Question
Any comments on the new Bestinvest Select service Justin? The advertisorials I have seen look OK, including the FT, and allow purchase of shares and ETFs plus low cost entry to funds and some rebate of commission. The small print says that that a Custody Fee of £15 a quarter plus VAT is payable on each account, presumably your ISA and non-ISA accounts, if your accounts have non-commission paying investments. This is from the end of the first quarter and rebated commission, variable per fund, is payable after the first year. You may need a maths degree and lots of time to calculate if you are making a profit from the rebates if you use low cost trackers. It seems to make the idea of using trackers redundant.
Do you have any different or contrary observations that I might be missing?Answer
I recently wrote a review of the Bestinvest Select SIPP which you can view in the Candid Reviews section. But in summary my thoughts on the new service are as follows:
The charges, as you point out, are needlessly complex. For example, they vary depending on how much you have invested and whether trail commission is paid. I prefer the sippdeal approach (no annual fees and a single dealing fee) which is much cleaner and simpler. But it would be wrong to write off 'Select' just because of this.
If you have less than £50,000 invested then the Bestinvest Select service is pretty pointless. You won't benefit from any trail commission rebates and the dealing fee is an indifferent £12.50. Cavendish Online would be much cheaper for commission paying funds (held directly or in an ISA) while Sippdeal would be a more competitive SIPP option.
Invest £50,000 or more (which can include combined family portfolios) and things look a bit more interesting. Dealing fees (on shares/investment trusts/ETFs etc) fall to £7.50 and trail commission rebates kick in. While the dealing fee is a bit more than x-o.co.uk, it's the cheapest I'm aware of within a SIPP and, unlike Alliance Trust and sippdeal, it doesn't apply to funds. However, the trail commission rebates are nothing to write home about, at typically half the annual trail commission, i.e. 0.25%. Alliance Trust gives around double this, hence likely to be much better long longer term unless you're a very frequent trader.
As you mention there are annual 'wrapper' charges if you hold any non trail commission paying investments, which, let's face it, is almost inevitable in this day and age. Compared to some competitors the fees aren't excessive at £50 a year for the ISA and £100 for the SIPP (both plus VAT, charged quarterly), but it would be nicer not to have them at all.
All in all I think Bestinvest has come up with a good, but not outstanding, proposition for those with £50,000 or more invested. It kicks the Hargreaves Lansdown Vantage SIPP into touch (not hard these days) but is likely to be more expensive overall than Alliance Trust or Sippdeal (net of all charges and commission rebates). As for the ISA it's broadly comparable to Hargreaves Lansdown if you hold commission paying funds, that's to say there are cheaper alternatives around (e.g. Alliance Trust and Cavendish Online depending on what you hold and how often you trade).
Bottom line, if you want the cheapest deal then look elsewhere.
But the Select Service could be a useful alternative for existing Bestinvest clients with £50,000+ portfolios who like the company and its in-house fund research but don't benefit from or take advantage of the 'free' investment advice they should be receiving in return for the trail commission. Moving to Select means receiving some modest trail commission rebates, a wider investment choice and retaining access to the research (which, in my view, is higher quality than other discount brokers). The latter might even be sufficient reason for some to move across from competitors whose research is less rigorous - although you can view much of Bestinvest's research on their website for free...
Any comments on the new Bestinvest Select service Justin? The advertisorials I have seen look OK, including the FT, and allow purchase of shares and ETFs plus low cost entry to funds and some rebate of commission. The small print says that that a Custody Fee of £15 a quarter plus VAT is payable on each account, presumably your ISA and non-ISA accounts, if your accounts have non-commission paying investments. This is from the end of the first quarter and rebated commission, variable per fund, is payable after the first year. You may need a maths degree and lots of time to calculate if you are making a profit from the rebates if you use low cost trackers. It seems to make the idea of using trackers redundant.
Do you have any different or contrary observations that I might be missing?Answer
I recently wrote a review of the Bestinvest Select SIPP which you can view in the Candid Reviews section. But in summary my thoughts on the new service are as follows:
The charges, as you point out, are needlessly complex. For example, they vary depending on how much you have invested and whether trail commission is paid. I prefer the sippdeal approach (no annual fees and a single dealing fee) which is much cleaner and simpler. But it would be wrong to write off 'Select' just because of this.
If you have less than £50,000 invested then the Bestinvest Select service is pretty pointless. You won't benefit from any trail commission rebates and the dealing fee is an indifferent £12.50. Cavendish Online would be much cheaper for commission paying funds (held directly or in an ISA) while Sippdeal would be a more competitive SIPP option.
Invest £50,000 or more (which can include combined family portfolios) and things look a bit more interesting. Dealing fees (on shares/investment trusts/ETFs etc) fall to £7.50 and trail commission rebates kick in. While the dealing fee is a bit more than x-o.co.uk, it's the cheapest I'm aware of within a SIPP and, unlike Alliance Trust and sippdeal, it doesn't apply to funds. However, the trail commission rebates are nothing to write home about, at typically half the annual trail commission, i.e. 0.25%. Alliance Trust gives around double this, hence likely to be much better long longer term unless you're a very frequent trader.
As you mention there are annual 'wrapper' charges if you hold any non trail commission paying investments, which, let's face it, is almost inevitable in this day and age. Compared to some competitors the fees aren't excessive at £50 a year for the ISA and £100 for the SIPP (both plus VAT, charged quarterly), but it would be nicer not to have them at all.
All in all I think Bestinvest has come up with a good, but not outstanding, proposition for those with £50,000 or more invested. It kicks the Hargreaves Lansdown Vantage SIPP into touch (not hard these days) but is likely to be more expensive overall than Alliance Trust or Sippdeal (net of all charges and commission rebates). As for the ISA it's broadly comparable to Hargreaves Lansdown if you hold commission paying funds, that's to say there are cheaper alternatives around (e.g. Alliance Trust and Cavendish Online depending on what you hold and how often you trade).
Bottom line, if you want the cheapest deal then look elsewhere.
But the Select Service could be a useful alternative for existing Bestinvest clients with £50,000+ portfolios who like the company and its in-house fund research but don't benefit from or take advantage of the 'free' investment advice they should be receiving in return for the trail commission. Moving to Select means receiving some modest trail commission rebates, a wider investment choice and retaining access to the research (which, in my view, is higher quality than other discount brokers). The latter might even be sufficient reason for some to move across from competitors whose research is less rigorous - although you can view much of Bestinvest's research on their website for free...
Read this Q and A at http://www.candidmoney.com/questions/question500.aspx
No comments:
Post a Comment