Question
I'm trying to figure out which dicount broker to use for a new ISA and to transfer previous ISAs to. Most comparisons use the example of a small portfolio of £10k and a large one of £100k. I am currently in between. Also I have a couple of other factors to take into account. I wonder if, based on the following requirments, you could advise me on which discount broker to use:
1) My current ISAs are worth ~£40k. They are split fairly evenly between CoFunds, Fundsnetwork, HL and direct with Jupiter. I want to transfer all to a single provider (doesn't matter whether this is as stock or cash as I want to change some of the funds anyway).
2) I want to start a new ISA as a regular (once a month) investor, investing the full ISA allowance of £11,280 this year, and hopefully the same next year onwards also.
3) The monthly investment would likely be split between, say, 5 funds/trusts
4) I want to be able to hold Investment Trusts as well as Unit Trusts.
5) I want to be able to invest in a wide range of funds including smaller name funds like MFM Slater Growth
5) I don't need lots of investment research tools from the provider as there are plenty of other places to get them.
I was going to go with HL but they are not competitive on rebates. I think Alliance Trust might be best, but I am worried about how their dealing charges will impact a regular saver who is investing in 5 funds/trusts each month (don't they even charge a fee to reinvest the rebate they have given you!?!).
I also have a small SIPP currently with HL worth about £12k. I may or may not add to this in the future, would it be best to move this to the same new broker also?
Thanks in advance for your reply.Answer
I'm afraid it's beyond the scope of this to give specific advice (the FSA would probably hunt me down!), but happy to give you some pointers I hope you'll find helpful.
Maybe a good place to start is to take a quick look at each of the main contenders to see how they might meet your needs:
Interactive Investor - full trail commission/platform fee rebates and investment choice, including shares, but £10 dealing charge won't be cost effective for your monthly contributions (£1.50 monthly dealing only available for shares, not funds). £80 annual charge includes 8 trades.
Alliance Trust Savings - full trail commission /platform fee rebates and offers access to shares, but fund choice more limited than most (e.g. Slater Growth not currently available). £1.50 monthly dealing includes funds, which is helpful. £48 annual ISA charge. Fund rebates are paid into a cash account so yes, you'll pay a dealing fee to reinvest. However, I expect Alliance Trust (and platforms in general) to move towards using institutional units (whose annual charge is effectively net of these rebates) over the next year or two, so this issue should subside.
Cavendish Online - full trail commission rebate and no admin or dealing charges. Good, simple deal for funds, especially monthly saving, but no share trading available. Uses the FundsNetwork platform which offers a fairly decent range of funds, including Slater Growth.
Club finance Frequent Trader - full trail commission/platform fee rebates and 50p share dealing, but 0.35% annual fee. Good value if you'll often trade shares else annual fee will take its toll.
Bestinvest and Hargreaves Lansdown offer share dealing and don't charge fund dealing fees, but their ISA trail commission rebates are typically only around one third of those offered by the companies above. Plus there are extra ISA/SIPP charges if you want to hold shares/non-trail commission paying funds.
In summary, there doesn't appear to be a single perfect solution. Alliance Trust looks the cheapest if you want share dealing too, the downside being the £48 annual ISA charge and fund dealing fees - although the £1.50 monthly dealing facility helps. Plus some of the funds you want to buy may be unavailable.
Cavendish Online could work out cheaper for funds on a portfolio of c£50,000, thanks to no ISA charge or dealing fees, despite annual rebates generally being a bit lower than Alliance Trust. However, lack of share dealing probably rules them out for you.
And the others will likely end up more expensive overall.
You could consider using Cavendish Online for funds and Sippdeal for share dealing. Sippdeal doesn't charge an ISA (or SIPP) admin fee and offers monthly dealing for £1.50 (covering FTSE 350 shares plus a selection of investment trusts and ETFs), although their trail commission rebates are low hence not suggesting them for funds. More hassle than using just one platform, but could come out the cheapest route overall.
As for your SIPP, Hargreaves Lansdown doesn't rebate any trail commission, but equally doesn't charge an annual SIPP fee when only holding trail commission paying funds. However, hold shares and you'll pay 0.5% capped at £200 per annum and non-commission paying funds are charged at £1 or £2 each per month..
If you stick to commission paying funds HL will probably end up the cheapest SIPP for a £12,000 pension fund, so little reason to move. But if their other charges kick in then by all means consider another discount broker.
