few prompts, via secure messaging, for updates. So all told about 8 weeks to transfer. II leave the account open unless you request it to be closed.
@spacebadger — You write “unless you request it to be closed” — just to check, you realize we’re not in any way affiliated with Interactive Investor? It’s nothing to do with us.
Just checking, appreciate it was probably a typo. 🙂
Sorry for the confusion, yes I meant Interactive Investor.
@ bmf – check out the TD Trading ISA account.
Accumulator – ok saw this. This looks ideal for the ISA. I can stick 1K in a month.
I was just curious about how to go beyond that? If I’m maxing out my ISA allowance and want to stick some more into a passive fund. I think perhaps “Regular investor” ticks both boxes as it also allows ISA contributions. If anyone has experience of this situation and knows otherwise please do advise.
Once you’ve maxed out your ISA you can invest more in a TD Trading Account or TD SIPP. TD will happily let you ‘invest regularly’ in any of ’em.
Accumulator – understood. Thanks very much.
Well. After a couple months my account has moved from iii to TD direct. A bit of a long and painful process but I would hope that I would be happy now however the cracks might be starting to appear at TD already.
Now i know that one of the nice things about TD was it allowed regular investments and regular dividend reinvestment. And i could see this when I was on my account last week – except now it doesn’t. You can only do either. So if you want to reinvest dividends you can but not if you want to add money monthly and vice verse.
Anyone else seen this yet?
Now i know that reinvesting £50 dividends at £1.50 a pop isn’t really good practice so maybe this is a good thing in that it will force me to let them accumulate before adding them to something but all the same its a pain and not what i expected.
And the portfolio not showing percentages – that’s just pants.
Hope there’s not more to come.
Oh what out for transfer fees if you fancy dabbling in funds too.
Did I also see that HSBC had reduced the TER on RDR friendly to just 0.1%?
Cheers All
Geo
I’m also starting to worry about TD. All my funds have now been transferred but on trying to set up the regular investment part the website is automatically adding 1.50 commission to everything including funds, which should be free. I’ve emailed them about it. I’ll let you know what they say. If I try and buy the same fund via my portfolio it’s free. I hope it’s just an error otherwise I’m gonna be really pissed.
Rob
My ISA Shares transfer from iii to TD is still in process and hasn’t been completed after nearly 2 months of waiting. Is anyone else experiencing long waiting times? When I called TD they explained that their custody provider called Cofunds is acting as an intermediary helping to transfer the funds and they are having trouble to deal with a lot of similar requests in regards to customers switching accounts and that it mainly affects index tracker funds. I really wonder how this whole transfer process works and if there is any selling/re-buying of shares involved and that is why it is taking so long (whereas I thought it is literally just a transfer of my account). Anyways – thought I share my experience and will carry on waiting (Zzzz)…
Same with me @Mischa. Long, long time waiting for my funds to transfer to iWeb. Just past three months now. Nobody at either end seems to know where they are at the moment as they disappeared from iii a month ago and haven’t reappeared at iWeb.
Seems strange. Why are these things so complicated? Surely it’s just a matter of telling the fund / share people that a new company is now the nominee for your holding?
When I’m King, things will be different…
Three months?! That seems ridiculous. Do you stay in the market over that time?
It took over 2 months for my bits to get moved over from iii to TD, shares went first then funds took longer but you should never theoretically be out of the market. Mine were in Limbo at one point and were flagged as sold on iii but the same price base come through on TD in the end.
Bit of a pain, lets hope its worth it 😉
Good luck getting your bits transferred.
@Geo, thanks, that’s reassuring!
Hi All,
I am trying to decide which provider to use to set up a ISA without incurring too many fees. I would be starting by investing a lump sum of £2000 and then paying in £60 a month, I could pay it in quarterly if this helps alleviate transaction costs.
Am I right in thinking that if I choose the ‘HSBC FTSE 100 INDEX R Acc fund’ from the Pound Stretcher portfolio with Bestinvest I would end up paying a quarterly custody fee (currently £12.50 plus VAT) as the fund does not pay any commission to best invest?
Otherwise Bestinvest looked good for my needs.
If this is the case, if anyone has any suggestions of a provider that would suit my needs that would be greatfully received. I would probably add a gilt index fund too. A lot of what I read is which is the best option for people with £10k to start with.
