Great post. Stability, financial sustainability, security is the biggest hurdle FreeTrade (and Trading212, InvestEngine etc.) need to overcome. Thatās why I currently spread my investments across 3 brokers, and Iām looking at a 4th.
From that perspective the new pricing plans are very reassuring.
For what it is worth, Iām not entirely clear how relevant the FSCS limit is as I thought it only covered cash rather than investments. Suppose the devil is in the detail as to what happens to the investments if for example a broker went bust.
The 85K applying only to cash is a common misunderstanding. It comes down to what kind of loss and what kind of firm.
This means that in the unlikely event of Freetrade failing, together with a failure to safeguard your assets or some other failure, the value of your assets held with Freetrade is protected by the FSCS up to a maximum of Ā£85,000.
What is not covered is losses caused by bad advice to your investment when dealing with a non advice firm. Freetrade does not give advice. So your understanding is correct, in the case of Freetrade, in the sense that your investment losses are your own.
Agreed, it is definitely something which commonly misunderstood.
Iām 95% sure I understand the theory but personally find it very difficult to get a definitive understanding of what is covered where and what that means in certain scenarios. The lack of transparency of what is held where at any given time adds to the uncertainty for me.
I see the sense in this. I havenāt bundled all my company related pensions together ā¦ for me in addition to what you say it is also a matter of investment risk diversification.
FYI from what I had read and understood. UK shares are held with freetrade nominees limited, European shares are held with Clearstream, and US shares are held with drivewealth.
You can email or message freetrade to confirm.
As for FSCS protection. If you look at past failures the wording always seems to suggest that protection coverage is a decision made at the time.
So for example in the event of a failure discrepancies in your shares might be covered. That is, if some shares are missing or maybe thereās some issue with a dividend perhaps (just making this up) the protection may cover that discrepancy. But a failure means the appointment of an administrator which generally you have to pay for, including their management and any fees relating to transfers etc. this has been covered by FSCS in the past but the wording makes it sounds optional, e.g they didnāt have to cover those costs but decided to do so.
This additional costs can be expensive and unknown. So relying on the entire 85k to protect just your shares will leave you not as covered as you thought you were.
The nominee structures are supposed to be the first line of protection for the majority or all of your investments
I came to FT because of their GIA and stock offerings. I had and have no need for the other services.
The GIA gave me access to the REITs and some MLPs that I depended on for dividends. FT intends to move all my important positions into their Standard plan. It is now a dead-end for me. I know that I cannot depend on FT for my long term investment plan.
My ISA remains with HL.
Revolut offers similar US stocks to FT.
You see what I find an issue is the sheer inconvenience and pain in the apples of moving from one broker to another broker because of their ācurrentā fees to try save a tenner a year.
Each of these brokers will and do change their costs all the time so is it really worth the hassle of moving? Probably if you have a crazy portfolio.
For a new investor I wouldnāt touch AJ Bell etc, I have barely scraped a profit on most of my trades with my portfolio being down 110 pounds from last year so far, even if I take the S n p 500 being 18 pounds in profit AJ Bell would of taken more than half that if not all for my limited trades/ only managing 100 pounds a month currently.
So far Iām on the basic account but with a few adjustments I can see me getting the standard teir.
Im enjoying the debates and figures though keep going
As a GIA holder and a new invester i was more than happy to use the free account that GIA offer untill i reached my tax free limit, and i was allway going to upgrade to ISA account .
I found it annoying to upgrade earlier than i expected.
But when i took the time to think and realise my long term investment goals and looked the move from basic to standard for Ā£4.99 mouth /Ā£60 is not a issue, with the benefits off all stocks available to me, ISA included 1% interest up to Ā£2000, that Ā£20 back there in interest.
so really am only paying Ā£40 a year Ā£3.33 a mouth thats same cost as a cup of costa coffee.
I can live with that .
So as you can tell am a standard account holder now
I havenāt actully tried it but I just imagined it to be a pain? Like do you need to sell up then move on or do you take your shares that you bought over to another broker?
In theory you can transfer everything in specie without selling anything.
This tends to be the case for all the big brokers because they all use compatible systems.
Thereās two issues where it doesnāt fully work.
Funds where the broker doesnāt offer funds or didnāt have the specific funds. An example vanguard only offers vanguard funds so if you have say Baillie Gifford funds, you canāt transfer these.
The other issue is new brokers using uncommon (for now) methods of holding foreign shares, or they donāt yet fully support transfer or specific foreign shares
So for example you can transfer US shares to freetrade from another broker. But for the moment you canāt transfer US shares from freetrade to another broker.
So you have two options. Sell incompatible shares, or only do a partial transfer.
The actual process itself though Iāve found relatively painless.
A working example is I periodically transfer my work pension funds to my SIPP. My SIPP doesnāt offer the funds my pension has (interestingly many pensions seem to have weird pension specific funds). So when I do a partial transfer I do a partial cash transfer. They automatically sell funds and transfer the cash to my SIPP. Takes a few weeks but I donāt have to do anything during that time.
Another example. At the moment Iām transferring some shares from a GIA to my freetrade GIA. This is a partial transfer because I also hold a fund (freetrade donāt support funds) and a UK share that freetrade dont currently support.
I filled out one form (took a few minutes), specified the shares I wanted to transfer and pressed submit. The only follow up Iāve had is to ask if I want the book cost added and if so to provide those details and theyāll had it.
Edit: to be clear in the above example, the transfer will likely take a few weeks but nothing will be sold. My shares will transfer in specie I.e as is. So no issue of being out of the market
Yes to make a simplistic Web site doesnāt take much effort but making a use able attractive website with features that make the user come back everyday without pulling their hair out does take time and money.
Iām not happy. Youāre basically going to lock me out of half of the US stocks that I currently trade unless I pay you monthly. Classic bait and switch. Thanks guys
I guess itās a case of you pay and the company can hopefully not fold or you get everything for free for maybe a year or two and the company proceeds into administration at which stage you will be forced anyway onto a new broker with higher costs than you might of had to pay using standard.
Except on US stocks the poster isnāt getting āeverything for freeā - they are paying fx fees.
Regardless of whether FT needs to make money (which as a shareholder it obviously does!), the point still stands that it is not the first time that FT has done a bait and switch style tactic by removing access to shares (rather than actually making the paid plans more attractive eg uk fractionals/auto reinvest etc etc). It was a poor decision when they first did it and the same now.
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