4 Aug 2012, 12:01am
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  • Why does it take so long to move an ISA?

    I have an ISA with iii, who jacked up their prices, in particular charging for funds and generally carrying on in a cavalier fashion. So more than a month ago I initiated a shift to TD Direct, telling both iii and TD, and filling out the relevant forms. iii at least revoked their exit charges for aggrieved customers transferring out who didn’t like the unilateral hike in fees.

    So far, the transfer still hasn’t competed, though it is within the specified time of six weeks. What the heck is the reason in this day and age for a transfer to take so long? I am transferring as stock rather than cash, but I now have an additional challenge in the form of a share certificate from one of my sharesave schemes that I want to shift into the ISA. I don’t dare put any money or stock into the TD ISA while the iii one still has anything in it, for fear of being hauled up by HMRC for double dipping. In fact all in all the process of transferring share accounts, within or without an ISA seems tediously drawn out and grief-stricken.

    I have a ESIP shareholding with Equiniti that I want to shift to TD in a non-ISA wrapper because Equiniti have outrageous selling fees that are avoided by transferring out within 90 days of vesting. However, The Firm’s shares are going XD in a few days and I’m avoiding a move over the XD period. There still seems plenty of opportunity for the transfer to make a right muddle of things between the XD and dividend payment date in a month’s time.

    What I need is a good Coffee Can

    The whole point of nominee shareholdings was to make computer transfers easier, but my experience of the ISA transfer is beginning to piss me off about holding shares in this way. If I can’t find a way to transfer the sharesave amount into my ISA I will hold the damned thing as a share certificate; it’s a large enough holding to be worth a grand a year in dividend income. The stock is good enough for Neil Woodford’s top ten which my HYP seems to have ended up being perilously similar to so it’s good enough for me as a core holding.

    Although paper is so yesterday, it has some attractions – it doesn’t mess you about to change nominee accounts and it doesn’t charge you any quarterly account fees. Account fees seem to be where nominee share accounts are going to – and I have become accustomed to not having them over the last few years. Guess I was freeloading on all the guys holding active funds, and this cross-subsidy is being banned by the Retail Distribution Review, which as an unforeseen consequence is going to shift the balance from electronic to paper for long term holdings. For a share that I’m going to sit on for a while as I build up my HYP ISA around it to get my sector allocation back into line there’s much to be said for paper. What I now need is a good can to stash these in, as described by Robert Kirby in his 1984 article ‘the Coffee Can portfolio” – basically stick share certificates in can, collect £1500 a year tax – free (when the second sharesave comes out in December to join this one) and forget about the tin. He said in 1984

    You can make more money being  passively active than actively passive

    Something the III experience has shown me is I want some diversity in nominee providers, and having no nominee for a significant holding is one step towards that. That way if I fall out with a nominee provider I don’t end up with my entire income stream held up to ransom. This isn’t easy with small accounts of < £10k each because you often get tapped with account fees below a certain size (with TD it seems to be £7500), and ISAs in particular are a pain to have spread around. However, I’m out of that limitation now, and after next year I will probably leave my HYP as it is and switch future years contributions to some sort of Vanguard lifestrategy fund if RDR hasn’t made funds expensive to hold. That will probably necessitate starting up with a different ISA provider to get access to the Vanguard fund.

     

    I hear you Ermine… nothing gets my goat more than a clearly woeful level of customer service in a day and age where it is unforgivable.

    There’s a cupboard being delivered for our bathroom at home from Wickes and although they had it in stock at the end of last week they can’t deliver till next Friday.

    With such service, I hope that they get mullered by online companies such as Amazon, but in the brokerage world there is no clear low-cost winner. All you can do is hope that enough money leaves iii for them to go out of business.

    […] Why does it take so long to move an ISA? – Simple Living in Suffolk […]

    Well, to be fair, it is most likely that one of the reasons why it is taking so long is sheer amount of transfers that III is going to do. Lot of customers of III.co.uk no doubt had a same idea when realising that they are going to be charged, that is to move their shares/funds out of III to more reasonable provider.

    That being said, I am personally a great fan of share certificates since I like to believe it combined the best of both world. If I want to sell my shares, I just transfer them in for free into any nominee account and take advantage of low internet cost. The slight disadvantage is it does take few days for your share certificates to arrive at your broker and into the account.

    I think the whole point of nominee shareholdings was for the ease of buying and selling of shares, not for ease of transfer. Of course, the dividend reinvestment which have to be one of the more important element of investing. After all, you can only do that with share certificates if the company offers Dividend Reinvestment Plan or Scrip.

    I rather like the Coffee Can portfolio, might try to read more around the topic since it really does sound more like buy and hold strategy to extreme.

    Rob – I had exactly the same experience with B&Q. In the end I find identical items at Screwfix for nearly the same price with next day delivery.

    I entirely agree on every level and more. The whole financial services world is getting worse, not better, and the RDR seems to be making things even worse again for the informed investor.

    I have the same problem regarding the transfer of sharesave shares from Equinity, and even for the sale of the balance I could not put into the ISA I have still not received the sale proceeds after a whole week. I must admit I have trusted to luck on the dividend front in the transfer and just assumed I’ll get it in the ISA if the transfer ever goes through. I’ll have to watch that.

