Are my investments costing me a fortune?

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17th Oct '21 by Whonose

16 comments 1045 reads

I've just got my annual costs and charges disclosure from Fidelity and adding them up seems like a fairly large number.

My total Isa & investments accounts have increased from 550k to 620k over the past 12 months - my total charges come to £10772.

Charges are based on 0.5% to IFA , 0.20% Platform Charges & 1.06% Transaction charges.

I appreciate that my account valuation has increased nicely this year however I will still be paying a similar amount in future years even if increases are not as good.

It is only when I am told that the fund could give me an annual income of roughly 20K that the charges really start to look significant.

Any thoughts out there?

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About the Author

Whonose

Premium Member

16 comments

Rusty2

17th Oct '21

Time to look at other platforms, I don’t understand why you are paying platform and portfolio fees or are these transaction fees?

gus 1065

17th Oct '21

Yes, they’re expensive and I wasn’t that impressed with the service either. If Fidelity are costing you about 2% per annum that’s a big bite out of your potential returns.

Depending on what you need there are cheaper alternatives. I moved my SIPP to Vanguard at the end of last year. You can only invest in their own in house funds/ETFs (not shares or third party funds or ITs) of which there are about 75 to choose from, but a maximum flat per annum charge of £375 on an account of your size and ongoing funds charges from as low as 0.06% pa, so on say £500,000 that would be £675 pa (on a more typical 0.20% per annum charge the figure would be more like £1,375). Happy to have some low cost, vanilla ballast in my investment portfolio held here. For share dealing I use a more expensive separate online brokerage account (Charles Stanley Direct).

https://www.vanguardinvestor.c...

Gus.

DavidMcCabe

17th Oct '21

I am with Interactive Investor, and was attracted to their fixed cost and simple fee structure. For a SIPP, ISA, and trading account I pay less than £400 a year in fixed fees, and that gives me reduced charges (£3.99) on share purchases and sales. On a total investment of say £100k, this would be about 0.4%, which seems to be a common price from those organisations who charge a percentage fee. Obviously if the funds under management are larger, and I hope mine will increase as I contribute more, and get good returns, then this seems like a better and better choice.

I don't use an IFA and mostly buy shares direct, not funds, so cannot comment on these aspects.

II seem to have pretty good service, although I only contact them online. I use stockopedia for research, not II, so cannot comment on them in this respect.

Whonose

17th Oct '21

Yes - transaction fees but called portfolio fees by Fidelity

KevinS1

17th Oct '21

I use HL for mine and my wife's ISA & SIPPs.

The charges are fine as long as you stay away from unit-trusts. I do not use UT's, investing in shares & IT's only.

The SIPP charges are capped at £200pa - on each account

On the ISA the charges are capped at £45pa - on each account.

Dealing charges are where I spend most of my money - these cost from £5.95 to £11.95 per deal depending upon how many deals you make in the month - 20+ per month gives you the lowest charges.

If you invest in UT's the fees are ridiculous and could cost you 0.45% pa - but probably only about £2-3,00pa on your holdings. It appears you are being massively stung having paid nearly £11k

I don't use HL advice services although previously when investing in more UT's I did read a lot of their recommendations.

There are possibly cheaper platforms out there, but it would be a, lot of hassle to try and move everything so whilst I can keep my fees down low through shares & IT's only I will live with them, unless moving is made a lot easier.

Their website lays out the charges very clearly.

Dragon

17th Oct '21

If I include everything, transaction fees, stamp duty, sipp custody charges for 2 sipps, software, computers, books, seminars etc. Then my costs come to about 0.8% per year of total capital over an 11 year period. So I think you should be able to cut your fees in half. I'm sure there are people who manange lower than 0.8% with less trading and better portofolio performance.

