27 Nov 2017, 10:15am
personal finance shares:
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  • iii take an Ermine for a ride – again!

    A few years ago something bad happened to the ISA platform III that I was with. Presumably they were taken over by some hedgies yelling at  them to sweat the assets. They came to the conclusion they weren’t making enough money off the punters after the Retail Distribution Review pissed on their fireworks hiding platfom fees as OEIC class variants, so they jacked up their fees wildly. So I cleared off taking my shares with me to TD Direct, who have served me well over the last five years. But now the big bad wolf is back, since III, realising they still weren’t making any money, decided to come along and buy TD Direct, and impose their ugly inactivity – punishing fee structure on them. They call it simple, clear and fair, well, it’s simple enough and it’s too bloody much. Not much has changed since my 2012 summary of their attitude

    Here is a message from the CEO describing just how we are going to obfuscate our previously simple offering to you. We will obscure things by bundling some services, charging more for others and complicating the process of comparing our charges with other ISA providers. Of course we are going to make out that we are doing you a favour, but basically we want you to trade a lot more often so as we get more money. Geddit? No, well, what we will do is charge you for two trades a quarter, constraining what you can do, and enticing you to churn more. Oh and we’ll wrap it all up in fluffyness of how we believe in the stuff we’ve been forced to do. Unfortunately, Mr Ermine, you weren’t using any of the funds that we were stealing some of the proceeds from every year, because you identified them as a ripoff. So you get to take the shaft, this time, buster. That OK with you? Because if not you know what you can do but it’ll cost ya. Bwahahahahahaha

    Pretty much rinse, repeat – I was happy with TDs costs – basically now’t if you do now’t 1, and £12.50 per trade. As opposed to £90 p.a. with III, which is reduced if you trade often enough. ‘Cos that’s where money is to be made for III, on the turn, they want to nail you in transaction fees or in annual fees.

    End of October I requested a transfer to iWeb, and TD Direct acknowledged this by email on the 1st November.

    We’re sorry to hear that you’re looking to move the assets you hold with us today but we’ll work closely with IWEB to ensure your transfer is completed as quickly as possible. If you change your mind and decide you’d prefer to stay with TD Direct Investing, please let us know and we’ll look after this for you.

    Moving is a big step

    We know that moving your assets is a big decision and we want to make sure you know what to expect during the time it takes IWEB and ourselves to complete this for you. Please take the time to read through the points below so you know what’s involved. We won’t charge you for moving your assets to another provider but it’s worth checking to see whether IWEB will charge transfer or exit fees if you decide to move your assets again in the future.

    Things to consider

    • Some providers will only accept cash transfers in pound sterling (£). If IWEB will only accept pound sterling (£) you’ll need to convert any cash you hold with us in other currencies before we can move your cash. Foreign Exchange (FX) rates will apply to all currency conversions you carry out.
    • Transferring assets can take up to 6 weeks, sometimes longer, depending on the complexity of the investments being transferred but we’ll work closely with IWEB to make sure this happens as quickly as possible.

    Since then they have done diddly squat, to the extent that IWeb sent another letter saying they hadn’t heard from TD Direct on the 24th. Which pretty much confirms my initial feelings about III from five years ago – shysters. From this thread on MSE I’m not the only one to be taking the shaft here.

    The RDR has been a bastard from my point of view – I was mainly a shares/ETF sort of guy and was quite happy to pay my way in buy/selling costs and for the massed ranks to pay for their free fund buying/selling via the various kickbacks on funds/OEICS. The information was out there that you were being ripped off annually in charges, and if you couldn’t be bothered to learn about it then I figure it’s fair enough. Whereas the shares proposition was always that you pay for activity. Not churning your portfolio was the win there. In other words don’t do this:

    bunch of contract notes from two years of my dotcom days

    Then the RDR came along and said it isn’t fair that the sheeple are being gouged, so we now have this problem of platforms being incentivised to make their punters churn their portfolios to generate some transaction fees, and changing their fee structure to try and catch people out. It’s a little bit like the way regulation of the power market means you have to shift supplier every few years, because all the best prices are aimed at new customers. The FCA come along all self-congratulatory and say that early signs are that the RDR is working, well it sure as hell ain’t working for me. I was quite happy for the fund buyers to pay their hidden platform charges, after all if you don’t want to pay annually then shares and ETFs are your friend 😉

