Avoiding Pooled Nominee Accounts

[tug7]

What is the cheapest/ easiest/ best way to buy and own funds & gilts that does not involve a pooled nominee account which all the cheaper platforms that I have looked at want to use for non ISA investments?

[wanderer]

Unfortunately individual CREST accounts seem to be a thing of the past so as far as I can tell, avoiding a nominee structure means holding paper certificates.

I looked into this a while ago and concluded that the cheapest option was to buy a stock through x-o.co.uk for 5.95 dealing charge through their nominee account and then ask for certificated withdrawal at £15+VAT per line of stock. Obviously, not great if you think you want to sell in a hurry at some future point, but maybe an option for buy and hold forever ITs etc.

Paper certificates were on their way to being outlawed by the EU but things have gone very quiet on that these days - maybe they are being retained as part of our Brexit freedoms.

[XFool]

...The only obvious answers I know are:

3. Hold certificates directly

2. Find a non pooled nominee broker

3. Find a broker that allows personal Crest Membership (if still available)

PERSONAL CREST AND CERTIFICATED BROKERS
SharesSoc

[tug7]

............ I looked into this a while ago and concluded that the cheapest option was to buy a stock through x-o.co.uk for 5.95 dealing charge through their nominee account and then ask for certificated withdrawal at £15+VAT per line of stock. Obviously, not great if you think you want to sell in a hurry at some future point, but maybe an option for buy and hold forever ITs etc. ..................

Please explain a little further as I don't know what a "certified withdrawal" is or does.

[wanderer]

You buy a share through the nominee account and then once it's cleared you ask the broker to re-register it in your name. They contact the registrar and then the registrar sends you the share certificate. The share has then been transferred out of your online nominee account and you hold the paper copy and have a direct relationship with the registrar.

If you want to sell at a later date you send the share certificate to your broker and they normally convert it for free into a nominee holding. Once done - it takes a week or two - then you sell it for cash.

Be aware that there are risks to holding paper certificates, just as there are risks with nominee accounts. Lose a share certificate and replacing it can be an expensive business.

[wanderer]

Also, AJ Bell offer individually segregated nominee accounts. You have to email them to get the details as they are not advertised on the site. For an individual investor there seemed to be very little benefit opposite a pooled nominee account, as far as I could see, and the set up and quarterly charges were absolutely eye-watering.

If you have any luck finding a broker that will provide an individual CREST account then let me know, as I would certainly be keen.

[mc2fool]

............ I looked into this a while ago and concluded that the cheapest option was to buy a stock through x-o.co.uk for 5.95 dealing charge through their nominee account and then ask for certificated withdrawal at £15+VAT per line of stock. Obviously, not great if you think you want to sell in a hurry at some future point, but maybe an option for buy and hold forever ITs etc. ..................

Please explain a little further as I don't know what a "certified withdrawal" is or does.

They transfer your holding out of the nominee onto a paper certificate with your name and the number of shares you own on it, that they send you, and that's your holding. Something like this.

[absolutezero]

What is the cheapest/ easiest/ best way to buy and own funds & gilts that does not involve a pooled nominee account which all the cheaper platforms that I have looked at want to use for non ISA investments?

It is not possible to hold ISA investments in anything other than a nominee account.

[Dod101]

What is the cheapest/ easiest/ best way to buy and own funds & gilts that does not involve a pooled nominee account which all the cheaper platforms that I have looked at want to use for non ISA investments?

It is not possible to hold ISA investments in anything other than a nominee account.

I assume that the op understands that a non pooled account can only apply to a non ISA account since that is what he is asking about.

Dod

[tug7]

Yes I do understand that but thank you for making sure.

[Alaric]

For an individual investor there seemed to be very little benefit opposite a pooled nominee account

Does it give easier access to shareholder perks, if any, and rights to attend and vote at AGMs?

[Dod101]

For an individual investor there seemed to be very little benefit opposite a pooled nominee account

Does it give easier access to shareholder perks, if any, and rights to attend and vote at AGMs?

I think there are a number of benefits. Firstly, it is probably the most secure way of holding title to shares. There is no risk of the broker going bust. Secondly, you will get shareholder rights, if any, as of right. Thirdly, you get the right to attend AGMs again as of right. An attendance card will usually be delivered through your letterbox ((unless of course you opt for electronic communications) and you get a hard copy Annual Report. I find them much easier to read than an electronic copy on a website.

So I would always go for a certificated holding if I can. I now have very few, I think maybe four or five and one of these is for only about 20 shares in Alliance Trust for all the reasons Ihave highlighted.

Dod

[Lootman]

I would always go for a certificated holding if I can. I now have very few, I think maybe four or five and one of these is for only about 20 shares in Alliance Trust for all the reasons I have highlighted.

How messy would certificated holdings be for an executor to deal with in that event?

[Dod101]

I would always go for a certificated holding if I can. I now have very few, I think maybe four or five and one of these is for only about 20 shares in Alliance Trust for all the reasons I have highlighted.

