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Should I use a platform with lower fees but which has exit charges, or pay higher charges and have no exit fees?

Andy | Hampshire| 20/04/2020 | 5

  • Private Pension

Andy's question in full

I'm a newbie investor looking for a SIPP. I see AJ Bell have low fees compared to Hargreaves Lansdown. Is it worth the lower fees even though there are exit charges, or pay the higher Hargreaves Lansdown charges, but have no exit fees?

Holly Mackay's Response

Both options you mention have very good service and are decent propositions. The AJ Bell Youinvest fees are indeed lower cost from an ongoing administration perspective.

You don’t say if you are in saving-up mode with your pension, or are close to ‘drawing down’ money out of it. AJ Bell Youinvest does have a menu of costs for those in drawdown mode whereas Hargreaves Lansdown's fee is more inclusive so it’s worth considering that too if you are close to retirement.

As for exit fees...

AJ Bell Youinvest is really quite unusual these days in having them.

I hate them, BUT you can make the argument that moving stuff out of an account costs money and why should everyone else subsidise those who do this?

This argument gets thinner and thinner the more that tech brings costs down. My gut feel is that if you chose AJ Bell Youinvest you would be broadly happy there, and I trust the integrity of the management team not to change direction/stuff things up/ become greedy.

So the exit fees question could be a moot point.

Broadly speaking I don’t think you’ll go far wrong with either. The larger your account, the more material the cost difference between the two options will be.

 

Hope that helps,

Holly

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Holly Mackay

Founder and MD of Boring Money, Holly Mackay has been working in the investments space since 1998. She read Modern Languages at Oxford, with a special focus on Mediaeval French which was deeply interesting and arguably utterly useless.

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