Is it time to move your money away from Hargreaves Lansdown?
Hargreaves Lansdown has been making headlines recently. This is due to the fact that the firm – which operates the largest investment platform in the UK with nearly two million customers – has received multiple bids from a private equity consortium (good news for long-term shareholders but not so good for anyone who bought HL shares near their highs).
Given that Hargreaves Lansdown has been in the spotlight, we thought it would be a good idea to examine the company’s annual fees and charges to see if they’re still competitive. Could it be time to move your investments from Hargreaves Lansdown to another provider to reduce your investment costs?
HL Stocks and Shares ISA fees
A lot of UK investors invest within Stocks and Shares ISAs. With these accounts, capital gains and income are tax-free.
Now with Hargreaves Lansdown’s Stocks and Shares ISA, there are different fee structures for stocks and funds.
For stocks (UK and international shares, investment trusts, ETFs, gilts and bonds), there’s a 0.45% charge, which is capped at £45 per year.
Meanwhile, for funds, charges are calculated in bands:
- £0 – £250,000 – 0.45%
- £250,000 – £1m – 0.25%
- £1m – £2m – 0.1%
- Over £2m – No charge
So, let’s say an investor had a £200k portfolio of stocks. Here, the annual fees would be just £45. That looks competitive. A £45 annual fee on a £200k portfolio equates to a charge of just 0.02% per year (note that we are ignoring trading fees here).
However, if the investor had a £200k portfolio of funds, it’s a different story. Here, the annual charges would be £900. That’s relatively high. By moving to a different platform, the investor could potentially save a lot of money. For example, if they moved to Interactive Investor, which offers an ‘Investor Plan’ for just £11.99 a month, their annual charges would be just £144 per year. That would represent a saving of £756 per year, which is significant.
HL SIPP fees
Looking at SIPPs (Self-Invested Personal Pensions), Hargreaves Lansdown offers different fee structures here too.
For stocks (UK and overseas shares, investment trusts, ETFs, gilts and bonds), there’s a 0.45% charge, capped at £200 per year.
Meanwhile, for funds, fees are as follows:
- On the first £250,000 – 0.45%
- On the value between £250,000 – £1m – 0.25%
- On the value between £1m – £2m – 0.1%
- On the value over £2m – No charge
Given these fees, a £200k SIPP consisting of stocks would be looking at annual charges of £200 while a £200k SIPP consisting of funds would be looking at annual charges of £900.
Again, the charges for stock portfolios are competitive. A £200 fee on a £200k portfolio equates to just 0.1%. This can be beaten – AJ Bell’s fee for stock-based SIPPs is capped at £10 a month, which translates to £120 per year. That’s not a huge difference though.
For fund portfolios, however, there are much cheaper options available. For example, with Interactive Investor, there is a £12.99 per month ‘Pension Builder’ plan. That equates to just £156 per year. This could save an investor £744 per year in annual SIPP charges.
Takeaways
In summary, Hargreaves Lansdown offers pretty competitive annual charges for accounts that only hold stocks. However, for accounts that hold funds, its charges are high.
Of course, when comparing investment platforms, fees and charges are not the only factor to consider. It’s important to also think about things like platform reliability, customer service, investment options, and research tools, and Hargreaves Lansdown excels in all of these areas.
But for those looking to cut their investment costs, it could be worth taking a look at some other providers. If you’re looking for reviews of other brokers, you can find plenty of other options in our investing app comparison tables.
Based in London, Edward is a distinguished investment writer with an extensive client portfolio comprising a diverse array of prominent financial services firms across the globe. With over 15 years of hands-on experience in private wealth management and institutional asset management, both in the UK and Australia, he possesses a profound understanding of the finance industry.
Before establishing himself as a writer, Edward earned a Commerce degree from the prestigious University of Melbourne. Complementing his academic background, he holds the esteemed Investment Management Certificate (IMC) and is a proud holder of the Chartered Financial Analyst (CFA) qualification.
Widely recognized as a sought-after investment expert, Edward’s insightful perspectives and analyses have been featured on sites such as BlackRock, Credit Suisse, WisdomTree, Motley Fool, eToro, and CMC Markets, among others.
You can contact Ed at edward@goodmoneyguide.com
