Tricky times for HL ahead?
Discussion
Vanguard have announced they are launching their own low cost platform & HL shares dropped 8%:
http://www.telegraph.co.uk/investing/news/does-van...
HL are currently charging me £140-odd a month in fees so if I move my business to Vanguard I'll pay less in a year than HL charge in three months. It gets better than that though: I received a letter from Vanguard advising that, as I'm an existing customer, they will waive the 0.15% account fee for as long as I remain with them.
It will be interesting to see how good the interface & services offered on their platform are.
http://www.telegraph.co.uk/investing/news/does-van...
HL are currently charging me £140-odd a month in fees so if I move my business to Vanguard I'll pay less in a year than HL charge in three months. It gets better than that though: I received a letter from Vanguard advising that, as I'm an existing customer, they will waive the 0.15% account fee for as long as I remain with them.
It will be interesting to see how good the interface & services offered on their platform are.
HL (perhaps a slightly less overvalued stock now) trades on a very high multiple so is vulnerable to scare stories - especially those that reach as far as the mainstream media. Top marks to Vanguard for effective PR implementation!
HL has long had many competitors with well developed open-architecture platform propositions that undercut it on price. To date their proposition and effective customer engagement have supported their premium pricing.
If Vanguard were to decide to take them in on the open-architecture space I think there would be more of a reaction. I don't for one minute think Vanguard are going to do this.
HL has long had many competitors with well developed open-architecture platform propositions that undercut it on price. To date their proposition and effective customer engagement have supported their premium pricing.
If Vanguard were to decide to take them in on the open-architecture space I think there would be more of a reaction. I don't for one minute think Vanguard are going to do this.
Mr Pointy said:
Vanguard have announced they are launching their own low cost platform & HL shares dropped 8%:
http://www.telegraph.co.uk/investing/news/does-van...
HL are currently charging me £140-odd a month in fees so if I move my business to Vanguard I'll pay less in a year than HL charge in three months. It gets better than that though: I received a letter from Vanguard advising that, as I'm an existing customer, they will waive the 0.15% account fee for as long as I remain with them.
It will be interesting to see how good the interface & services offered on their platform are.
It's not a platform, by FCA definitions, as they're only offering their own products. Notwithstanding that, HL may be more stirred than shaken. The offering is an iron bomb more than it's a precision guided munition, and I'm sure HL will respond well - I'm not altogether sure that many HL clients invest small amounts into VLS anyway, and their proposition is still distinct. It's a great move for some though.http://www.telegraph.co.uk/investing/news/does-van...
HL are currently charging me £140-odd a month in fees so if I move my business to Vanguard I'll pay less in a year than HL charge in three months. It gets better than that though: I received a letter from Vanguard advising that, as I'm an existing customer, they will waive the 0.15% account fee for as long as I remain with them.
It will be interesting to see how good the interface & services offered on their platform are.
Also HL provide access to funds with discounts so you pay less in management fees.
Compare platforms very carefully, many don't have much invested in them and some are making a loss. Given that you don't own anything when investing through a platform, you are only entitled to the minimum protection(£85,000). One thing about HL is that they are big enough and viable enough to be a relatively safe place to invest.
And as noted, their fees are negotiable depending on size of investments.
If you want a ripoff platform, look no further than Cofunds...
Compare platforms very carefully, many don't have much invested in them and some are making a loss. Given that you don't own anything when investing through a platform, you are only entitled to the minimum protection(£85,000). One thing about HL is that they are big enough and viable enough to be a relatively safe place to invest.
And as noted, their fees are negotiable depending on size of investments.
If you want a ripoff platform, look no further than Cofunds...
TheMonster said:
PhilboSE said:
Given that you don't own anything when investing through a platform, you are only entitled to the minimum protection(£85,000)
Can you explain this further please?I recently moved platform and because of this element of risk, I looked at each of the candidates in detail. I was surprised to find out how little funds are invested in some platforms and how dodgy some of the platform finances are based on their Companies House filings.
PhilboSE said:
Sure. When you transfer cash £££ to a platform with an instruction to buy a fund (e.g. an OEIC) then the platform buys units in the fund in their name and then allocates you the rights to a share of their total holding (accumulated from all their investors in that fund) so the benefits (growth and income) related to your share go to you. However the units are legally owned by the platform, so if the platform goes belly up then you don't actually own anything independently of them. You would have to apply as a creditor to get something back. You would be entitled to the FSA protection which is currently £85,000. So you would be guaranteed to get that much back.
I recently moved platform and because of this element of risk, I looked at each of the candidates in detail. I was surprised to find out how little funds are invested in some platforms and how dodgy some of the platform finances are based on their Companies House filings.