I want to start investing but am overwhelmed by all the charges that I may miss and the potential changes from the RDR.
Thanks
@ Buje – You are correct, Bestinvest would charge you a custody fee. Have you looked at Cavendish Online? I think they could suit your circumstances. Also see the broker round-up in this post: http://monevator.com/rdr-execution-only/
@The Accumulator – Thanks for the response. I have had a look at Cavendish and they seem to fit what I need from what I can gather. They seems very cheap and people have been saying good things about them
I think for most of their funds they require 50 a month minimum drip feed. Do you know of any funds that are similar to the Vanguard funds that offer one fund that is diversified into different asset classes that I may be able to use through cavendish? Just a keyword to search for would be useful as I dont know if there is a specific name for these types of fund if they exist.
Thanks
You could try the HSBC World index funds. TER / OCF is a fair bit higher than Vanguard. I wrote a piece here about them: http://monevator.com/hsbc-world-index-portfolio-fund-of-funds/
I think Fidelity have an index-based fund of fund too, but I haven’t checked it out. Again, I think the TER was pretty stiff.
Blackrock have their RDR friendly Consensus funds, two of which are on HL now, although these are higher equity funds, 100% and 85%. TER’s of approx 0.6% although you lose about 0.5% on purchase due to the spread (I think accumulator did a bit on the spreads on black rock trackers in an article). I think although these aren’t cheaper than vanguard (however on HL for instance Blackrock is cheaper until you have about 7k in there), do consider that making your life easier and forgetting about things does help. You could HSBC Track, ETF things and get yourself in knots. Passive in mind i think is one thing about this style of investing that should be considered – invest, forget and live life a little. ( Something i need to do more of)
Good luck
Hi
I had been a user of Interactive Investor for over two years. I was shocked upon one of my infrequent log-ons, to discover I owed them £22. My shares were still there, but they had decided to introduce a new £20 quarterly fee, the benefits of which are only evident to regular traders. Basically they have stiffed the investors that just leave their shares alone, to check on them every four-six months, like I do.
I did ask them if there was anything that could be done, to which I received this reply!!!
“Thank you for your message dated 15th November 2012. I am sorry that we have fallen short of your expectations. I have investigated the point(s) you have made.
Secure Messages were sent on 31 May 2012 and 21 June 2012 informing you of the changes to our prices and your options. In addition to this, e-mails were sent out on the same dates and we updated our website to reflect the impending change.
I appreciate you have stated that this was not sufficient however, as confirmed in clause 12.12 and 12.16 of our Terms and Conditions, we will send all written notices to you via Secure Message. We will also contact you via email to inform you of any important communications that require your action. Such messages shall be deemed to have been received by you upon the date of sending.
We have introduced the fee in adherence with Clause 20.1 of our Terms and Conditions by providing you with 20 working days notice. We have also ensured the introduction and communication of the changes has satisfied our regulatory obligations. Furthermore, we have provided fee-free exits from our service until 31 July 2012.”
A nice robotic quotation of the terms and conditions, which as we all know is akin to a company advising you they have no care for youm just your money.
Stay well clear, they are very, very underhanded and will think nothing of bleeding you for all you are worth. I intend to close my account as soon as my shares have been sold.
Charlatans.
Vanguard on TD?
I just checked my TD account and have been looking to consolidate into easier passive strategies and to my surprise i saw vanguard is on there now with life-strategy. I can’t see this has been mentioned but sorry if it has.
Cheers
Brilliant find
Vanguard lifestyle 60%
TD–Fees .31
H-L–Fees .24+.31+£24 platform
is there a fee TDfor holding in Isa?
Can you buy it Geo? TD use Morningstar to supply their fund database so Vanguard funds have previously turned up on TD via that i.e. they’re on the database but not actually available to buy.
TD don’t charge a fee for ISA if your funds are worth over £5600 or thereabouts. That’s from memory, I’m not at home to check precisely right now.
phoned TD up–couldnt get anyone from trading desk
person thinks it started a fort-night ago
going to phone me back monday with info
think its £5100 in your isa fund by may – no charges
will post info mon if its 100% pos or 100% neg
Vanguard appears on their fund list, but also on the regular invest list. Shame no Irish funds here or on hl yet, smaller companies index options bare for UK investors.
