Throughout August I’ve been sharing reviews of my experiences around pensions and investing – first with PensionBee, and then with Nutmeg.
This week it’s Hargreaves Lansdown’s turn – it will also be the last in this mini series of reviews.
Before I begin, a little disclaimer.
Investing doesn’t guarantee returns – you could lose some or all of the money you put in – so be prepared for the risks and don’t put more money in than you can afford. Especially don’t be that person who borrows to invest.
Also, do your own research – or get a qualified financial adviser to do it. What might work for me at a particular time might be a terrible choice for you.
What Hargreaves Lansdown offers
Hargreaves Lansdown (HL) actually calls itself a financial services company, though arguably most people think of it as an investment platform for buying and selling funds and shares.
That’s because in addition to the investing side, you can also use it to manage your cash savings through its active savings account* and send money abroad*.
For buying and selling funds and shares (and bonds, gilts and investment trusts), you can go through one of these products:
- Fund & Share Account
- Stocks and shares ISA
- Lifetime ISA
- Junior ISA
- Cash ISA
- Self Invested Personal Pension (SIPP)
- Junior SIPP
Why I chose Hargreaves Lansdown
There are a lot of investment platforms and HL is one of the better known ones, alongside AJ Bell Youinvest, Interactive Investor*, Vanguard, Wealthify and MoneyBox (this last one is newer to investing).
HL is actually not the cheapest in terms of fees (more below) but it has a few things going for it.
One of the things that appealed to me was the enormous selection of funds available through HL.
Different platforms offer access to different funds, and some offer more than others – HL offers one of the biggest selection on the market (over 3,000!).
I focus on funds because they tend to be less volatile than shares, which helps to spread risk; and they don’t need as much hand holding, which saves me time.
HL compiles a Wealth Shortlist*, which is great for those short on time – it’s essentially a whittled-down list of funds that its analysts believe can deliver great returns over the long run.
It doesn’t mean all the other funds are duds, but it does present a good place to start.
You should still read the detailed analysis though, and look at what investments are in the fund, because if you’re looking to diversify your portfolio, it’s important to look not only at which companies the fund has invested in but also where in the world those companies are.
On HL, it’s also completely free to trade funds, which saves me money in the long run.
The funds themselves charge a management fee that’s separate to HL, and varies from fund to fund.
But thanks to its size, HL often offers a discount on these fees, which potentially means these funds are much cheaper to hold than elsewhere.
HL has invested a lot of money into research as well.
It publishes and regularly updates analyses of funds that help investors decide whether or not to buy.
As someone still learning the ins and outs of investing, this was precisely what I needed.
And last but not least, it has a really great app that’s easy and straightforward to use – one of the things that originally attracted me to Nutmeg.
How much does Hargreaves Lansdown charge?
HL charges an annual management fee of 0.45% for portfolios up to £250,000, which drops as the value of your portfolio increases.
Between £250,000 and £1million for example you’d pay just 0.25% a year, while those with between £1million and £2million saved are charged 0.1%. Those lucky enough to have over £2million won’t have to pay a fee at all.
It’s also known to offer lower fees to investors who have a larger portfolio before they reach those thresholds.
The management fee only applies to ISAs and SIPPs holding shares, ETFs, investment trusts, and bonds – the HL Fund & Share Account is exempt from these fees.
There is a cap on the fees, which is £45 a year on any ISAs and £200 a year on the SIPPs.
While trading funds is free, you should be prepared to pay the fees charged by the funds themselves as mentioned earlier.
And if you plan to trade shares, there’s a hefty charge per deal, which starts from £5.95.
My Hargreaves Lansdown experience in context
My experience with HL is a little bit different because unlike the other platforms I’ve tested so far, I’m the one picking out funds this time.
HL actually offers a handful of ready-made portfolios* for those who prefer to leave it up to the experts – but I wanted to experiment and learn more about investing so I decided to choose my own.
Because of this, it doesn’t really make sense to talk about portfolio performance – at least not in the same way.
What happened when I dipped my toes into investing
When I opened my account with HL last year, I went with a LISA first.
Unless it’s for a first home, you can only access the money in a LISA penalty free when you’re 60, which means plenty of time for me to experiment with this portfolio.
That means room to make mistakes, and hopefully time to correct those mistakes too.
It has certainly not been plain sailing. At one point my portfolio plummeted in value; it’s still trying to recover.
I quickly realised that my original investing strategy was completely wrong, and I’m still in the process of correcting that – so in some respects HL gave me exactly what I needed to learn.
I think I’ve got things figured out now, or at least I have enough confidence to open a second account with HL.
It’s a regular ISA this time, with a much shorter investing timeframe. So far, so good – but those may yet prove to be famous last words.
To be clear, the markets are currently very volatile and investing is designed to have a long term outlook.
The former is what’s slowing my readjustments, rather than anything that HL is doing.
What HL is doing is offering a platform where I can make my own decisions and take as much or as little advice as I want or need.
So if anything goes wrong, well, it’ll be down to me.
A verdict on Hargreaves Lansdown
You know when brands ask you whether you’d recommend them in surveys?
I would certainly tick yes for HL.
I’ve enjoyed using it so much, I’m actually planning on moving my Nutmeg portfolio over at some point
It’s easy to open an account, the app and website are intuitive, and I love all the extra information HL provides to help me come to a decision.
Of course I worry about how the funds I pick will perform in the long run.
So until I’m ready to move my Nutmeg portfolio over, it’ll make for a useful benchmark.
While my experience with HL has been positive, there has been a lot of grumblings about HL and this article from The Times gives a good overview of the background.
How safe is Hargreaves Lansdown?
If you’ve been keeping tabs on what’s happening in the investing world, you may have read about investors shorting HL.
Basically they’re betting that the company will fall in value because the global downturn is shrinking its customers’ portfolio, and in turn the amount of money it can charge.
Sometimes a company’s shares being shorted is just something that happens and sometimes it precedes them going bust.
There’s no indication of that happening here of course – HL says it’s “financially strong” – but it’s always worth knowing what happens if an investment platform goes bust.
Well, any money invested with HL is protected by the Financial Services Compensation Scheme (FSCS).
If HL goes bust, you should be able to get your money back up to £85,000 from the FSCS.
You can’t claim if you simply lost money because your investments fell in value though.
HL has more details on what that means here.
It’s worth bearing in mind that if the worst comes to the worst, it might take you a while to get your money back – another reason why you need an emergency fund and shouldn’t see any investment portfolios as easy access.