    You see the background radiation of the old system in the new charging structures. Platforms made their money on fund kickbacks, so they didn’t charge for buying or holding funds. They didn’t make money on shares, so they charged transaction fees on shares. Now that they don’t make money on fund kickbacks, they charge annual fees just for having funds, and just because they can, they extend this ripoff  and charge annual fees for shares. The likes of Hargeaves Lansdown at least have a little bit of shame about that, inasmuch as they cap their annual fees on holding shares at £45, while fees are unlimited on funds until you reach £2 million assets under management. HL would actually be half the price of iii for my ISA, as their charges on shares and ETFs top out at assets of £10,000 under management, but £45 is still too much to charge for inactivity. The one greatest lesson I learned in investing is the power of sitting on my backside. Time in the market is your friend. I don’t want to be paying for it.

    UPDATE 27 Nov 18:00

    III have acknowledged the poke about the transfer and say

    Dear [griping mustelid]
    Thank you for your secure message in respect to transferring your ISA
    account to Iweb. 
    We have received the transfer form – transfer reference nnnnnn and we are due to send a statement of your account to Iweb.  Due to a spike of activity in the transfer team, transfers are taken longer than normal to process but I will make them aware you have been in touch so they can expedite this for you.   
     I can assure you that as we can see you have already requested a  transfer out, you will not be expected to pay the fee.  If your account is still open in January just email us again at this time and we will waive or refund it.
    Should you have any further enquiries, please do not hesitate to get in touch again. Our response time to secure message is usually 1 working day,
    although in times of high volumes we may take up to 5 working days.
    
    

    Notes:

    1. ETFs and shares – I got right out of funds in TD when they started charged platform fees to hold them

    Sorry to hear you are once again ensnared by ‘shysters’. I had my ISA with them but moved it to AJ Bell’s Youinvest in 2012 when ii eventually agreed to provide a free transfer after appearing on R4 Moneybox. Sounds like they have not changed in the past 5 years…good luck with your efforts to escape!

    At least they learned from that experience and transfer out is free for a while. I’m still sore about last time as I had started to sell down my funds to reduce the lines of stock before they capitulated.

    I was just thinking about how every MV reader was most likely better off platform wise pre RDR. Its always the way, if you’re lucky enough to know your onions these sort of interventions always leave you worse off. I imagine the same would be true of something like the proposed energy cap, i.e. I personally will just end up paying more for electricity and gas – its an inevitable consequence.

    Transfers do take forever and in my experience both parties always blame the other. The only thing to do is keep hassling everyone, but a few months is certainly par for the course.

    iWeb have been good so far from my perspective, I would recommend them. I’d imagine you won’t have too many issues with them.

    One thing I would say is that if you genuinely do only hold shares, ETFs and ITs then HL is a very competitive option. I’d go almost as far to say its a no brainer as they really do offer a level of service above the rest of the competition and I think their size is a reassurance. £45 per year for an ISA and £200 for a SIPP is quite reasonable as it goes. To say £45 is too much almost verges on sounding penny wise, pound foolish..

    But for sure, iWeb is also great.. Good argument for using both I think if your 100% shares/ETFs/ITs. TI has written about diversification of platforms. I’m predominantly in funds as I like lifestrategy products and that makes it much harder (more expensive) to diversify. If I were in ETFs I would definitely use 2 brokers minimum.

    As I’ve said before, I’m eagerly awaiting the emergence of lifestrategy ETFs as this will open up platform options. They’ve got to come eventually right?

    Thanks for the good feeling on iWeb – I didn’t really want ot jump from the frying pan into the fire. I do hold funds, but only with Charles Stanley, and use another platform explicitly because of TI’s warnings on providers. I figured why not use the platform for what it’s good at – CS for funds since most of my ISA estate is shares and ETFs, and CS also was the only flexible ISA provider. TDs fees were zero for shares and ETFs.

    Having said that even after moving to iWeb I may need another shares ISA provider, and the TD account is very uncomfortably above the FSCS 50k limit after the Brexit premium

    > To say £45 is too much almost verges on sounding penny wise, pound foolish..

    I hear what you say but subtle changes on fees could be an easy win for them. After all the limit implied by the £45 is 10k, but if they decided it isn’t fair that their funds people are uncapped until 2M and they want to equalise that I would get to suck up a very big hit.

