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ICICI: a new rival to Hargreaves Lansdown

Ed Bowsher
by Lovemoney Staff Ed Bowsher on 10 January 2013  |  Comments 11 comments

A new entrant is shaking up the world of investment platforms.

ICICI: a new rival to Hargreaves Lansdown

If you’ve recently put money into an investment that is in any way related to the stock market, there’s a good chance that you’ll have used an ‘investment platform.’

In other words, you’ll have made the investment online and can monitor how well the investment is doing by visiting the platform whenever you like. Hargreaves Lansdown is probably the best known platform provider.

The first investment platforms in the UK were known as ‘fund supermarkets’ because they only allowed you to invest in investment funds, such as unit trusts and OEICs. But ten years later, most of the supermarkets have evolved into ‘platforms’ where you can also buy individual stocks and shares, and invest in pensions too.

Big fan

I’m a big fan of platforms as they’ve made investing cheaper and simpler for ordinary folk. You can now invest just by touching a button and many platforms also offer useful tools and research to help you make your investment decision.

But that doesn’t mean that all platforms are identical. There are significant differences between the main platforms and competition is gradually increasing. In fact, I think one recent entrant – ICICI - looks especially attractive.

So I thought it would be worth comparing three of the top platforms and seeing which is best.

Hargreaves Lansdown

Let’s start by looking at Hargreaves Lansdown, which is widely seen as the No.1 platform for private investors.

You can use the Hargreaves platform to manage your Stocks & Shares ISAs, a SIPP pension, or direct investments in funds or shares.

I’m a longstanding Hargreaves customer myself and I’ve always been very impressed by the company’s technology and customer service. The platform is easy to operate and nothing ever goes wrong. There’s also a very wide range of investment options available.

However, there’s one area where I’ve begun to have my doubts – charges.

In fairness, if you opened a Stocks & Shares ISA with Hargreaves Lansdown, you wouldn’t have to pay any dealing charges for funds, and you wouldn’t normally have to pay any initial charge to the fund management company (for example Jupiter or Legal & General.)

Hargreaves Lansdown also offers a ‘loyalty bonus’, normally 0.25% but which can be as much as 0.5% a year. This is basically a partial refund of the trail commission that has traditionally been paid by the fund management companies to financial advisers.

However, investors in most index tracker funds – usually the cheapest way to invest in the stock market – have to pay an extra charge to Hargreaves of £1 or £2 a month for each fund.

If you want to buy shares in an individual company, you’d normally pay £11.95 per trade although that figure will fall to £5.95 if you’re a very frequent trader. There’s also an annual charge for all shares and investment trusts that amounts to 0.5% of the value of the investment – capped at £45 a year.

The charges for a SIPP are identical except that the 0..5% charge is capped at £200. If you’re investing outside an ISA or SIPP, the charges are the same except that you won’t have to pay the annual 0.5% charge for shares and investment trusts.

In many ways, the charges are pretty reasonable, but there are two things that annoy me – Hargreaves doesn’t refund the full trail commission, and it imposes an extra charge for index tracker funds.

ICICI Investment services

ICICI is the new kid on the block and I think it looks very promising.

The big plus point is that ICICI charges a simple flat fee for all your investments. This is either £4 a month or £35 a year. If you have a bank account with ICICI, the charges are £3 a month or £25 a year.

You don’t have to pay any other charges and you’ll receive all the trail commission from the fund management company. This is a simpler pricing structure and it’s also more transparent than Hargreaves. With ICICI, you know that you’ll get all the trail commission back, whereas with Hargreaves the picture is less clear.

On the downside, you can’t invest in individual shares with ICICI and you can’t operate a SIPP either. But you can operate a Stocks and Shares ISA or make direct investments in funds.

I really like the simplicity and the transparency of the charging structure and it’s especially attractive if you’re able to invest a relatively large sum of money. If you’re investing £35,000, a £35 fee works out at 0.1%, but if you’re only investing £3,500, it’s a 1% charge.

ICICI plans to launch a SIPP service later this year.

Alliance Trust Savings

Alliance Trust also imposes a regular charge for all accounts - £12 a quarter, and it also rebates all trail commission to customers. You won’t normally have to pay any initial charge either.

So Alliance Trust effectively charges £48 a year while ICICI charges £35. Unlike ICICI, Alliance Trust also imposes a dealing charge of £12.50 a trade which applies to all trades including fund purchases as well as stocks and shares.

Right now, Alliance Trust also has a restricted range of funds to choose from, but this is only a temporary issue due to regulatory changes at the beginning of the year – Alliance should have a normal range of funds back very soon.

And you can at least invest in stocks and shares with Alliance Trust which isn’t possible with ICICI.

The best

Just looking at these three platforms, I’d say that ICICI is best if you think you’re only going to invest in investment funds and you’re able to invest at least £10,000.

