Making Money | Saving Money

Hargreaves Lansdown Review: Everything You Need To Know

This Hargreaves Lansdown review post shares what I learnt using the HL SIPP and HL Stocks and Shares ISA products. Every year, thousands of people are getting into investing. It’s easy to be interested in the field but also a little bit confusing/ intimidating as to which product or broker to use. This post is here to share the ins and outs of Hargreaves Lansdown.

This blog shares information on investing and saving but does not provide personal advice. Please seek professional advice from a financial advisor if you are unsure which investments are right for you. Investments can go up as well as down in value, and you may lose your money.

Affiliate Disclosure: This post may contain affiliate links that earn this site a commission at no extra cost to you. Everything we recommend, we have used ourselves and hope you find the recommendations helpful.

Why Hargreaves Lansdown?

I started to use Hargreaves Lansdown stocks and shares ISA, and then their Self Invested Pension Plan. I thought the service was excellent (although a tad expensive), but for the money, I didn’t think there was anything close that offered the same level of flexibility at the same cost.

When I was investing, I mainly looked at low-cost index funds to build a diversified portfolio. The priority for me was the lowest cost at all times and in this post, I wanted to share how Hargreaves Lansdown could be a potential option in certain cases.

Is Hargreaves Lansdown any good?

I found Hargreave Lansdown to be good for both their stocks and shares ISA and SIPP products. The online platform was easy to use, and so was the app. When I had any issues I needed help with, it was easy to get help on the phone and wait times were not long.

Is your money safe with Hargreaves Lansdown?

Hargreaves Lansdown is regulated by the Financial Conduct Authority (FCA), and deposits are covered under the Financial Services Compensation Scheme (FSCS), which can pay up to £85,000 to each investor. Hargreaves Lansdown is also:

  • A FTSE 100 company
  • Has £86B of assets on behalf of its clients
  • Hargreaves Lansdown only places deals on behalf of clients and does not buy or sell investments for their own benefit.
  • All client money is held in trust.

Is Hargreaves Lansdown good for beginners?

Always get professional financial advice to make sure investments are suitable for you. As a beginner, HL will not give you advice on what to buy or sell (unless you use their dedicated financial advice service), but they do have a wide range of investment options available to suit most people. 

Provided you are comfortable picking and making your own investment choices, Hargreaves Lansdown is easy to use. Hargreaves Lansdown is not the cheapest but offers

  • Great fund availability 
  • Good customer services
  • Easy to use research and reporting tools
  • Lots of free information e.g. how to pick stock guides, a guide to ISAs etc.

Hargreaves Lansdown fees

The reason that I started using Hargreaves Lansdown in the first place was that I was trying to keep my fees down. I firmly believe that successful index fund investing works by controlling the variables we can control – and the main one is broker cost. 

The two Hargereave Lansdown products that I have used are their stocks and shares ISA and their SIPP, so I will discuss those here!

With a relatively modest amount to invest – under £20k, I found that the best way was to limit my investments to funds only as these were free to buy and sell with Hargreaves Lansdown.

How much do Hargreaves Lansdown charge?

Hargreaves Lansdown fees – Stocks and Shares ISA

These are lifted straight from the Hargreaves Lansdown site.

Funds

  • On the first £250,000 – 0.45%
  • On the value between £250,000 -£1m – 0.25%
  • On the value between £1m – £2m – 0.1%
  • On the value over £2m – No charge

Shares

Includes the UK and overseas shares, investment trusts, exchange-traded funds, VCTs, gilts and bonds

0.45% capped at £45 per year

Dealing charges

Fund dealing

Includes unit trusts and open-ended investment companies (OEICs). There’s no dealing charge for buying or selling funds.

Share dealing – online and mobile app 

Including UK and overseas shares, investment trusts, exchange-traded funds, gilts and bonds.

Number of deals in previous month: Charge per deal 

0 – 9£11.95
10 – 19£8.95
20+£5.95

Hargreaves Lansdown Stocks and Shares ISA: My thoughts

There are definitely cheaper options out there for stocks and shares ISA, particularly if looking to buy and sell index funds with relatively few movements i.e. rebalancing once every 6 or 12 months.

One of my favourites is the Vanguard Stocks and shares ISA with ongoing costs of 0.20% (on average) and a low account fee of 0.15% capped at £375 per year.

The only reason I did not go with the Vanguard stocks and shares ISA was that Vanguard only allowed you to invest in their own funds, and I guess my OCD/Doomsday imagination wanted me to have funds from different providers. 

The compromise, in that case, was to use Hargreave Lansdown and accept that I would have slightly higher fees.

