As an Adviser who often gets asked to ‘transfer to my Hargreaves Lansdown SIPP’ because my portfolio has been returning 15 to 20% per year for the last 5 yrs at minimal costs’. I salute your stock picking and don’t doubt that you have used extensive knowledge to pick the portfolio you are in but I would ask you to stop and think of a few things.
- All funds have done well over the last 5 yrs, we have had great market conditions.
- Are you in aggressive funds, this increase is not going to happen every year, what if there is a market correction and funds drop by 30%, how will you feel?
- The FTSE has just dropped 11% (week of 19th March 2018), are we heading for a bear market?
- How cheap is you scheme? See the charges below.
- Do you Understand the benefits of Financial Advice, google and Financial Advice are very different. See here
Hargreaves Lansdown the real costs broken down
0.45% charge for the SIPP
0.365% Review charges
1.3% – 1.5% Charge for HL in house funds
0.75% and up for popular funds.
Now the above comes out at between 1.75 – 1.95% without any ongoing financial Advice add financial Advice and this is hitting 2.3%. Granted you can reduce this depending on the fund you are in.
Hargreaves over charges for similar funds, In a nutshell you pay 1.5% for a re-packaged threadneedle/schroders fund that may well be 0.4 or 0.7% on other platforms. They may well charge you 1.5% for the managed inhouse funds but you are likely to be able to pick a similar fund up on the open market for a fraction of the cost, usually around the 0.7% mark. In essence Hargreaves get a kick back from these funds or re-package them and add their charges on top. You are likely to see similar funds on other platforms that are the same funds but again at half the price elsewhere.
Its well know within Financial Advice circles that Hargreaves Lansdown is one of the most expensive platforms out there but that all being said you can set up portfolios which are cost effective and don’t include many of the costs above but its worth being aware of them all. You no doubt will be getting lots of marketing material trying to persuade you to move in to their own managed funds I have mentioned, so be aware.
Hargreaves Landsdown Defined Benefit Advice
Broken down this is what you will pay for this type of advice, lets use an average customer pot of £300,000.
£1,500 inc VAT for the TVAS report, this report basically gives the initially analysis and suggests whether a transfer is financially viable, i.e. if not then the advice stops here.
2% of the transfer value to facilitate the transfer. So in this case £6,000 for the actual transfer advice and implementation of that advice.
£7,500 in total for the above transaction.
Peter Hargreaves and Steve Lansdown have done pretty well in recent years and they are not offering their services for free, see above. If you transferred an average £300,000 final salary pension pot with them and you kept invested with them for the next 15 yrs in one of their managed funds with on-going financial advice then we have calculated that the costs to stay with them are just over £80,000 over those 15 yrs, perhaps this has helped them jump up the rich list.
As a point of comparison one of the most popular pension providers on the market that Arthur Browns Advises on will come out at a cost of almost a quarter of the Hargreaves Lansdown SIPP which includes ongoing advice.
Have a look at the Hargreaves existing customer reviews here
Unfortunately I don’t make it on to the richlist…….