Fee to transfer Hargreaves Lansdown ISA?
|Investment | ISAs
Asked by brearlk, submitted
11 August 2012.
I am planning to transfer my ISA's from Hargreave Lansdown to Cavendish Online.
I have 7 funds invested and have been informed that each transfer will incur a fee of £25. I also understand that each fund will have to be sold and re-purchased.
My question is would it make sense to sell all my funds with HL and then make 1 cash transfer to Cavendish?
This I presume would incur only one fee of £25 and as there would be only 1 transaction between the 2 companies a there would be less likelihood of anything going wrong. Hopefully a more speedy transaction would take place aswell. Your advice would be much appreciated
Answered by Justin on 14 August 2012
There are two ways to transfer a stocks & shares ISA held on platforms like Hargreaves Lansdown (HL).
The first is to transfer funds or shares 'as is', a process often called 're-registration' or an 'in-specie' transfer. Using this route the funds/shares do not need to be sold, so your investments won't be out of the market.
The second is for the investments to be sold and the resulting cash being transferred across to the new ISA provider, who invests it as per your instructions. This approach means your money will out of the market between when the investments are sold on the existing platform and repurchased on the new one. This could be up to a week or more (although the whole transfer process inexplicably takes several weeks on average).
I would usually opt for re-registration unless you want to change your fund selection, in which case there's no downside to cash (provided there are no fund initial charges). But there's a problem; not all platforms currently allow re-registration off their platform (although the FSA is forcing them to offer this by the end of this year) and a handful, including HL, charge a princely sum for the privilege.
As you mention, re-registering from HL to FundsNetwork (the platform used by Cavendish Online) will incur an HL charge of £25 plus VAT per fund held, a total of £210. If you transfer the ISA as cash there's no charge. In theory a single cash transfer should be quicker, but in practice ISA transfers seem something of a lottery.
While HL's £210 re-registration charge looks rather heavy handed, it might still be worth paying if your portfolio is worth tens of thousands of pounds, just in case markets swing upwards while your money is being transferred. For example, missing a 2% market rise on a £50,000 portfolio would effectively cost you £1,000.
Otherwise, a cash transfer might prove better value in this instance.
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Comment by BernieB at 1:41pm on 29 Aug 2012:
Is it possible to transfer out an ISA in stages? I was wondering if you decided to transfer out as cash, selling a number of funds on a regular basis, and making regular transfers of cash you would have "pound cost averaging" and reduce the risk of being out of the market?