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Hargreaves Lansdown has announced the biggest shake-up to its fees in more than 10 years – but what does it mean for customers?
The investment platform is making three major changes from 1 March: cutting its headline annual platform and share-dealing fees, but adding a fund dealing fee.
Those who own shares, trusts or ETFs in a stocks and shares ISA or self-invested personal pension (SIPP) will also see their maximum annual platform fee hiked from £45 to £150.
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Richard Flint, interim chief executive officer for Hargreaves Lansdown, said the changes from 1 March would see the firm “become even greater value for our clients and make investing even simpler and more accessible”.
What will Hargreaves Lansdown’s new fees be?
Hargreaves Lansdown is lowering its headline annual platform fee from 0.45% to 0.35% from 1 March.
Its share trading fee will fall from £11.95 to £6.95 per trade for people making zero to nine deals each month. The share trading fee for customers making 10 or more deals each month will be lowered from £8.95 to £6.95 and for those making 20 or more trades a month the fee will drop from £5.95 to £3.95.
A new £1.95 fee will be charged to customers buying or selling funds unless they have a regular saving plan set up (someone who invests monthly via Direct Debit).
Hargreaves Lansdown said the new fund dealing fee was being introduced as more retail investors are now trading in funds.
Customers with shares, ETFs, trusts or bonds held within stocks and shares ISAs or SIPPs will see their maximum annual platform fee charge rise from £45 to £150.
The total charge for a Hargreaves Lansdown ready-made pension plan will drop from 0.75% to 0.45%. The firm claimed this makes its pension plans cheaper than most workplace pension plans.
Holly Mackay, chief executive officer and founder of Boring Money, which provides tips to savers and investors, said the fee structure change from Hargreaves Lansdown was “broadly-speaking good news”.
“The all-in costs make Hargreaves Lansdown a cheaper ready-made pension play than Vanguard, most robos and key rivals AJ Bell, although Interactive Investor still marginally pips them on costs once accounts start rising above £100,000,” she said.
However, Mackay said the new 0.35% annual platform fee (capped at £150) for those with General Investment Accounts (GIA) could sting older, more affluent investors, who have spare money after using up their annual ISA and pension allowances.
“(For) fare dodgers who have taken advantage of the fee-free GIA for listed securities and held investment trusts and ETFs in a GIA for years, the party has ended.”
Hargreaves Lansdown has designed a calculator which you can use to work out what you will pay in fees when the new regime comes into force from 1 March.
Why is Hargreaves Lansdown lowering its fees?
The announcement from Hargreaves Lansdown comes amid increasing competition in the retail investment market.
Vanguard has said it will lower the annual charge across its LifeStrategy mutual fund range from 0.22% to 0.20% from 27 January. Interactive Investor is also launching three simple price plans and lowering foreign exchange (FX) fees from 1 February.
Mackay said the move from Hargreaves Lansdown, one of the more expensive platforms to invest, brings them “into line with a more palatable average fee”.
“They’re not trying to be the cheapest but this does make them more in line with the pack,” she said.
Mackay said the whole industry watches Hargreaves Lansdown “like a hawk”, and she expects other firms to make smaller changes to their fees following its announcement today (26 January).
You can find out more about investment costs in our guide.
