Seeking a new ISA platform

Last year I had a bash at getting a second ISA platform to join iWeb. There’s nothing wrong with iWeb, indeed if I could find a broker with iWeb’s service that was unconnected with Halifax/Lloyds I would just do that.

I ended up with Vanguard, but although there’s nothing wrong with Vanguard either, I came to the conclusion that they aren’t the right fit for me. I should have spotted it really in Monevator’s broker table

Investors with larger portfolios — Look first at the flat-fee platform table if you’ve accumulated over £25,000 (ISA)

Yeah, I was already over that with Charles Stanley before I moved it, and I am now way over. This is not good because – fees.

Iweb are good enough to provide the FSCS regulatory info. I am already well over the FSCS limit, and would suffer a serious haircut if push came to shove. The aim of splitting is to get 1+1 protection, This means I have to avoid

• Halifax Share Dealing,
• Lloyds Bank Direct Investments,
• Bank of Scotland Share Dealing,
• IWeb Share Dealing, (because I already have this)

To get that protection. Taking a look at Monevator’s broker table, that’s the first three options ruled out right away.

Interactive Investor – just say no, once more, with feeling

I’m not that keen on Interactive Investor, because I have had bad experience with them not just once but twice, though I could jump over it. There’s a lot not to like about iii – the odious scumbag Tomas Carruthers who pissed me off last time is still in there having bought it out, and its owned by private equity associated with JC Flowers, according to Wikipedia. No, I’ve drunk from that well before, and private equity is never any good for anybody other than private equity, with it’s inherent lack of transparency and generally scummy behaviour. If you look at all the M&A activity they are to share brokerages what Endurance international Group are to web hosting and Interbrew are to craft beer. On a more positive note, Aberdeen Asset Management seem to be in the process of buying them out. That might remove some of the reservations.

That leaves me with Sharedeal Active who I have never heard of, apparently run by AIM-listed Jarvis Securities, or HSBC Invest Direct. I don’t have any bank accounts with HSBC (or Halifax of Lloyds) which is good stuff as these would be aggregated, though it looks like you have to open a bank account with HSBC first. Their dealing charges are nothing special, twice as high as iWeb, though this isn’t a huge dealbreaker.

Then there’s the crew that we all love to hate, Hargreaves Lansdown. Though nominally a percentage fee broker, they limit fees on shares but not funds to £45 p.a. I have generally preferred shares and ETFs to finds, so I could move the Vanguard fund to iWeb and shares/ETFs to HL – the yearly fees are £45 relative to HSBC’s £42.

I favour big fish for security, and detest private equity, which would point to HSBC or HL. I already have a residual SIPP with HL, so I am leaning slightly that way.

I don’t need a flexible ISA any more

I get to give up the flexible ISA option than nudged me towards Vanguard this time last year, but that’s not so important to me now. For two reasons – one was the concept was bigger than the living, but also I now hold a lot of gold in a GIA rather than the ISA, where I came to the conclusion it didn’t belong in the ISA. I will eat the issue of defusing capital gains should I be so lucky. Gold is easy to defuse capital gains, because you can sell CGT worth of SGLP and buy the same day, say Wisdom Tree PHAU to the same amount. Gold is gold, but it’s a different ETF with a different firm falls outwith the HMRC definition as I read it.

is it worth taking a commission-free flutter with fishy fintech?

Then there’s the commission-free crew. I’m not doing Freetrade, because it’s app only. I can see the point of an app-only platform for a bank account and Starling works well for me, but there’s no earthly reason for a mobile-first/only ISA platform in my book. You often need to pay for things on the move, and Starling’s rapid feedback means you don’t need a receipt often and you can turn the card on and off which can be a win for travelling. For share holdings – no. I don’t want to have to use a mobile phone in the house to make their IT development easier.

InvestEngine look interesting, because I could move all my Vanguard ETFs into them in specie, which would stop me paying fees to Vanguard’s ISA. If it were possible to part transfer ISAs to them, then I could move VWRL out of iWeb too, which would bring the balance between the ISA’s closer to parity, in which case I would then aim new money into iWeb, which so far seems pretty much the perfect balance of features and fees for me. InvestEngine also carry SGLP, so I could transfer some of that out of iWeb to get working capital into them without subscribing to them this year. They aren’t consistentent – either they offer this range of ETFs which is larger than this list of ETFs they carry.

The downside is the latter says they carry only the VHYL version of VWRL. Downside because this. OTOH they HMWO, which is the same sort of thing, but with HSBC. So if I sell my VWRL with Vanguard and swap it for HMWO, but keep the main chunk with iWeb, I get some diversification against having my entire world trackers with one fund manager, as well as platform diversification from iWeb. What’s not to like?

I can live with selling up in VWRL in Vanguard because I only have about 10k of it, I am slightly cheered to have made a modest profit over the last year despite hating myself each time I bought it because it was always over my iWeb average price.

OTOH is this list is true then they cover all I have in Vanguard – I have VWRL but I have 50k in VFEM and VMID. It isn’t clear to me whether you can move ETFs in specie to InvestEngine, but if you can then I could just instruct them to move the lot in specie and the residual cash. In theory it doesn’t cost anything to sell in Vanguard or to buy in Investengine, zero commission and fees being IE’s selling point.

The obvious downside of Investengine is this

Many platforms are loss making.  Newer platforms especially.   They look to build market share as quickly as they can before they up their prices to becomes profitable or get bought out by one of the big guns.  The risk of unprofitable platforms is that they fail and you lose access to your funds whilst they are in administration.

A platform that is not charging does not get any other source of income from you as there are no commissions anymore (unless they use own-brand funds).   So, it is not a sustainable business model.  So, if you use them, you need to be prepared for potential outcomes.

dunstonh (who I believe is/was an IFA IRL, though it shouldn’t be held against him – he generally posts good stuff on MSE rather than Just Another Random Talking Head on t’internet like me)

Now there are some folk who have a passion for yomping their accounts with the latest best offers. These blessed punks brought us the likes of Bulb in the energy markets, and I deeply resent my standing charges going up to bail these whazzocks out. Conversely, I do not want to Be That Whazzock in a different market.

So HL may still get my business. Because with ETFs I get to pay their cap of £45 p.a. Which is significantly less than I am paying Vanguard, and I expect HL to still be around in five years time, though that £45 cap can of course be changed at any time. But I acknowledge I probably need to pay something to keep the wheels running. With iWeb I get to pay £5 per transaction, which probably keeps the hamster on his wheel. Whereas it would piss me off deeply to have to extricate myself from InvestEngine’s administrator, particularly as that ISA is also over the FSCS limit now. Saving money can cost you a fortune in aggravation and grey hair. Plus HL is a whole of market operation.

Swings and roundabouts. Probably worth not doing anything there in the next couple of weeks anyway, to let all the last-minute Johnny-come-lately’s opening their ISAs at 23:59 tonight rattle through the system. I am not one of them, the header pic is gratuitous – I used this year’s ISA allowance a fair while ago, and have 365 days to get my act together for the next one.