@ Geo – you’re absolutely right. I’ve finally been able to log in to my TD account and the UK domiciled funds are there, including all the LifeStrategy funds.
You can also get the UK equity fund, UK equity income, US equity, Dev World ex UK, Dev Europe ex UK, Long Duration Gilts and Index Linked gilts.
I can’t see any changes to their rates and charges so that finally means Vanguard with no platform fee, no trading fees, and no admin charge if you’re in an ISA and hold more than £5100 in assets.
A LifeStrategy portfolio is a no-brainer under these circumstances.
Geo
thx again–TD confirmed they now do vanguard–phonecall today
so there .22+£24 cheaper than H-L
Cool, glad its all confirmed. The dilution levy will still apply with is the .22 i think you mention. Accumulator you are right, i think most people would be best off just life styling – if only i could bring myself to do this, I would be so much happier i think 😉 I’ve been rereading Smarter Investing, realizing how much I may have forgotten. I missed before his note about the 20 year bull market (1980-2000) distorting our perceptions of performance, which Monkey with a Pin highlights much more -5% it is. Also loved rereading about Bolton and how for 10years he under-performed!
Lets hope with TD there are no stray charges that we’ve missed or that will arise. Best of luck all. Well luck shouldn’t actually be part of this game 😉
“Lets hope with TD there are no stray charges that we’ve missed or that will arise.”
My only concerns are the £50 transfer out / account closure fees.
@ David Stuart – thanks for the update. Some readers on another thread are getting inconsistent answers from TD, though this is fairly typical when new funds come in.
@ Geo – I know what you mean. I feel like I’ve invested too much of myself into this to just bung everything into a LifeStrategy fund and come back 20 years later when it’s done – like a slow cooker. I may well be better off accepting a few extra basis points in cost to remove my flawed emotions from the picture.
@ Jonny – I think TD are quite reasonable for account closure charges. It’s £50 plus VAT for the whole account, isn’t it? Most places charge £15 – £25 per investment.
@The Accumulator.
It’s just hard to contemplate paying to close something, having closed a million savings accounts/credit cards etc. without ever being charged.
TBH It just inconveniences my personal situation (hoping to start a small regular LifeStrategy investment into a S&S ISA, until it grows to a size suitable to be put into a SIPP). With TD I’d have to offset the £50 charge too. (It’s probably best just to use a regular saver in these circumstances, though I’ll have to crunch the figures!)
I’m very interested in investing a lump sum of £5,100+ into the Vanguard LifeStrategy 60% equity fund. Just so I can be unequivocally clear what I’m getting myself into, please can someone answer the following:
1.) is it better to drip feed into the Vanguard fund? How much of a difference does it make?
2.) what are the exact fees I’ll be paying? (say if I invest £10,000 lump sum)
Kind regards
*I crucially forgot to add that I’ll be using TD Direct in the above post
I hate to come across all doom and gloom, but the TD Direct situation with Vanguard seems too good to be true. I think anyone switching to them for this purpose should do so in the expectation that TD Direct are likely to hike their fees at some point, because at present they are buying and selling investors’ Vanguard holdings and taking care of custody and record-keeping and earning absolutely nothing. That can’t be sustainable.
However, if you are happy to go through the hassle of transferring out if necessary, the transfer fee is not too bad, so it might be worth taking the risk on how long you get to benefit from the current lack of charges.
I think that’s fair comment, Ivan. It’s either a loss-leader or a tactical move as customers migrate during RDR. Interestingly the same thing is going on in the States with Charles Schwab essentially providing brokerage services for free. The Investor linked to a Larry Swedroe interview that talked about the zero fee phenomenon in last week’s Weekend Reading. According to Larry, Schwab operate a cross-sell model, hoping to snare you with credit cards and bank accounts etc. I’m not saying this is the TD plan, I just find it an interesting parallel.
This just in from TD Investing on charges (I’ve edited the full spiel so you get it fat free):
Updates to our Rates and Charges that will come into effect from 1st February 2013.
Our Trading Account Management Fee remains £12.50 plus VAT per quarter. The fee will not be charged if you:
Have a funds (Unit Trusts/OEICs) valuation of £10,000 or more in your portfolio or
Have a SIPP or ISA linked to your Trading Account.