I'm trying to figure out which dicount broker to use for a new ISA and to transfer previous ISAs to. Most comparisons use the example of a small portfolio of £10k and a large one of £100k. I am currently in between. Also I have a couple of other factors to take into account. I wonder if, based on the following requirments, you could advise me on which discount broker to use:
1) My current ISAs are worth ~£40k. They are split fairly evenly between CoFunds, Fundsnetwork, HL and direct with Jupiter. I want to transfer all to a single provider (doesn't matter whether this is as stock or cash as I want to change some of the funds anyway).
2) I want to start a new ISA as a regular (once a month) investor, investing the full ISA allowance of £11,280 this year, and hopefully the same next year onwards also.
3) The monthly investment would likely be split between, say, 5 funds/trusts
4) I want to be able to hold Investment Trusts as well as Unit Trusts.
5) I want to be able to invest in a wide range of funds including smaller name funds like MFM Slater Growth
5) I don't need lots of investment research tools from the provider as there are plenty of other places to get them.
I was going to go with HL but they are not competitive on rebates. I think Alliance Trust might be best, but I am worried about how their dealing charges will impact a regular saver who is investing in 5 funds/trusts each month (don't they even charge a fee to reinvest the rebate they have given you!?!).
I also have a small SIPP currently with HL worth about £12k. I may or may not add to this in the future, would it be best to move this to the same new broker also?
Thanks in advance for your reply.Answer
I'm afraid it's beyond the scope of this to give specific advice (the FSA would probably hunt me down!), but happy to give you some pointers I hope you'll find helpful.
Maybe a good place to start is to take a quick look at each of the main contenders to see how they might meet your needs:
Interactive Investor - full trail commission/platform fee rebates and investment choice, including shares, but £10 dealing charge won't be cost effective for your monthly contributions (£1.50 monthly dealing only available for shares, not funds). £80 annual charge includes 8 trades.
Alliance Trust Savings - full trail commission /platform fee rebates and offers access to shares, but fund choice more limited than most (e.g. Slater Growth not currently available). £1.50 monthly dealing includes funds, which is helpful. £48 annual ISA charge. Fund rebates are paid into a cash account so yes, you'll pay a dealing fee to reinvest. However, I expect Alliance Trust (and platforms in general) to move towards using institutional units (whose annual charge is effectively net of these rebates) over the next year or two, so this issue should subside.
Cavendish Online - full trail commission rebate and no admin or dealing charges. Good, simple deal for funds, especially monthly saving, but no share trading available. Uses the FundsNetwork platform which offers a fairly decent range of funds, including Slater Growth.
Club finance Frequent Trader - full trail commission/platform fee rebates and 50p share dealing, but 0.35% annual fee. Good value if you'll often trade shares else annual fee will take its toll.
Bestinvest and Hargreaves Lansdown offer share dealing and don't charge fund dealing fees, but their ISA trail commission rebates are typically only around one third of those offered by the companies above. Plus there are extra ISA/SIPP charges if you want to hold shares/non-trail commission paying funds.
In summary, there doesn't appear to be a single perfect solution. Alliance Trust looks the cheapest if you want share dealing too, the downside being the £48 annual ISA charge and fund dealing fees - although the £1.50 monthly dealing facility helps. Plus some of the funds you want to buy may be unavailable.
Cavendish Online could work out cheaper for funds on a portfolio of c£50,000, thanks to no ISA charge or dealing fees, despite annual rebates generally being a bit lower than Alliance Trust. However, lack of share dealing probably rules them out for you.
And the others will likely end up more expensive overall.
You could consider using Cavendish Online for funds and Sippdeal for share dealing. Sippdeal doesn't charge an ISA (or SIPP) admin fee and offers monthly dealing for £1.50 (covering FTSE 350 shares plus a selection of investment trusts and ETFs), although their trail commission rebates are low hence not suggesting them for funds. More hassle than using just one platform, but could come out the cheapest route overall.
As for your SIPP, Hargreaves Lansdown doesn't rebate any trail commission, but equally doesn't charge an annual SIPP fee when only holding trail commission paying funds. However, hold shares and you'll pay 0.5% capped at £200 per annum and non-commission paying funds are charged at £1 or £2 each per month..
If you stick to commission paying funds HL will probably end up the cheapest SIPP for a £12,000 pension fund, so little reason to move. But if their other charges kick in then by all means consider another discount broker.
Read this Q and A at http://www.candidmoney.com/questions/question735.aspx
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