Hargreaves Lansdown fees – Self-invested pension plan (SIPP)

These fees are listed directly from the Hargreaves Lansdown site

Funds

  • On the first £250,000 – 0.45%
  • On the value between £250,000 -£1m – 0.25%
  • On the value between £1m – £2m – 0.1%
  • On the value over £2m – No charge

Shares

Including UK and overseas shares, investment trusts, exchange-traded funds, VCTs, gilts and bonds. 0.45% capped at £200 per year

Dealing charges

Fund dealing

Includes unit trusts and open-ended investment companies (OEICs). There’s no dealing charge for buying or selling funds.

Share dealing – online and mobile app 

Including UK and overseas shares, investment trusts, exchange-traded funds, gilts and bonds.

Number of deals in previous month: Charge per deal 

0 – 9£11.95
10 – 19£8.95
20+£5.95

Will Hargreaves Lansdown reduce fees?

As new lower-cost investing platforms entrants come into the industry (Freetrade SIPP ), HL is under pressure (and to be fair) has started to respond by reducing fees. HL has some way to go before it is the cheapest.
Whether or not you go with HL and accept slightly higher fees depends on your circumstances and investment needs or goals. As an example, some people want to place deals via the phone. Some lower-cost platforms, such as Freetrade, do not offer a telephone service and are online only.
Some investors may not be comfortable with online only and may side with traditional brokers like HL, who are slightly more expensive but offer phone service.

Hargreaves Lansdown SIPP: My thoughts

I had an existing pension that I needed somewhere to keep and invest in. I was comfortable doing my own investing using index funds. Hence, I decided to do what I had already done with my Hargreaves Lansdown Stocks and Shares ISA and extend the same to my pension.

I normally balance my portfolio every 6 months, so roughly, there would be around 5 buy/ sell transactions every six months. With the funds being free to buy and sell, I only purchased funds.

My problem was the 0.45% fee on funds up to £250,000. On shares, the 0.45% fee is capped at £200, whereas on funds there is no cap other than the fee tapering down to 0.25% for amounts above £250k up to £1M. 

On a pension balance of around £145-£150k, it would cost around £50 in HL fees each month when invested into funds.

For those with lower buy and sell requests each year, it may make more sense to invest in exchange-traded funds (ETFs) as a cost-saving technique to benefit from the £200 per year fees cap.

ETFs are bought and sold as shares but have the benefit fees wise at being capped at £200 for the year.

The flip side is that you have to pay the dealing charges (£11.95 for each deal between 0-9) in the previous month. 

With my SIPP, moving from funds in the pure sense, to EFTs meant that I went from paying around £600 per year in fees to around £300 (£200 cap, plus around £100 in dealing fees) per year in my SIPP. 

My experience with the HL fees is that if the amounts are lower, then it may make more sense to be in funds, whereas if your portfolio is in excess of let’s say £100k, then it may make more sense to pick ETFs (that are traded) as stocks to benefit from the £200 per year cap. 

As an alternative SIPP, one of the game-changer products on the market that has come up has been the Freetrade SIPP. There are no dealing fees and instead, you pay a fixed £9.99 for the SIPP.

Immediately by switching to Freetrade SIPP, I have the opportunity to reduce my broker fees to £120 per year!

I am just in the process of moving to Freetrade SIPP, so I will do an update sharing how that went or has gone. Freetrade, at the time of writing, is offering a free share depending on the amount your transfer in.

Hargreaves Lansdown lifetime ISA

Hargreaves Lansdown does offer a lifetime stocks and shares ISA. I have not used this product myself, but the fees are the same as the other stocks and shares product except that there is no cap on the 0.45% annual charge.  

Hargreaves Lansdown funds

Hargreaves Lansdown has a huge selection of funds. I very much lean towards passive funds vs active funds so my main interest was finding the cheapest trackers I could find to provide global diversification.

The funds that I used from Hargreaves Lansdown are shown below. To be honest, could not really complain about the price or any of the services. HL does offer savings on certain funds net ongoing management charge which helps reduce the costs of running a portfolio. The 0.45% still applies though, in addition to the below.