    That’s the trouble with this post RDR game. I could live with the obfuscation of fees in fund classes because the way to avoid that was obvious. The way to avoid endless fiddling with fee structures is jump around and it’s a pain in the backside. A lot of those stocks were the ones that came with me from iii in the first place. Grr…

    27 Nov 2017, 4:23pm
    by The Rhino

    reply

    ooh, just discovered that the vanguard own platform ISA is flexible.. that (to me) is interesting..

    Now that is an interesting idea. I hold funds from Vanguard and Legal & General in Charles Stanley. I should investigate if there’s a case to give CS the order of the boot and invest in ISAs directly with these guys. Sadly L&G’s ISA doesn’t offer the world ex-UK L&G fund I hold with CS, but Vanguard seem to be prepared to let you transfer just the Vanguard holdings to its ISA

    27 Nov 2017, 5:49pm
    by The Rhino


    The cost structure is quite simple with the vanguard ISA (at 1st glance). 0.15% capped at £375 and no dealing fees. Thats cheaper than any other ad valorem platform (though not totally sure how the caps may vary across platforms).

    The other one that is attractive (from the flexible perspective) is the Share Centre. That would cost £156 a year for an ISA plus £7.5 per trade. In a perfect world iWeb will just make their ISA flexible

    Well, shiver me timbers, I dodged this one! My SIPP was with AJ Bell, but then they were bought by YI, and the fee structure changed. So in the end I moved to Halifax, because it was the closest thing to the “old” AJ Bell, but it was a tossup between Halifax and TD. From memory TD fees had a variable component, or it was variable but capped or some such nonsense, and I didn’t like that. Very pleased I didn’t pick TD. Phew!
    (Walks away whistling the tune from ‘Always Look on the Bright Side of Life’)

    hehe – well done on that. It’s always good to hear the ping of the bullet that missed!

    This reminds me of when I worked in the corporate world at Clusterf* Ltd & was responsible for suppliers …..every couple of years, when some thought you’d fallen asleep at the wheel, they’d tweak the T&C’s, rendering the deal now lousy. If you failed to react, they’d ease up the profit dial until it broke.

    It piqued my curiousity when it became clear that the most notorious had a strategy of simply buying up their smaller competitors deserting clients switched to. Those then quickly were instructed to follow the same venal policy – I can’t name names because I’d be sued, but if those well known names are still around years later, the maths must work – in that enough apathy rules for this strategy to succeed. The obstinate clients had to just keep jumping ahead of the juggernaut.

    This proves that we don’t have healthy capitalism currently, because if the market was competitive, providers of the best service would supposedly win out. Equally, it means the regulators are toothless window-dressing to disguise the reality of cartelism or total corporate capture of the system via lobbying. As an individual, it’s tiring changing almost all services almost every year, but if you don’t want to be overwhelmed by your parasite load, there’s no real choice in the matter…..

    I am in exactly the same position. I left them (II) after getting the charges notification. Acknowledgement email received 1st Nov, since then nada. Chased to today with them saying it was iWeb causing the delay, bunch of shysters. Perhaps, they have huge volumes of people leaving them – we can only hope.

    I think

    > Due to a spike of activity in the transfer team, transfers are taken longer than normal to process

    supports your idea of large volumes leaving. At least iWeb got their blame in first 😉

    27 Nov 2017, 4:18pm
    by John Bray

    reply

    I wanted 2 brokers for diversity

    Iweb for unsheltered and ISA funds – no charge, so they make 2-3 trades a year out of me. I wonder if this is sustainable for them

    HL for unsheltered and SIPP ETFS. £200 for the SIPP, 2-3 trades. I think £200 is fair for what they do.

    I think £50 is would be fair to run a ISA

    I’m coming round to the thought of being prepared to pay £50 p.a. to avoid the pain of moving every five years – I guess even platforms have to eat 😉 I suspect I’ve been reading too much RIT on platform costs and it’s beginning to bite me. Still, fingers crossed that iWeb is big enough to hold out for a bit longer before I bow to the inevitable…

    28 Nov 2017, 1:29am
    by John Bray

    reply

    Iweb is run by hbos, so big isn’t a problem, nasty might be once they’ve git market share

    Another vote for Iweb here. I moved from Selftrade about 3-4 years ago when Selftrade started asking the most onerous questions about where their customers wealth had been generated from. I took a hit transferring the shares but worth it to get away from them. Selftrade spiralled down shortly after and were bought out by Equiniti. Iweb’s cheaper dealing fee at £5 has probably covered most of hit I took by now.