This is not correct. In simple terms:I recently moved platform and because of this element of risk, I looked at each of the candidates in detail. I was surprised to find out how little funds are invested in some platforms and how dodgy some of the platform finances are based on their Companies House filings.
Fund platforms are required by FCA regulation to establish nominee companies to hold shares/units/funds for the "beneficial ownership" of underlying clients. The nominee companies are separate legal entities from the fund platforms, and regulation requires that client assets are clearly segregated from those of the fund platform itself. If a platform business were to fail commercially (eg it became loss making and ran out of funding), client assets would be entirely ring-fenced. Under regulatory supervision, responsibility for the nominee company and its associated assets would be moved to another platform.
If you looked at the balance sheets of the fund platform operators in companies house accounts filings, you would have been seeing the assets and liabilities of the platform companies themselves. These do not include the assets held by nominee companies on behalf of clients.
Edited by WindyCommon on Monday 22 May 07:20
FredClogs said:
Because as Windycommon has pointed out on another thread, when it comes to self investing people have a hard time discerning cost from value.
I agree with this cost vs value observation. I opted for a cheaper platform than HL, and the hassle was almost not worth it. YouInvest is a technical shambles, communications black-hole, and support is poor.However, the whole point of low cost funds is low cost. I wouldn't dispute that HL is better value than e.g. YouInvest, but I still want the lowest cost available, because the added usability and support doesn't actually help my investments grow; it just makes my life easier.
WindyCommon said:
PhilboSE said:
Sure. When you transfer cash £££ to a platform with an instruction to buy a fund (e.g. an OEIC) then the platform buys units in the fund in their name and then allocates you the rights to a share of their total holding (accumulated from all their investors in that fund) so the benefits (growth and income) related to your share go to you. However the units are legally owned by the platform, so if the platform goes belly up then you don't actually own anything independently of them. You would have to apply as a creditor to get something back. You would be entitled to the FSA protection which is currently £85,000. So you would be guaranteed to get that much back.
I recently moved platform and because of this element of risk, I looked at each of the candidates in detail. I was surprised to find out how little funds are invested in some platforms and how dodgy some of the platform finances are based on their Companies House filings.
This is not correct. In simple terms:I recently moved platform and because of this element of risk, I looked at each of the candidates in detail. I was surprised to find out how little funds are invested in some platforms and how dodgy some of the platform finances are based on their Companies House filings.
Fund platforms are required by FCA regulation to establish nominee companies to hold shares/units/funds for the "beneficial ownership" of underlying clients. The nominee companies are separate legal entities from the fund platforms, and regulation requires that client assets are clearly segregated from those of the fund platform itself. If a platform business were to fail commercially (eg it became loss making and ran out of funding), client assets would be entirely ring-fenced. Under regulatory supervision, responsibility for the nominee company and its associated assets would be moved to another platform.
If you looked at the balance sheets of the fund platform operators in companies house accounts filings, you would have been seeing the assets and liabilities of the platform companies themselves. These do not include the assets held by nominee companies on behalf of clients.
Edited by WindyCommon on Monday 22 May 07:20
The Companies House filings give detail on the platform business, and the amounts invested through them I got from other sources. Both were pretty eye opening for some of the smaller platforms.
PhilboSE said:
What I said wasn't incorrect, I just left out some of the details (nominee company) to avoid overload in the first post. The essential point is, that the individual doesn't actually own anything. You own the rights to something, but not the thing itself. Just to add that this doesn't unduly concern me - I am heavily invested through a platform.
The Companies House filings give detail on the platform business, and the amounts invested through them I got from other sources. Both were pretty eye opening for some of the smaller platforms.
Oh come on! You failed entirely to point out the critical separation that exists between client holdings and a platform businesses own assets. As a result your post (in a forum where there are many posters seeking help and reassurance with investment decisions) was downright misleading.The Companies House filings give detail on the platform business, and the amounts invested through them I got from other sources. Both were pretty eye opening for some of the smaller platforms.
Your follow up point about not the "individual not actually owning anything" is similarly flawed. Nominee ownership is a construct that exists at all levels of fund investment. When you own shares of a fund you don't own the underlying securities which - in turn - don't own the underlying assets of the companies in which they are invested.
CrouchingWayne said:
Can someone clarify what protection is available when using a platform? I understand there is the £85k protection, but am unsure how this applies to stocks and shares based investments via a platform.
Here's what one platform (Fidelity) says. Others will have similar statements.Fidelity said:
- What protection do I have under the client money and asset rules?