    Equiniti’s prices are indeed outrageous, for which I blame the Firm. Last time I sold I did not read the charges properly and got charged over £200 in costs on a £17k sale – something I’ve not seen since about 1999.

    Moving on, my really big beef with the FS world is savings and cash ISA interest and compensation levels.

    In order to get a half decent savings rate I have to either commit to a fixed term or move my money every single year – and for some reason this takes weeks too.

    Worse, if you have a decent amount of savings you are forced to use different institutions for each £85k of savings, lest you lose government backed compensation. So every year I have to move multiple accounts, and as most banks do not allow you to move from their old best rate account to their new best rate account (ING recently turned down £77k of my money because I had stupidly not fully closed an account that had some £20 vestigial interest in it from a previous transfer).

    This is not good enough – banks should be set up in such a way that they cannot lose savers’ money, or the government should guarantee every penny. Not that it affect most people, but what, for example does a lottery winner, or hard working millionaire do? Does a millionaire have to hold 12 accounts? A person with 5 million needs 60? Either this or take a massive risk or buy a bed with a lot of space under it? This cannot be right.

    @Rob I guess with all the cutting back service all round will get the squeeze. I favour Wickes for plumbing supplies on cost usually though, aprticularly taps which seem to cost a shcking amount for basically a lump of metal. I second Mike on the vote for screwfix as well, even though they are the same firm a B&Q.

    @Joe I hadn’t thought of that, iii did managed to shift their charges in a particularly cack-handed way. It wasn’t so much the change in costs that bugged me, it was the reports of the fragility of the company’s finacial position that was the larger push.

    The Coffee can article was interesting – the message seems to be essentially Do Not Churn – I’ve been pleasantly surprised how (large) companies that go through an annus horribilis seem to come out of it. One of those was the company I worked for – I was buying employee share options with DRIP and though I’d be slaughtered in the fall of 2/3 in the SP (it’s since recovered and the loss is 1/3). When the divi reinvestment and the divi income is facotred, overall I am well in profit, igonring the extra 40% tax break, even thought the SP is 1/3 down. I became a lot less active and particularly less jittery on the sell side after that, and it’s improved my portfolio performance.

    @TNT, Looks like I failed to read Equiniti’s charges right too, I thought it was flat £20. I am looking to hook out my ESIP shares as I get hold of the lot now. I’m also going to spring my SS10/5 year holding in December, probably as a share certificate again.

    Cash seems to be a right pain as an asset class, have to admit I favor NS&I ILSCs as I don’t really regard cash as something that earns a return, I’d just like it not to die silently in the night. It takes a long time to build up a holding there, however, with a 15k issue limit. You have quite a high cash holding there, I’d be windy of holding so much from an asset allocation POV though you do have to ask what else will hold its value in these desperate times 😉

    I found Pete Comley’s making the case for cash article on Monevator interesting on ways to limit the chasing round.

    There is also the same issue with ISA providers, withe the added complication that rebalancing across ISA silos doesn’t sound like fun at all, involving cash transfers from one to another presumably. This isn’t a problem I have, so far, but I will have in the coming years.

    Ermine, on the Equiniti front, I think the £20 flat is only for sales on the immediate expiry of the sharesave. Anything held in Easyshare which is then sold has a minimum of £20 but a 1.75% (iirc) charge.

    Regarding the cash, I’ve posted on this before – I disagree with a lot of the views that people hold that cash is a poor way of holding value and several articles and data sources prove that cash generally beats inflation over time, and that recent inflation above cash rates is not typical.without question over the lasts 12 years cash has outperformed RPI and equities, as long as you have as much in term accounts and term ISAs as possible.

    In any case, a big slug of my large cash amount is there simply because I earn more from it than my mortgage costs me – an average of 3% after tax v 0.99% for my mortgage. On £160k that’s worth having. If I’d truly believed that rates would stay as low as they have for so long I’d have used more longer term fixed accounts than I did, and made even more than 3%.

    The other factor is that while I do buy HYP shares I prefer tech and cyclical plays for better growth prospects, and the big cash buffer helps offset the volatility. In this way I’ve made 200%, 300%, 500%, even over 1000% gains (as well as 99% losses) in some shares (Apple, Imagination, Transense, Premiere Foods, ITM power, Stratex, Shanta Gold, Tanfield) over the last 4 years, and enough on one share in 1999 to buy half of my current house. But the volatility can get very unnerving. That said, most of my HYP shares have seen 30-50% swings in most single years, so even the big boys are not as stable as people think – I’ve made good dividends and small gains in the likes of Aviva, Astra Zeneca, Glaxo, BP, BT, but all of them have at some point fallen by about 50% or more, yet none of them have gone up by 2000+% like Imagination did, or 800% like Apple.

    Now if only the Government were really keen on getting people to save and allowed a decent amount to be put in cash ISAs and NSILCs – at let double for both, then I’d be even more happy with a big cash holding.

    […] had much taste for buying this year or indeed the opportunity, since it took three months to shift my ISA from Interactive Investor. So the current snapshot return is about £2500 on an average stake of £14000, over a period of […]

     

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