I'm almost excited. It looks like there really is going to be a price war of some sort among the investing platforms. Hargreaves Lansdown (HL) announced its new charging system last week. We didn't like it much for a few reasons.
First it seemed remarkably complicated (it took 48 pages to explain). Second, it penalised those of us who mostly like to hold trackers, exchange-traded funds and investment trusts.
One very irritated client wrote to the Sunday Telegraph to point out that his annual charges were about to rise from £24 a year to £500.
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And third, as I pointed out in this column earlier in the week,it remains pretty conventional. I had a tiny hope that HL would somehow gather the means to dump pricing based on the value of your investments, and introduce some kind of flat fee system that would actually reflect the cost of servicing each client. That didn't happen.
Still, it wasn't all bad the majority of HL clients now at least have an idea what it costs them to be a client, and they will also mostly save a bit of money too. Anyway, yesterday came a challenge.
Fidelity announced its new charges and they do appear to be a little simpler than HL's. There will be a single fee payable by anyone with under £250,000 invested 0.35% of their assets. Go over £250,000 and that falls to 0.2% on the lot (HL's charges are higher and stepped in the same way as stamp duty is).
Another plus is that these charges are paid on all your assets under management at the firm regardless of whether they are held in a Sipp, Isa or a general account. That makes it easier to get to the volume of assets needed to get your fees down (HL treats each account separately, which is irritating).
Fidelity will also continue to treat investment trusts as what they are (shares) rather than inventing a new category of charges for them. There's a charge, but not a new charge.
The downsides are that Fidelity is still charging based on the total value of your investments; it is still more expensive than smaller rivals; and HL has managed to get some fund charges lower.
So what do you do? For the moment, I'd say nothing. Moving is an expensive business, and the price war has barely begun. You can see some of the options on the strategy page of the new MoneyWeek magazine out tomorrow. (If you're not already a subscriver, subscribe to MoneyWeek magazine.)
Cavendish Online and AJ Bell are cheaper for most people, and Alliance is definitely cheaper if you have a large portfolio (they charge flat fees I approve). But not all the big companies such as Barclays Stockbrokers - have announced their plans yet, and I'm far from convinced that those that have announced have set them in stone.
The management at HL tells me that this could be a starting, not an ending point. I'm not leaving them yet (although, unless there is major change, I'll probably have to in the end).
For now, I'm just going to watch and wait to see who moves next. It is really rather more interesting than it should be.
The goal of all this, by the way, is to get your fees down, your investments right and eventually to end up like John Lee now Lord Lee of Trafford. He is "living proof that if you are prepared to invest in the stock market, take time out to do some serious homework on the companies you want to invest in and use the tax shelter offered through Isas, you can amass serious wealth", says Jeff Prestridge in The Mail on Sunday.
Lee hasn't said exactly how much he has, but it is more than a million and less than five million. Most of us would be happy with any number in the middle there.
How does he do it?Having money to invest during the great bull-market years probably helped, but so did investing it in profit making, dividend paying, cash generative companies run by directors who have invested in their own companies.
If you want to know more, Prestridge suggests buying Lee's book, How to Make a Million Slowly.
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