Unlike banks, investment firms, including Fidelity, are required to separate client money and assets from their own resources. We are not permitted to use client money and assets in the course of our own business activities and your money would be ring-fenced in the unlikely event that we became insolvent.
- What happens if a distributor becomes insolvent?
When you invest through a company that distributes funds, such as Fidelity, any cash held on your behalf is placed with a range of different banks in designated client bank accounts. As the cash is kept completely separate from Fidelity’s own money, if we became insolvent it would be returned to you in an orderly manner.
When you invest in funds, they are held by Fidelity using a nominee structure. This allows us to administer your investments efficiently, whilst ensuring that you are clearly identified as their owner. This means that, in the unlikely event of Fidelity becoming insolvent, your money cannot be touched by any creditors.
- What happens if a provider becomes insolvent?
For mutual funds such as OEICS or Unit Trusts, a trustee or depositary holds the legal title to the underlying stocks in the fund (i.e. they are not owned by the provider). This means that if a provider, such as Fidelity, gets into financial difficulty your investments would be protected from its creditors.
- What is the Financial Services Compensation Scheme?
The Financial Services Compensation Scheme (‘FSCS’) is an independent body set up by the Government under the Financial Services and Markets Act 2000 and funded by the financial services industry. As the “fund of last resort” for customers of authorised financial services firms, it can pay you compensation if a firm is in default and cannot meet any valid claims against it.
- In what circumstances might the FSCS apply to my investments?
The FSCS would only apply to your investments if the protection measures that distributors and providers have in place (as described above) were to fail.
The FSCS might apply if you lose money because your investments have not been administered correctly, or as a result of misrepresentation or fraud, and the authorised firm concerned has gone out of business and cannot pay compensation or return your investments or any cash held on your behalf.
The FSCS will not pay compensation if your investment performs poorly as a result of market conditions.
- Are there limits to the amount of FSCS compensation?
Yes. The maximum amount of compensation payable to an individual under the FSCS will depend on the type of financial product that you hold and who the claim is against.
If a provider is in default the limit is £50,000 per provider for UK domiciled mutual funds (OEICS and Unit Trusts).
If a distributor is in default there is a limit of £50,000.
If one of the banks used to hold client money is in default then the limit is £85,000.
If you would like to know more, please visit the FSCS website or call the FSCS on 0800 678 1100.
Unlike banks, investment firms, including Fidelity, are required to separate client money and assets from their own resources. We are not permitted to use client money and assets in the course of our own business activities and your money would be ring-fenced in the unlikely event that we became insolvent.
- What happens if a distributor becomes insolvent?
When you invest through a company that distributes funds, such as Fidelity, any cash held on your behalf is placed with a range of different banks in designated client bank accounts. As the cash is kept completely separate from Fidelity’s own money, if we became insolvent it would be returned to you in an orderly manner.
When you invest in funds, they are held by Fidelity using a nominee structure. This allows us to administer your investments efficiently, whilst ensuring that you are clearly identified as their owner. This means that, in the unlikely event of Fidelity becoming insolvent, your money cannot be touched by any creditors.
- What happens if a provider becomes insolvent?
For mutual funds such as OEICS or Unit Trusts, a trustee or depositary holds the legal title to the underlying stocks in the fund (i.e. they are not owned by the provider). This means that if a provider, such as Fidelity, gets into financial difficulty your investments would be protected from its creditors.
- What is the Financial Services Compensation Scheme?
The Financial Services Compensation Scheme (‘FSCS’) is an independent body set up by the Government under the Financial Services and Markets Act 2000 and funded by the financial services industry. As the “fund of last resort” for customers of authorised financial services firms, it can pay you compensation if a firm is in default and cannot meet any valid claims against it.
- In what circumstances might the FSCS apply to my investments?
The FSCS would only apply to your investments if the protection measures that distributors and providers have in place (as described above) were to fail.
The FSCS might apply if you lose money because your investments have not been administered correctly, or as a result of misrepresentation or fraud, and the authorised firm concerned has gone out of business and cannot pay compensation or return your investments or any cash held on your behalf.
The FSCS will not pay compensation if your investment performs poorly as a result of market conditions.
- Are there limits to the amount of FSCS compensation?
Yes. The maximum amount of compensation payable to an individual under the FSCS will depend on the type of financial product that you hold and who the claim is against.
If a provider is in default the limit is £50,000 per provider for UK domiciled mutual funds (OEICS and Unit Trusts).
If a distributor is in default there is a limit of £50,000.
If one of the banks used to hold client money is in default then the limit is £85,000.
If you would like to know more, please visit the FSCS website or call the FSCS on 0800 678 1100.
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