We will continue to waive this fee if you trade once or more per quarter. We will also continue to waive the fee based on your individual portfolio valuation but the minimum required is increasing from £7,500 to £15,000.
No changes to our ISA and SIPP fees
Our ISA Administration Fee remains unchanged and continues to be waived if you:
Have a balance in your ISA of £5,100 or more or
Have a regular investing facility set up on the ISA.
Our TD SIPP Administration Fee remains unchanged at 0.25% of the value of the SIPP every 6 months (subject to a maximum of £100).
Online funds trades (Unit Trusts/OEICs) remain free of trading commission however funds trades by telephone will now be charged at £40 per trade.
New funds with no trail commission
Our fund pricing has not changed and we are pleased to introduce a new class of funds with no trail commission included in the Annual Management Charge.
TD Direct introducing a 0.35% platform fee for clean funds as from August 2013.
http://www.tddirectinvesting.co.uk/investment-choices/funds-unit-trusts-and-oeics/funds-pricing/
Thanks for the tip-off, Cisnes. That ends the mystery of how TD Direct can do it. They can’t.
Breakevens on 0.35% platform fee:
Alliance Trust @ £48 annual charge = £13,714
iii @ £80 annual charge = £22,857
HL @ £24 annual charge (1 fund portfolio) = £6857
Portfolios values below these breakeven rates are better off at TD (in a regular trading ISA).
There are dealing fees to account for at iii and Alliance Trust too. Estimate your likely annual dealing fees and add them to the annual charge / platform fee.
Then the calculation is: Total costs / 0.0035 = £breakeven
Interesting….. but presumably this doesn’t apply to standard funds, so the non-clean HSBC funds? So, as TD list both of these the HSBC 100 standard would be 0.27% minus any trail rebate, the ‘clean’ c class would be 0.1% plus 0.35% = 0.45%. That sounds weird but this is how i read the new structure. Also there would be no difference to vanguard as its a non clean fund…?
Why is Vanguard non-clean? It pays no commission, so by TDD’s definition it is clean.
Similarly, the old HSBC tracker units pay no trail, so would incur the 0.35% charge. (I understand that they pay platform commission to some platforms who have enough clout to negotiate it, eg HL. But TDD’s definition of clean seems to be based on trail.)
I can see your logic, but purely using the TD fund screener using the new clean option, Vangaurd and ‘normal’ hsbc funds don’t appear in there. The link to the new structure still shows any funds paying less than 0.5% commission do not have the 0.35% platform fee.
I may be wrong though 😉
The old HSBC funds pay 0.1% in commission as can be seen by the uniform drop of 0.1% from dirty TERs to clean TERs. But I think these older funds will disappear. You’ll be able to hold them as legacy funds, but new investments will go into clean funds and you’ll pay the platform fee. That’s my guess anyway.
I can potentially see that with HSBC but its not as clear cut with Vanguard I guess/hope. Lifestrategy with a TER of 0.7 would be a pain. I was going to transfer some money from an HL isa over to TD…. not so sure now.
Accumulator, the 0.1% commission on old HSBC trackers is platform commission, not trail. By TDD’s stated definition, they are clean.
I agree they will probably disappear, but not unless and until platform commission is banned, which is not due until end of 2013 at the earliest.
Geo, the Vanguard funds do seem to be on TDD’s screener as “no commission” funds. I agree that the HSBC “retail” trackers are not listed in this category, but perhaps this is just a mistake.
I note that Invesco Perpetual High Income No Trail is included in that category, even though its AMC includes 0.25% platform commission. Interactive Investor is paying a rebate on this class of funds, so I think it is absolutely clear that Invesco is willing to pay platform commission on this class. So, maybe TDD is pocketing this platform commission and planning to charge the 0.35% platform fee on top. Or, I think more likely, TDD has waived its right to this commission so that it can claim that this fund class is clean, in the sense that they receive no commission from it. If so, then I think this is very misleading, because to me a clean fund is one on which the AMC includes nothing in respect of commission of any variety.
