The Lemon Fool

Because of pension contribution issues, I am going to have to invest in VCTs. The total amount will be about 25 K in 4 or 5 VCTs on the offer for this tax year. Which is the cheapest IFA platform when it comes to discounted initial and trail commission please? I believe there are several platforms such as interactive investor, Wealth Club, Bestinvest and HL. Which one is best in terms of discounts?
Many thanks.

I've just started buying paper certificates with Wealth Club as they seem committed to helping the private VCT investor and am happy with their service so far. On my VCT purchase they offered the full initial fee discount offered by the VCT as additional shares and a modest trail rebate for the first few years which apparently they send out as cheques once a year if your overall rebate accounts is worth £20 or more. I understand that some platforms might pass on more of the trail but then you may pay initial application costs eg II charge £30 inc VAT. and some of them such as HL have been reducing support for VCT investors in recent years. If you are trying to make an investment in new shares this tax year then you will have already missed some of the offers so might not find 4 or 5 that still interest you. I put my money in Baronsmead as it's well diversified with a good income profile. I might be more adventurous next tax year.

Did you get the additional shares separately or combined with the ones you would have got anyway?

I believe the addional shares from the discount are part of the initial allocation.

Thanks Alex. That's what I thought but I didn't get a contract note with a purchase price so wasn't sure.

Well well well!

Black mark to hitherto-stalwart WealthClub, as my application for Albion generated an unspecified error and failed to complete.

Rather than wait, I applied directly through Albion instead. The difference in cost seems to be exactly the trail commission, which is dwarfed by the earlybird discount.

I have been very happy with WealthClub for all my recent years' applications.

I agree with UncleE that the initial price may be the same as a direct application and the trail commission is the difference but there is one other factor, an application through an FCA regulated intermediary can remove money laundering bureaucracy.

Kidman wrote:I have been very happy with WealthClub for all my recent years' applications.

I agree with UncleE that the initial price may be the same as a direct application and the trail commission is the difference but there is one other factor, an application through an FCA regulated intermediary can remove money laundering bureaucracy.

Hmmm. I didn't think of that. Neither did I encounter it in my application. Indeed, I also didn't have to declare myself HNW or sophisticated.

Two things that might be relevant there: being an existing shareholder, and applying for an amount that may fall below money-laundering thresholds. Though I saw nothing in the application to suggest either of those played a role.

(talking of "sophisticated", that's technically a definition you could now meet with a couple of £10 flutters on seedrs).

Interesting that when Albion opened last week WC put it top of their list but today Northern joined as number 4. Although WC have a brief page declaring that their selection is not based on commercial criteria they could be a bit more transparent in how they scored the offer. It reminds me of the wealth type shortlists that HL, II and Fidelity publish and struggle to describe as they are not allowed to call them advice or recommendations.

Looks like WC just list the Featured Products alphabetically. Similarly for the non-Featured ones.

Alexland wrote:They could be a bit more transparent in how they scored the offer

It's alphabetical

The featured ones are alphabetical, then the rest are alphabetical too, take a look

(I deduced this at a glance, seeing Blackfinch and Calculus are near the top!)

Alexland wrote:Interesting that when Albion opened last week WC put it top of their list but today Northern joined as number 4.

Isn't Albion at the top and Northern 4th out of the "featured offers" purely alphabetical?

Agree on the wider point about shortlists, wealth 100s etc.

Aah yes it is alphabetical - I was looking for deeper meaning! Thanks guys.

UncleEbenezer wrote:Two things that might be relevant there: being an existing shareholder, and applying for an amount that may fall below money-laundering thresholds.

From memory the money-laundering threshold was about £10,000, maybe EUR 10k or 15k in our EU days, but I agree that an existing shareholder is unlikely to be asked for the necessary paperwork. One would also hope that the receiving agents can do any necessary ML checks electronically these days rather than asking for certified copies of pieces of paper that haven't been printed from the internet etc.

VCTs are classified as 'retail investments' so do not need any FSMA status such as HNW or Sophisticated.

Kidman wrote:VCTs are classified as 'retail investments' so do not need any FSMA status such as HNW or Sophisticated.

So why do Wealth Club require such declaration when using their online form to apply for VCTs?

Alexland wrote:I've just started buying paper certificates with Wealth Club as they seem committed to helping the private VCT investor and am happy with their service so far. On my VCT purchase they offered the full initial fee discount offered by the VCT as additional shares and a modest trail rebate for the first few years which apparently they send out as cheques once a year if your overall rebate accounts is worth £20 or more. I understand that some platforms might pass on more of the trail but then you may pay initial application costs eg II charge £30 inc VAT

Actually I have done some maths on the level of trail I would have received on my recent subscription to BVT if I had gone with II (it seems to be 0.5% pa for 5 years detailed in the offer prospectus) compared to the WC offer of just 0.10% for 3 years and even after the £30 initial charge the gain would have mostly covered the £600 for an II trading account for 5 years and I would have had a S&S ISA with trade credits too. Hmm maybe next tax year if the chosen VCT(s) offer a similar trail and I am subscribing a similar amount I will go with II.

Alexland wrote:

Kidman wrote:VCTs are classified as 'retail investments' so do not need any FSMA status such as HNW or Sophisticated.

So why do Wealth Club require such declaration when using their online form to apply for VCTs?

I believe it is because they also send out information on EIS investments etc which require this. They have also started to offer a private equity fund as well.

If they did not check your status they could only mention VCTs and other retail investments in their marketing.

I mainly do VCTs but have done a couple of single company EIS investments through Wealth Club, higher risk of course and no income, but higher potential returns for the patient, and better tax incentives too.

When I first started investing in VCTs in about 2005 or whenever I was certainly not a HNW individual and probably wouldn't have qualified as a Sophisticated Investor either. It never caused me any problems.

Gostevie

I am sure mjames is correct with respect to WealthClub.

I used to buy BES (the predecessor to EIS) shares with no questions asked but that was before the Financial Service and Markets Act (FSMA 2000) which brought in the classifications of HNW and Sophisticated.

Regarding the earlier money-laundering question, I note from the Mercia/Northern paperwork that the current level for being checked if not applying through an intermediary is EUR 15,000 or the local equivalent. Mercia/Northern say that they first try electronic checks and only if they fail do they request the relevant paperwork.

Kidman wrote:I used to buy BES (the predecessor to EIS) shares with no questions asked but that was before the Financial Service and Markets Act (FSMA 2000) which brought in the classifications of HNW and Sophisticated.

I'd say those definitions are severely unfit for purpose.

Sophisticated? Two investments in unlisted companies qualify there. That could be two flutters of a tenner each on seedrs.

HNW? I made it to £250k because I was saving for a house without having a reliable-enough income to get a mortgage. How many other countries count you as HNW before you can afford a house?