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How does Hargreaves’ pricing stack up against its rivals?

Dan Jones
Written By:
Dan Jones
Posted:
Updated:
15/01/2014

Hargreaves Lansdown has unveiled its long-awaited clean pricing model this morning – but how does its tiered pricing model rank against other direct to consumer offerings?

Earlier today the platform giant revealed a tiered charging structure with four main levels, each free of switching costs:

– 0.45% per annum for clients with fund investments under £250k;

– 0.25% per annum for investments of £250k to £1m;

– 0.1% per annum for £1m to £2m;

– No charge for investments above £2m.

These charges work on a cumulative basis: an investor with £500k in assets, for example, will pay 0.45% on the first £250k and 0.25% on the next £250k.

Comparisons

Below is a list of the biggest players in the execution-only market, sorted by the charging level for the crucial £50k segment.

It is this grouping, of clients with investable assets £20k-£50k, in which a significant proportion of Hargreaves’ customers are found, according to analysts at Barclays.

The tables below suggest Hargreaves’ pricing is  competitive at that level – particularly for SIPP business – though this falls off at the next leg up (clients with assets of £50k-£100k).

All figures are based on a ten fund portfolio with 50% turnover a year and include switching charges, wrapper charges and dealing costs.

Companies which have yet to announce new, unbundled pricing models, such as Barclays and Fidelity, are not included.

 

Hargreaves: SIPP/ISA (% charges, cumulative basis)

Portfolio size £10k £20k £50k £100k £250k £500k £1m
  0.45 0.45 0.45 0.45 0.45 0.35 0.20

Competitors – SIPP (% charges)

  £10k £20k £50k £100k £250k £500k £1m
Charles Stanley 1.45 0.85 0.49 0.37 0.3 0.27 0.21
Interactive Investor 2.44 1.22 0.49 0.24 0.1 0.05 0.02
AJ Bell 0.9 0.75 0.5 0.35 0.14 0.07 0.03
Alliance Trust Savings 3.11 1.56 0.62 0.31 0.12 0.06 0.03
The Share Centre 2.73 1.72 0.69 0.34 0.14 0.07 0.03

 ISA (% charges)

  £10k £20k £50k £100k £250k £500k £1m
Interactive Investor 1 0.5 0.2 0.1 0.04 0.02 0.01
Charles Stanley 0.25 0.25 0.25 0.25 0.25 0.25 0.2
AJ Bell 0.7 0.45 0.3 0.25 0.1 0.05 0.02
ATS 2.15 1.08 0.43 0.22 0.09 0.04 0.02
The Share Centre 1.58 1.15 0.46 0.23 0.09 0.05 0.02
AXA Self-Investor 0.5 0.5 0.5 0.5 0.5 0.50 0.5
Nutmeg 1 1 0.95 0.85 0.7 0.60 0.45