Hargreaves Lansdown "playing hardball"

A question about : Hargreaves Lansdown "playing hardball"

FT article today here :
Fund groups told to slash fees or lose business.... Hargreaves Lansdown, the online supermarket for funds and shares, is playing hardball on pricing with asset managers that want their products included on its influential buy list. Hargreaves, the third-largest UK fund platform, with assets of Ј37bn, is demanding asset managers cut their fees for products that might feature in an updated version of its widely followed Wealth 150 list.

Should be fascinating to see what unfolds. With higher costs than their competitors, HL clearly need something of this kind after RDR2 kicks in to look competitive on price, especially for larger investors. At the moment HL keep an average of about 75% of trail commission and 100% of the platform fee [TEXT DELETED BY FORUM TEAM] to give them an average of around 0.80% p.a. of investments. In contrast, customers of competitors such as Cavendishonline, using the Fidelity platform, can currently pay just a 0.25% platform charge on clean funds.

The article asks some of the questions around what the other parties would make of it? Will competing platforms insist on the same terms and, if not, how likely is that IFAs will be content to tell their clients that they can't access funds on the same terms they could get from HL? Would the FCA would see it as a level playing field in the spirit of RDR?

I'd assume that fund managers would be wary of openly giving advantageous terms to HL if they're then shunned by other platformsand so made more dependent on a single outlet. (HL though well-known to DIY investors is said to remain only the third largest.) Didn't work out well for suppliers who became overly dependent on M&S when the wind changed.

So could we perhaps see exclusive products just for the HL platform, like those undersized packets of Polos and choccy bars produced for sale in the pound shops or something of the kind?

This is clearly a spot of news managment by HL as time runs out before they have to anounce their new fee structure but, nonetheless, interesting times for investors. The new HL 150 list is expected next month; what will we see?

Best answers:

• Why not just tell HL where to put their Commission 150 funds?
  I pay 0.1% on Vanguard ETFs with X-O.
• https://forums.moneysavingexpert.com/....php?t=4577383
  Try and keep it all in one place just saves having people confused by the 2 threads.
  It was announced a while back that HL would try and get "better" deals from certain asset managers to get them on their list, which really does prove that it is a sales list (not that anyone thought otherwise).
  I think if anything, HL trying to force asset managers to bring out lower costs will inevitably help the investors, driving down price. I think RDR is going to bring in a lot of competition to fund supermarkets, but its a shame it costs so much and takes so long to switch providers.
  They should be releasing their fee structure any day now (given previous articles stated it would be released end of November).
• i will be following this matter with interest, as an HL customer, with both ISA and SIPP.
• AFAICR, HL's last results suggested their margin on funds is c. 0.6% (that's after deducting rebates, a.k.a. "loyalty bonus").
  they also implied that they have these improved prices agreed with fund managers; and are only delaying announcing their new pricing structure because they think that whoever announces first will be heavily criticized (as interactive investor were - especially here on MSE - last year).
  perhaps this has changed, but HL were talking about not reducing the size of the "wealth 150" (which is already down to only about 100 funds!), but giving more prominent highlighting to some of the cut-price funds within it.
  nothing wrong with highlighting cheaper funds, IMHO. but why do they never highlight tracker funds?
  i doubt that HL will get big enough price cuts from fund managers to compensate for their own relatively high charges, but we'll see.
  my reading of the FCA documents (earlier this year) was that they didn't object to different platform negotiating different prices. it could be different fund classes. it could be rebates in the form of extra units. it can't be cash rebates (except for minimal amounts). it can't involve any kickback to the platform.
  the idea is mostly to make it clear what platforms are charging and what fund managers are charging.
  if we do go down the road of multiple fund classes, a major issue is how that will work when transferring between platforms. which many ppl are likely to want to do when all of the new pricing is known.
• who do you guys consider to be the main alternatives, at this stage?
• I suppose it depends what you want from your platform and how much you're prepared to pay for it, given that many things could still change.
  Personally, only investing in funds and ITs using ISA and GIA, and given the sums involved, Charles Stanley tick many boxes for me - but their dealing fee on stocks is a bit high compared to some and the way they've implemented their platform charge is just weird imho
  With no platform charge levied if making 6 or more stock purchases every 6 months in accounts with only stocks but where mixed stocks and funds exist the platform fee is only waived on the qualifying lines of stock.
  That means for only stocks and shares the platform charge is a minimum Ј20 and effectively capped at Ј120 a year if managed properly or explicitly hard capped at Ј150 if you cant be bothered to trade 6 times each 6 months, yet for funds there is no such upper limit to the 0.25% or 0.15% platform fees chargeable at different investment levels and no way to cap them beyond limiting the amount invested in funds.
  I don't know why that should be unless there is some sort of liability cost incurred on their part from accounts containing funds that doesn't apply to stocks but the difference on a large investment account could easily run to thousands.
• Maybe. Not sure whether it has flexibility on things like trading levels. Thanks, I'll take a look, could be very useful and worth promoting here.
• It's been around for quite some time and promoted on here before James, I'm not sure it's to be totally relied on as the information is only as good as that last provided to him by the platforms, at least the ones who submitted anything.
  HL refused to submit data to the site apparently but that should be no surprise to anyone reading this thread.
• planteria, it heavily depends on what you invest in and how you invest. Things like trading frequency and fund or share or ETF holdings can completely change the answer.