    27 Nov 2017, 4:47pm
    by The Rhino

    reply

    when you say ‘spiralled down’ do you mean that you found the costs less agreeable or was it something else? I have held an account with selftrade for the past 7 years through the equiniti takeover and experienced no problems at all. If I remember rightly they backed down over that questionnaire (in 2014) and in the end there was no requirement to give any detail other than current name and address, which seemed reasonable..

    I moved my shizzle from II to TD at the same time you did but I was a bit more on it when TD were bought out by II.

    I knew their charging structure wouldn’t be for me so I transferred my ISA in June (to IG, as I already have an iweb account) it only took a few days. So I suspect they are just swamped with exits rather than playing silly buggers.

    Wasn’t quite the end of the story as a later dividend payment stopped my account from being “really really” closed which I wasnt aware of until I found a generic notice in my junk mail box last month that I was due to be charged because the account balance was below the charging threshold. So presumably they would have just kept charging against the dividend amount until it was all gone. So watch out for that one.

    I don’t wish to appear some kind of crazed lefty statist but brokerage would work quite nicely nationalised. Furthermore with my crazed lefty statist beret on I suggest a 4% ILSC would see me dropping the whole share ownership thing like a shitey potato.

    To be fair to II, I sent the transfer request (to go to IG – they don’t have exit charges in case I move) and got a confirmation email the next day (6th November). I was able to track exactly what was going on from TDDirect’s “transfers” page and it completed on the 22nd. Pretty good IMO.

    I don’t think II’s charging structure is unfair, just not as cheap as it might be. That said, I’m pretty impressed with how cheap IG is!

    I can still log into the TDDirect ISA – I think I need to send them a letter to tell them to close it.

    > I think I need to send them a letter to tell them to close it.

    You most definitely do, else you’ll be paying their fees on an empty account!

    Ah, the old transfers page, eh – never had the privilege of seeing that. Here’s what III had to say about that, in response ot “where is the track transfers page”

    We are currently having problems with the Track My Transfer feature so it has been turned off for now, in the mean time you will be receiving a weekly update from our transfer team. I do apologise for any inconvenience caused by this.

    You got more than I did when I queried how to track my transfer – “we (ii) no longer run that page, you have to call us”

    If you have a large fund based portfolio, the options are fairly limited and iWeb is easily the cheapest. It’s been fine for me, costing about £20 per account per year in total, but I guess if something is too good to be true it probably won’t last for ever.
    I withdrew from II due to poor customer service. For broker diversity, I use Alliance Trust who are not cheap, but also not that expensive on a percentage basis for a large portfolio. I also use YouInvest, but had to switch to ETFs to avoid % charges there. I keep wondering about HL but don’t want another ETF based portfolio, and currently YouInvest are cheaper (I have a SIPP and taxable account with them). I don’t know, perhaps my affection for funds over ETFs is irrational.

    Aren’t Charles Stanley (like any % broker) fairly expensive? I have kids ISAs there, which are just about getting to a point where it would be cheaper to move them to flat fee.

    CS is relatively dear, but the fund part of my ISA estate is small. Although it’s got to the point where Monevator’s platform comparison tool tells me I am paying over £100pa to them, which is too much… OTOH the optionality of flexible access is worth a fair amount.

    I have the opposite prejudice to you, I am a shares/etf guy, and I’ve got used to paying £0 cost of carry over the years. For index investments I’ve tended to accumulate in funds then yearly convert/add to the ETF variant. I think that prejudice is born out of the pre-RDR days.

    When you say ‘spiralled down’ ?

    What I meant is that Selftrade lost a lot of customers and ended up being flogged to Equiniti. I moved away from them as soon as they threatened to lock accounts if the questionnaire was not completed. I do believe that they backed down later but I wasn’t staying around with a company who made threats like that.

    Iweb have been excellent and cheap, no annual charges and £5 per trade. I too wonder how long they will keep it so.

     

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