Fact Check: Are HL fees high?

Are HL Fees High? A Detailed Examination

Introduction

The claim that "HL fees are high" refers to the fees associated with Hargreaves Lansdown (HL), a prominent investment platform in the UK. This assertion invites scrutiny, particularly as it raises questions about the comparative costs of investment services and their implications for investors. This article will explore the available evidence surrounding HL's fee structure, including various charges and how they compare to industry standards.

What We Know

Hargreaves Lansdown offers a range of investment services, including Stocks & Shares ISAs and financial advice. According to their official website, there are no set-up fees or inactivity charges for their Stocks & Shares ISA, and buying and selling funds does not incur additional fees 1. However, HL does charge for financial advice, with fees typically capped at 2% of the investment value 3.

A review of HL's fees by various sources indicates that while some fees may be competitive, others are considered high relative to industry standards. For instance, a review by BrokerChooser highlights that HL charges high fees for trading stocks and ETFs, although it does not impose inactivity fees 8. In contrast, a comparison by Which? suggests that HL's fees can be higher than those of other platforms, particularly for active traders 6.

Analysis

Fee Structure

1. Stocks & Shares ISA: HL's lack of set-up and inactivity fees is a positive aspect for investors. However, the absence of these fees does not necessarily mean that overall costs are low, as trading fees may still apply 1.

2. Financial Advice: The 2% fee for financial advice is significant and could be a deterrent for some investors. This fee structure is relatively high when compared to other platforms that may offer lower advisory fees or alternative pricing models 3.

3. Comparative Analysis: Various reviews indicate that HL's trading fees for stocks and ETFs are notably higher than those of competitors such as AJ Bell and other investment platforms 510. For example, a comparison study highlighted that HL's trading costs could be up to 50% higher than those of its competitors 10.

Source Reliability

• Official HL Sources: The information provided directly from Hargreaves Lansdown's website is generally reliable as it comes from the company itself. However, it may present a biased view as it aims to promote its services 13.

• Third-Party Reviews: Sources like BrokerChooser and Which? provide independent assessments of HL's fees. These reviews are valuable as they compare HL to other platforms, but they may carry their own biases based on the authors' perspectives or the methodologies used in their analyses 68.

• Industry Reports: The Transaction Termination Fee Study by Houlihan Lokey provides data on fees in the context of M&A transactions, which may not directly relate to individual retail investor fees but can offer insights into broader financial service fee structures 24.

Conflicts of Interest

Some reviews may be influenced by affiliate marketing relationships, where platforms earn commissions for referrals. This potential conflict of interest should be considered when evaluating the credibility of certain reviews 7.

Additional Information Needed

To further assess the claim regarding HL's fees, more detailed comparative data on specific transaction types and the overall cost of ownership for various investment strategies would be beneficial. Additionally, insights into customer satisfaction and the perceived value of services relative to costs could provide a more comprehensive understanding of whether HL's fees are justified.

Conclusion

Verdict: Mostly True

The claim that "HL fees are high" is mostly true based on the evidence reviewed. While Hargreaves Lansdown does not charge set-up or inactivity fees for its Stocks & Shares ISA, the trading fees for stocks and ETFs are significantly higher than those of many competitors, and the advisory fees can also be considered steep at 2% of the investment value. This indicates that while some aspects of HL's fee structure are competitive, others are not, leading to a mixed assessment.

It is important to note that the term "high" is relative and can vary based on individual investor needs and trading habits. For instance, casual investors may find HL's fees acceptable, while active traders may seek more cost-effective alternatives. Additionally, the reliability of sources varies, and potential conflicts of interest in third-party reviews should be considered when evaluating HL's fees.

There are limitations in the available evidence, particularly regarding the lack of comprehensive comparative data on specific transaction types and overall cost of ownership. As such, readers are encouraged to critically evaluate this information and consider their own investment strategies and preferences when assessing the fees associated with Hargreaves Lansdown.

Sources

1. ISA Charges & Fees For The Stocks & Shares ISA | HL - Hargreaves Lansdown. https://www.hl.co.uk/investment-services/isa/savings-interest-rates-and-charges
2. PDF 2023 Transaction Termination Fee Study - cdn.hl.com. https://cdn.hl.com/pdf/2024/2023-transaction-termination-fee-study.pdf
3. Financial Advice Charges | Cost of financial advice | HL. https://www.hl.co.uk/financial-advice/cost-of-financial-advice
4. Transaction Termination Fee Study - Houlihan Lokey. https://hl.com/insights/transaction-termination-fee-study/
5. Hargreaves Lansdown review: features and fees for ... https://wise.com/gb/blog/hargreaves-lansdown-review
6. Compare investment platform fees and charges - Which?. https://www.which.co.uk/money/investing/investment-platforms-and-fund-supermarkets/best-investment-platforms/compare-investment-platform-fees-and-charges-anYec4l0G9J5
7. Hargreaves Lansdown review 2024 - Worth the extra cost? https://investinginsiders.co.uk/hargreaves-lansdown/
8. Hargreaves Lansdown fees explained - BrokerChooser. https://brokerchooser.com/broker-reviews/hargreaves-lansdown-review/hargreaves-lansdown-fees
9. 2023 Transaction Termination Fee Study - LinkedIn. https://www.linkedin.com/pulse/2023-transaction-termination-fee-study-andy-stull-naege
10. AJ Bell Vs Hargreaves Lansdown: 2024 Comparison. https://www.forbes.com/uk/advisor/investing/aj-bell-vs-hargreaves-lansdown/