Rusty2

18th Oct '21

I use Hargreaves Lansdown (LON:HL.) but have moved most of my share dealing to Ig Group (LON:IGG), dealing fees are considerably lower especially for US shares, which only cost 0.5% forex fee, (HL 1% plus £5.95 to £11.95) there are no dealing fees as long as you do 3 transactions, in the previous month. UK shares are £3 per transaction. So considerably less than HL.

But I agree it is a hassle moving not helped by HL, who want to hold onto your money/shares as long as possible. This is something the regulators should improve.

Ig Group (LON:IGG) don't do funds and don't cover Scandinavian markets, so I will probably keep some of my account with HL.

Momoko Miyamoto

18th Oct '21

you could reduce your charges significantly by moving to IG/HL/AJB/ii and holding investment trusts or ETFs (capped platform charges) instead of OIEC funds. I would question whether your IFA is worth 0.5% p.a. considering the portfolio performance compared to MSCI world index up 25.8% in 12m to end Sept.

UK_Investor_8888

18th Oct '21

I've had an unforgiveable problem with Fidelity in the past:

Bouncing a cheque on an authorised withdrawal request mere days before a divorce-house completion date. They didn't even bother with a courtesy phone call or email.

PLS1nve5t

19th Oct '21

Well transaction charges relate to how frequently you trade and any associated stamp duty - so that is down to you - or trades done on your behalf by the rip off IFA !!

The 0.2% platform charges sounds reasonable, but it depends, you may do better with a capped cost account (HL do £45 cap on ISA's, better deals may be available)

Sounds like the IFA element is the biggest con - do you really need an IFA's advice ?

Sorry but I have no sympathy for IFA's - legalised theft as far as I'm concerned - bunch of scum bag thieves.

Jeffvshepherd

19th Oct '21

Four years agoI looked into moving from HL to AJ Bell. I was told by AJ Bell that there is an 8 week transfer period and that HL were suffering delays due to the number of people wanting to move away. The situation may have improved by now.

Jeffvshepherd

19th Oct '21

I suggest ditching your IFA. It is easy to research which are the best fund managers to invest with if funds are your choice of investment. Trustnet rank fund managers performance.

I also suggest ditching Fidelity to another broker with cheaper fees. HL/AJB/ii are all significantly cheaper.

BlueFrew

19th Oct '21

I have my SIPP, ISA and the children's Junior ISAs with II. The fees are reasonable, especially with the trading credits. Dividend reinvestment is also very cheap at 99p. The only thing to watch out for is their forex charges are a bit of a rip off. However with the SIPP you can hold the proceeds of any sales or dividends in the currency you are paid in, so you only get hit once with forex charges. So any EU, Swiss or US purchases are made in the SIPP and UK stocks only in the ISA.

One thing II does have in its favour is that transfers out are free, so they will hopefully stay competitive on fees. Hopefully no emails telling me they are putting their fees up by 20% for my convenience (I'm looking at you AJ Bell).

Rusty2

19th Oct '21

Many platforms the exit fees are free, the problem is the time it can take and during that time you can’t trade these stocks or use the money if it in cash.

garbetklb

19th Oct '21

My experience with IFAs is not good - I inherited a couple when my father died and I took over mum's finances.

The investments all performed with fair mediocrity. But the admin was appalling :

2 different IFAs failed to suggest that having an additional Trustee (to my elderly parents) on a couple of investments might be a good idea - resulting in loss of control & huge hassle when dad died & mum became mentally incompetent. One of them ignored specific advice to do this by the provider.

1 set up a series of investments in my parents' grandchildren's names - but in fact set them up in my parents' names, negating the whole exercise. Then demonstrably lied about the whole thing.

But we got regular requests for investment reviews - which consisted of handing over slick (bought in) presentations outlining portfolio splits, risk factors etc. But no coherent suggestions of what might be best.

I concluded that their only point was to provide information on taxation aspects and the range of products to address this. But much better to execute yourself.

Revs8

19th Oct '21

AJB Youinvest is a very good platform. Low cost, super easy access and trading.

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Whonose

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