Hargreaves clarifies price structure amid criticism

Danny Cox, head of financial planning for the FTSE 100-listed advisory firm, said the long-awaited charge list is expected to influence how other platforms respond to the requirement for commission-free ‘superclean’ pricing post-RDR.

In the initial announcement made on 15 January, the listed fund supermarket claimed its pricing undercuts rivals who have already declared their pricing, with the average annual management charge on a Wealth 150 fund set at 0.65 per cent compared to 0.75 per cent elsewhere.

A brochure is available on the website which lists a number of additional charges including a new fee to cover the work associated with some corporate actions, as well as charges for preparing probate valuations, closing accounts, transferring cash to other providers and transferring stocks between accounts within Hargreaves Lansdown.

Article continues after advert

One critic was Gina Miller, founder of the True and Fair Campaign for transparent costs, who said Hargreaves Lansdown had failed to provide one ‘ticket price’ for investors.

However Mr Cox defended the decision to introduce top-up charges for investors who hold investment trusts: £45 in the Isa and Fund & Share Account and £200 for the Sipp.

He said: “These caps reflect the fact that investment trusts attract a dealing charge. By combining the dealing charge with a capped platform, we believe we have struck a fair balance.”

The company has long promised to use its market clout to negotiate exclusive lower pricing from fund managers in the new charging climate, with 27 funds making the low-cost offshoot of the platform’s Wealth 150 list of recommended investment funds in line with industry expectations.

Reaction Round-up

Mark Polson, founder of platform consultancy the Lang Cat, said Hargreaves Lansdown may no longer be a place to hold investment trusts. Stressing that the company had abolished other charges, he added: “We have been asked: ‘why not have one simple charge?’ It should be remembered that Hargreaves Lansdown is the leader in many markets and offers a wide choice of investments and services. There are always going to be different charges for each.”

Daniel Garrod, research analyst director for Barclays, said: “The announced direct pricing structure is lower and more aggressive than expected. But the positive offset is that the superclean discounts Hargreaves has achieved out of the manufacturers are better than we were anticipating. We think this strategy to take down pricing is sensible to attract in significant new money post-RDR.”

David Hearne, adviser for London-based Satis Asset Management, said: “Hargreaves Lansdown slides nicely under 1 per cent if it is charging 54bps on the AMC for superclean funds. However issues with total expense ratios, ongoing charge figures and portfolio turnover rates remain.”