Alliance Trust is better if you also want to invest in individual stocks and shares, but Hargreaves may still win out if you’re investing small amounts of money. That’s because the lower dealing charges may well outweigh the lower levels of trail commission rebate if you’re investing small amounts.

But the big message is clear: don’t just assume that Hargreaves Lansdown is always best. There’s plenty of competition out there and it's only going to increase.

More on investment and platforms:

Six great reasons to choose an index tracker
I still can't forgive Hargreaves Lansdown
The cheapest index trackers
The cheapest global index trackers

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Comments (11)

  • prometheus
    Love rating 1
    prometheus said

    Is ICICI fully covered by the FSA compensation scheme though? I couldn't find it on their site

    Report on 10 January 2013  |  Love thisLove  0 loves
  • nibbers
    Love rating 1
    nibbers said

    Wrong Ed!

    "There’s also an annual charge for all shares and investment trusts that amounts to 0.5% of the value of the investment – capped at £45 a year.The charges for a SIPP are identical"

    The charges for a SPP are not identical as the cap rises to £200 a year!

    Report on 10 January 2013  |  Love thisLove  0 loves
  • doc45
    Love rating 0
    doc45 said

    Admin support of ICICI remains to be proven.

    If service level is anything like in India - then cheap doesn't mean that it is better.

    Report on 10 January 2013  |  Love thisLove  0 loves
  • blkbrd37
    Love rating 2
    blkbrd37 said

    Why should I have to use a platform to buy individual shares? Is it not possible to buy individual shares directly from the company - DRIPs as they have in the U.S.?

    Report on 10 January 2013  |  Love thisLove  0 loves
  • yocoxy
    Love rating 152
    yocoxy said

    Any company that sends out the volume of thick, glossy marketing material that I receive from HL must be charging quite some fees somewhere..

    Report on 11 January 2013  |  Love thisLove  0 loves
  • Ed Bowsher
    Love rating 80
    Ed Bowsher said

    Hi Nibbers,

    You're quite right, there's a £200 cap for the sipps. I've now amended the article. Thank you for pointing out my error.

    I'll come back and answer the other points later today.


    Report on 11 January 2013  |  Love thisLove  0 loves
  • new investor
    Love rating 0
    new investor said

    The loyalty bonus for Hargreaves is not guaranteed. It varies depending upon which fund you invest in. I have a Artemis fund which gives me only 0.125%. I have another fund which does not give me any loyalty bonus. I am sure Hargreaves still gets commission from funds which it does not pass on.

    I had a savings a/c with them. Couldnt fault their service. But savings is a simple product. I checked the ICICI website, they seem to have a UK callcentre. Their e-mail address is that of Cofunds, not sure if their call centre too is.

    Good deal, but will wait for sometime to see some more feedback on ICICI before I move my money to them.

    Report on 11 January 2013  |  Love thisLove  0 loves
  • mdskinner
    Love rating 2
    mdskinner said

    "There’s also an annual charge for all shares and investment trusts that amounts to 0.5% of the value of the investment – capped at £45 a year." - Not the full truth here: this fee applies to the ISA account, but not to the Fund & Shares Account with HL, where you only pay the £11.95 trading charge (and stamp duty for UK shares).

    "Hargreaves Lansdown also offers a ‘loyalty bonus’, normally 0.25% but which can be as much as 0.5% a year." - Again, you're not telling people the full truth. You only get HL Loyalty Bonus on holdings over £1,000. IF you hold £500 in a fund you get zilch back.

    I know this because I have both an ISA and a Fund & Shares Account with HL.

    Report on 11 January 2013  |  Love thisLove  0 loves
  • tuttogallo
    Love rating 99
    tuttogallo said

    I Use The Motely Fool. £30 per annum and £10 per deal (plus stamp duty on purchases of course). I have a share account and an ISA. I believ that one can also hold funds.

    Once I had tansferred all my shares in, everything was really easy and convenient.

    Report on 13 January 2013  |  Love thisLove  0 loves
  • andrewjameshowar
    Love rating 26
    andrewjameshowar said

    A "DRIP" is not exactly a way of buying shares direct from a company. It stands for "Dividend Reinvestment Plan". Instead of receiving a cash dividend, you get a few extra shares. It's not limited to the US - some UK companies can give you this facility too. You still pay income tax on the amount of the dividend. And your capital gains tax calculations (if you have to do them) can get very complicated. Still, they are of interest to some people, if not me. But they are not really a way to buy shares. Dealing costs are really cheap these days compared to when I first started buying shares. If you've got enough to invest for it to be worth your while buying shares in the first place, £10 is neither here nor there.

    Report on 01 February 2013  |  Love thisLove  0 loves
  • blkbrd37
    Love rating 2
    blkbrd37 said

    I beg to differ, Andrew. Whilst 'DRIP' stands for Dividend Reinvestment Plan, in the U.S. you may buy directly from the company instead of going through a broker. Not all companies provide that option but many do.

    Report on 13 February 2013  |  Love thisLove  0 loves

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