Question
My wife and I have an ISA each and invest directly with the providers, (Jupiter and Invesco) i have been reading that we could make a saving through investing via an independent broker, thereby saving on initial and annual charges.
Is it possible to change to a broker (and keep investing in the same funds) mid financial year, or is it best to wait until the next year to do this
Any assistance gratefully received.
Answer
Yes, you should be able to make a saving by using a discount broker who rebates both initial and ongoing annual (‘trail’) commission.
A discount broker will simply arrange the transaction for you. Because there’s very little effort on their part they’ll refund the initial commission (usually 3% for funds) and some or all of the trail commission (typically 0.5% a year). Those who refund all trail commission will charge a small ‘admin’ fee else they’ll end up with nothing.
To benefit from commission rebates you simply need to sign a letter or form that transfers the ‘agency’ across to the discount broker (they’ll supply this). This means they’re then entitled to receive the commission, which they can waive (effectively reducing your fund charges) or refund to you. This should cover your existing investments and ongoing savings into those funds.
Because you’ve purchased funds directly from the manager you won’t be getting any advice, so using a discount broker instead is really a no-brainer. You’ll save some money that would otherwise be pocketed by the fund manager.
The discounts should start to apply within weeks of initiating the process and the funds themselves will be unaffected, so there’s no need to delay. Once you’ve chosen a broker it’d make sense to proceed straight away. If, for any reason, you wish to change to a different broker in future you simply repeat the process.
Which discount broker should you use? If you’re happy as things are (i.e. you don’t need research information and guidance) I’d opt for a bare-bones service that gives maximum discounts/commission rebates.
You can view a comprehensive list of discount brokers along with typical discounts given in our ISA Discounts Action Plan. You may also find our Trail Commission Rebates Action Plan helpful.
My wife and I have an ISA each and invest directly with the providers, (Jupiter and Invesco) i have been reading that we could make a saving through investing via an independent broker, thereby saving on initial and annual charges.
Is it possible to change to a broker (and keep investing in the same funds) mid financial year, or is it best to wait until the next year to do this
Any assistance gratefully received.
Answer
Yes, you should be able to make a saving by using a discount broker who rebates both initial and ongoing annual (‘trail’) commission.
A discount broker will simply arrange the transaction for you. Because there’s very little effort on their part they’ll refund the initial commission (usually 3% for funds) and some or all of the trail commission (typically 0.5% a year). Those who refund all trail commission will charge a small ‘admin’ fee else they’ll end up with nothing.
To benefit from commission rebates you simply need to sign a letter or form that transfers the ‘agency’ across to the discount broker (they’ll supply this). This means they’re then entitled to receive the commission, which they can waive (effectively reducing your fund charges) or refund to you. This should cover your existing investments and ongoing savings into those funds.
Because you’ve purchased funds directly from the manager you won’t be getting any advice, so using a discount broker instead is really a no-brainer. You’ll save some money that would otherwise be pocketed by the fund manager.
The discounts should start to apply within weeks of initiating the process and the funds themselves will be unaffected, so there’s no need to delay. Once you’ve chosen a broker it’d make sense to proceed straight away. If, for any reason, you wish to change to a different broker in future you simply repeat the process.
Which discount broker should you use? If you’re happy as things are (i.e. you don’t need research information and guidance) I’d opt for a bare-bones service that gives maximum discounts/commission rebates.
You can view a comprehensive list of discount brokers along with typical discounts given in our ISA Discounts Action Plan. You may also find our Trail Commission Rebates Action Plan helpful.
Read this Q and A at http://www.candidmoney.com/questions/question304.aspx
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