@Geo … I was going to do the same but discovered the additional 0.35% via these pages and pulled the plug on the transfer. I still reckon SWIP FTSE All Share at 0.1% plus the £2 platform fee from HL is the least costly option, at least for a single large(ish) holding. I achieve portfolio diversity via my spouses ISAs 😉
Am I reading it right that TD Direct’s .35% platform fee per fund is set at a minimum of £40 and therefore Hargreaves Lansdown’s £24 a year per fund works out the most cost effective broker? Also if their SIPPS are also £24 per fund then they work out as the best place to be?
@john
Where is the £40 minimum mentioned? News to me.
@ivanopinion (and everybody else!)
It seems I can’t see the £40 minimum anywhere…I swore I saw it…perhaps I dreamt it!
Back as you were then…
As for SIPPS…
I was just about to start moving from HL to TD, but am now thinking that there’s no point before they’ve clarified their RDR position on account charges. I’m paying £24 pa for each of 3 x Vanguard funds (the rest of my portfolio is EFTs, ITs and a handful of trackers and OEICS) = £72 across four accounts, which seems reasonable. I reckon if I move to minimise commission now, I could end up having to move again, and it’s bad enough paying their exit charges once. Can’t work out whether I’d be better off with the rebated commission or not now!
I moved to the UK recently and I am looking to open an ISA before the end of this fiscal year, meaning very soon. I see that TD is adding restrictions on when you are able to buy Funds: “Purchases can only be made on the first and third Wednesdays of each month, subject to change.” (from http://www.tddirectinvesting.co.uk/choose-an-account/trading-isa/~/media/uk/pdf/rates-charges-upcoming.ashx, page 3).
Is it a regular practice among Discount Brokers?
Don’t you find this a bit too restrictive?
I am also very confused with their Platform Fee. They are promoting clean funds (i.e. funds with no trail commission) but at the same time they waive the Platform Fee if trail commission is below 0.5% (which is the case for clean funds by definition). Shouldn’t they promote something that would generate more revenues to them? Why is it so important for them to have funds not paying trail commission as they rebate them to the customer anyway… Surely I am missing something here.
The website is also unclear, on the clean fund page they say “Pay no platform fee charges on clean funds until August 2013. The fee we will introduce at this time will be 0.35%. ” (http://www.tddirectinvesting.co.uk/investment-choices/funds-unit-trusts-and-oeics/introducing-clean-funds/). But they also say that “Funds paying Trail Commission of less than 0.5% annually” are waived (http://www.tddirectinvesting.co.uk/investment-choices/funds-unit-trusts-and-oeics/funds-pricing/). Does it mean that the rule of Trail Commission below or above 0.5% will disappear in August 2013 so that a Platform Fee of 0.35% will be applied whatever the fund?
@ GLR – the first and third Wednesday after the Epiphany thing, that’s for regular investment purchases. i.e. you get a discount rate if you place a monthly order. Brokers are able to offer the discount because they aggregate a large batch of orders on those particular days. It’s common, but you can also buy funds whenever you like, if you’re not interested in the discount. OEICs and Unit Trusts don’t attract trading charges anyway with TD, so there’s no need to buy them with a regular order.
Yes, the consensus is that TD will start charging a 0.35% fee on all funds in August. In other words, the current state of affairs is a loss leader to draw you in. There are alternatives: http://monevator.com/compare-uk-cheapest-online-brokers/
@The Accumulator – Thanks for the info. And good work on this website, there is plenty of useful information!
Just chased Hargreaves to determine their position on the RDR, but it seems they’re holding fire as long as possible now….
Dear Mrs & Mr Jamieson
Thank you for your email.
I can confirm that we are continuing to offer the existing retail unit classes of funds in the Vantage service for now. However, in due course we expect to offer clients the ability to buy “new” clean units of funds with no commission attached.
Before we can proceed we must wait for the final rules relating to “RDR 2” which are due to be issued at the end of April. These rules specifically applies to platforms such as Vantage.
Once we have the information from FCA, we will seek to analyse it quickly. We expect to be able to communicate with clients later in the summer about how the future availability of different types of fund unit will work, what the charging structure will be for holding such units on Vantage, and the status of existing retail units.
I have attached a copy of our guide to the Retail Distribution Review to this email for your reference.
I hope this has been of assistance to you, if you have any further queries please don’t hesitate to come back to me directly.
Kind regards,
Finn Henderson
Investment Helpdesk Consultant