Holly's Blog: The Good (Best Buys), the Bad (markets) and the Ugly (fee disclosure)
11 July, 2017
Loads going on this week. The Good – our Best Buys 2020. The Bad – stock market carnage. And The Ugly – hopeless poor disclosure on charges (highlighted to me by you guys) leads to our campaign with the FT we launch today - #ClearPensionsCharges (https://twitter.com/hashtag/ClearPensionCharges?src=hashtag_click).
The Good – Boring Money’s Best Buys 2020 💪
On Wednesday we announced the winners of our 2020 Best Buy ratings for ISAs, DIY pensions, Beginners and Sustainable Investors.
Sunlight is the best disinfectant and we publicly share the methodology (https://emailboringmoney.co.uk/t/4QZH-AYJM-DEQJU-87XK1-1/c.aspx) behind these to avoid any grumbles about bias, favouritism or cash in brown paper bags. 30% of the ratings come from customer reviews. 25% is based on charges. And the rest is a detailed mix of our secure site testing with our funded accounts, the size and stability of the company and the service. Yes, we’ve even hit the phones to measure answer times and how long it takes to speak to an actual human being.
Here are the winners of this year’s ratings:
Best Buy ISA – AJ Bell Youinvest; Fidelity; Hargreaves Lansdown; Nutmeg; Vanguard; Wealthify - read why (https://emailboringmoney.co.uk/t/4QZH-AYJM-DEQJU-87YP3-1/c.aspx)
Best Buy DIY Pension – AJ Bell Youinvest; Fidelity; Hargreaves Lansdown; Nutmeg; Pension Bee - read why (https://emailboringmoney.co.uk/t/4QZH-AYJM-DEQJU-87YP4-1/c.aspx)
Best Buy for Beginners – AJ Bell Youinvest; Fidelity; Moneybox; Nutmeg; Pension Bee; Vanguard; Wealthify - read why (https://emailboringmoney.co.uk/t/4QZH-AYJM-DEQJU-87YP5-1/c.aspx)
Best Buy for Sustainable Investors – Charles Stanley Direct; Interactive Investor; Nutmeg; Pension Bee; The Share Centre; Wealthify - read why (https://emailboringmoney.co.uk/t/4QZH-AYJM-DEQJU-87YP6-1/c.aspx)
You can see our full comparison table here (https://emailboringmoney.co.uk/t/4QZH-AYJM-DEQJU-87XK2-1/c.aspx), including customer ratings and the Boring Money ratings.
The Bad – FTSE100 down 12% this week 😢
So I did that thing this morning of logging on and squinting at the screen to shield my eyes from the red. The FTSE100 is down about 12% this week (as I write). Some stocks have been particularly hammered – Easy Jet, for example, is off 27% this week. But whenever the morning news bulletins lead with the stock market, and the papers use words like ‘freefall’ and ‘crash’, I always wonder if I have any cash I can chip into the markets.
I never think I can time the bottom. And inevitably I’ll chip something in and then things will fall more and I’ll have a minor and temporary panic that capitalism as we know it has come to an end. But I do know that the FTSE100 is 12% cheaper today than it was one week ago. So – unless you are a forced seller – just re-hear the headlines as people saying that the stock market is on sale. Keep Calm and Carry On. Times like this do remind us of the benefits of setting up monthly direct debits into ISAs and pensions which smooth the entry point and average out the peaks and troughs.
The Ugly – pension charges disclosure 🤢
Many of you have written to me about the irritation of trying to get your heads around fees and charges for pensions. What might you pay? How to calculate it? And how to work out whether that’s fair value or not? I talked to the FT a few months ago and set out on a mission to find out what the costs would be on a range of 10 different pensions options, from DIY to full advice.
For those of you who have seen The Revenant, Leo Di Caprio’s stumble across the snowy wilderness was a day out compared to the torture I endured with this process. Lack of disclosure. Lack of clarity. Patronising weary people telling me that a “fool knows the cost of everything but the value of nothing.” Advice firms refusing to answer simple questions.
After hours of the most deeply irritating research with firms who make this pointlessly hard (or just don’t disclose anything at all), we have today launched our #ClearPensionCharges (https://twitter.com/hashtag/ClearPensionCharges?src=hashtag_click) campaign. The genesis of this entire campaign sparked from emails from you guys – thank you to everyone who has contacted me with questions, emails, charge disclosure documents or just a rant!
The bottom line is this. The only way I could ascertain some of the advised pension charges was either because some of you sent me your statements, or because I had the mobile phone number of a Director of those firms. Or, because I played endless email ping-pong with PRs or industry folk. The fact that it is an impossible thing to do from publicly available information, clearly disclosed on websites, is a disgrace.
You can read the full piece in the FT, my article here (https://emailboringmoney.co.uk/t/4QZH-AYJM-DEQJU-87XK3-1/c.aspx) and just for you, we include the chart below which shows you the total charges you would pay for a pension over a 25 year period in the 10 firms we tested. (Methodology and assumptions here (https://emailboringmoney.co.uk/t/4QZH-AYJM-DEQJU-87XK4-1/c.aspx).)
It’s not for me to tell anyone how they might value advice. I have seen good advice save people from huge tax bills, disastrous investment decisions and countless sleepless nights. I am not bashing advice. But I am most certainly bashing the complacent industry acceptance of the fact that there is no need to publish your charges on a website, so that any prospective client can clearly see what’s involved, and shop around for the best solution for them.
Have a great weekend all. It will be warm again one day...