  • HSBC European Index Class C – Accumulation (GBP) – Europe exposure – 0.07% net ongoing management charge.
  • HSBC FTSE 250 Index Class S – Accumulation (GBP) – UK ‘small’ exposure – 0.07% net ongoing management charge.
  • iShares Emerging Markets Equity Index Class H – Accumulation (GBP) – Emerging markets exposrure – 0.16% net ongoing management charge.
  • iShares III plc S&P SmallCap 600 (GBP) – I could not find a fund for US Small caps on an index basis, so I ended buying this ETF. It trades like a share with an ongoing 0.40% charge.
  • iShares Japan Equity Index Class H – Accumulation (GBP) – Japan exposure – 0.08% net ongoing management charge.
  • iShares Pacific ex Japan Equity Index Class H – Accumulation (GBP) – Asia excluding Japan exposure – 0.13% net ongoing management charge.
  • Legal & General UK 100 Index Trust Class C – Accumulation (GBP) – FTSE 100 exposure – 0.06% net ongoing management charge.
  • Legal & General US Index Class C – Accumulation (GBP) – US ‘Large’ exposure – 0.06% net ongoing management charge.
  • Legal & General Global Inflation Lnk Bond Indx Class C – Accumulation (GBP) – I keep 25% in ‘cash’ at all times via inflation-linked bonds. This was the best I could find. 0.15% net ongoing management charge.

Issues I had with Hargreaves Lansdown

If you wanted to buy actual GILTS, they could not be purchased online or via the app, so you had to call up. HL were good though, in that they only charged me as though I was buying a stock, i.e. £11.95 dealing charge vs the usual 1% of the trade value, minimum charge £20, maximum £50 when dealing via the phone.

The larger the portfolio got the more annoying the 0.45% blanket fee on funds got. There is no cap on SIPP funds re the 0.45% charge.

Frustrated Investor

I later found a more economic way of running the portfolio was to switch to ETFs – which are treated like stocks, but they benefit from the 0.45% charge being capped at £200 for the year.

The index ETFs I selected instead of the funds are:

  • VANGUARD FUNDS PLC FTSE DEVELOPED EUROPE EX-UK UCITS ETF (VERX) – Europe excluding UK
  • VANGUARD FUNDS PLC FTSE 250 UCITS ETF (VMID) – FTSE 250 tracker  
  • HSBC ETFS PLC MSCI EMERGING MARKETS UCITS ETF GBP (HMEF) – Emerging markets tracker
  • iShares III plc S&P SmallCap 600 (GBP) – US ‘Small’ tracker
  • VANGUARD FUNDS PLC FTSE JAPAN EQUITY (VJPN) – Japan tracker
  • Vanguard Funds plc FTSE Developed Asia Pacific ex-Japan (VAPX) – Asia excluding Japan Tracker  
  • ISHARES PLC CORE FTSE 100 UCITS ETF (DIST) (ISF) – FTSE 100 tracker  
  • ISHARES PLC S&P 500 UCITS ETF (DIST) (IUSA) – S&P 500 tracker
  • ISHARES III PLC BARCLAYS CAPITAL GLOBAL INFLATION-LINKED BOND (SGIL) – Inflation-linked bonds tracker

Although to balance the portfolio, I would now have to pay the dealing charges (£11.95 per trade), my total fees from HL went from circa £600/ year using funds to around £300 per year using ETFs due to the cap.

Depending on portfolio size, using the ‘free’ funds does not necessarily work out cheaper, particularly if the buy and sell movements are relatively few.

How have if found Hargreaves Lansdown?

Hargreaves Lansdown has been very good in terms of customer service, responsiveness to queries. I am in the process of transferring to FreeTrade SIPP and the transfer process is nearly 2 months in with delays expected.

I’ll give Hargreaves Lansdown the benefit of the doubt as due to COVID 19 and home working etc, things just take a bit more time.

What is the Hargreaves Lansdown interface like?

I used both the website and the iOS app to review my account and also make trades. The interface on both is simple and straight forward to use and I did not come across any issues with the site being down when I needed to get into my account.

Who is Hargreaves Lansdown good for?

There are definitely lower-cost options available but I struggled to find options that were lower cost but offered the same level of flexibility in terms of investment options available.

Vanguard for example is definitely a lower cost for equivalent tracker product, but you are constrained by only being able to purchase their own funds. 

Overall: Is Hargreaves Lansdown good or bad

It depends entirely on the size of the portfolio. Hargreaves Lansdown probably favours the larger investor as you can effectively sidestep the 0.45% charge buy selecting investments that allow you to hit the cap of £45 per year (stocks and shares) and £200 per year SIPP.

That then leaves the circa £11.95 per share dealing charge. If your movements are few and far between, then again, that plays into your favour to reduce portfolio fees. 

This blog shares information on investing and saving but does not provide personal advice. Please seek professional advice from a financial advisor if you are unsure which investments are right for you. Investments can go up as well as down in value, and you may lose your money.

Also see  How To Live In A Van And Make Money Whilst Saving

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