How messy would certificated holdings be for an executor to deal with in that event?

Well when my first wife died in 2000 most of her holdings were certificated and I do not remember any particular problems so I think the answer is ‘not very’ Mind you, I inherited her estate and most of the holdings were transferred to me in specie.

Dod

[wanderer]

Does it give easier access to shareholder perks, if any, and rights to attend and vote at AGMs?

No, I don't think so. (Please note that I was referring in that instance to segregated nominee accounts, so the holding is still in the name of the nominee, not the beneficiary. )

I think certificated holdings are the best way to access perks and vote at AGMs, although perks are few and far between these days and voting at AGMs is increasingly something that is facilitated even through nominee accounts.

[gryffron]

How messy would certificated holdings be for an executor to deal with in that event?

My dad left certificated holdings with decades of scrip dividends. Nearly 100 separate certificates in the case of just one of the holdings, and probably 200 in total. It was an utter nightmare. I was on the phone to eqiniti for an hour and a half confirming all the certificate serial numbers I had or didn’t have (about half of them) to their call centre.

As soon as I got certificates transferred in my name, they went straight into a nominee account. It has put me off certificated holdings forever.

Gryff

[hiriskpaul]

How messy would certificated holdings be for an executor to deal with in that event?

My dad left certificated holdings with decades of scrip dividends. Nearly 100 separate certificates in the case of just one of the holdings, and probably 200 in total. It was an utter nightmare. I was on the phone to eqiniti for an hour and a half confirming all the certificate serial numbers I had or didn’t have (about half of them) to their call centre.

As soon as I got certificates transferred in my name, they went straight into a nominee account. It has put me off certificated holdings forever.

Gryff

My wife's uncle had about 30 certificated holdings, about 45 certificates in total. He held them as he liked to attend the AGMs and receive the gargantuan paper annual reports, etc. All certificates were neatly stored along with original contract notes, corporate actions, etc. It was a faff dealing with the certificates, but at least none were missing. All transferred to the widow using stock transfer forms once I had the Grant of Probate. Now all transferred to an HL nominee account. I still need to check that all dividends have been accounted for. The nominee held ISA was an absolute breeze in comparison. Filled in a simple form provided by HL and they moved everything into the widow's ISA in a few days.

My uncle had about 40 BT shares, most of the certificates missing. That was a pain. It cost about £20 to replace the certificates. To sell I then transferred into my own name, paid into iWeb, sold and then transferred the money back to the executors account. The cheapest solution I could find. I am still chasing about £5 in unpaid dividends. Equiniti are being a complete pain about them, but I will grind them down as a matter of principle.

ps, one other annoyance with certificates after someone dies is that you have to value them yourself and account for XD shares (the unpaid dividends are part of the estate). For any interest bearing certificates, such as gilts, you have to calculate the accrued interest to the date of death as well. All done by the broker for nominee holdings.

For the sake of your executors, don't hold certificates!

[Dod101]

How messy would certificated holdings be for an executor to deal with in that event?

My dad left certificated holdings with decades of scrip dividends. Nearly 100 separate certificates in the case of just one of the holdings, and probably 200 in total. It was an utter nightmare. I was on the phone to eqiniti for an hour and a half confirming all the certificate serial numbers I had or didn’t have (about half of them) to their call centre.

As soon as I got certificates transferred in my name, they went straight into a nominee account. It has put me off certificated holdings forever.

Gryff

I sometimes did that but then every so often would send them all into the registrar to get them consolidated into one certificate. The registrars not surprisingly encourage that.

Dod

[pyad]

...If you have any luck finding a broker that will provide an individual CREST account then let me know, as I would certainly be keen.

Charles Stanley still offer a CREST account but it costs a sizeable annual fee of £420 + VAT. That's in addition to their normal online charge of £11.50 per trade which is higher than many low cost nominee brokers.

[yorkshirelad1]

Am watching this thread with interest

If interested in this subject, abbreviations like ICSA and OCSA come into play. Individual Client Segregated Accounts ("ICSAs") and Omnibus Client Segregated Accounts ("OCSAs").

I'm currently in a pooled nominee with my broker, and would very much like not to be. They do offer individual nominees, but are very vague about the costs. I've heard verbally/informally about the costs being £10k, but it's not documented, it's not clear whether that's the set-up fee, or whether the annual fee, or whether VAT is on top or not. Which sounded to me like F***-off pricing. I was told that they've not firmed up the costs because no other customer is interested, and I'm the only one that has enquired. Yeah, right.

As to advantages of individual nominees, the only one I can really see is that if the broker goes bust, it might be easier to disentagle your assets from other clients' assets, but that's about it. Whether it may give you better access to the underlying invested company for things like perks, information rights or meetings remains to be seen. Also, it might not make any difference to taking a haircut in the case of insolvency and liquidators' costs (remember Beaufort?). There is some light at the end of the tunnel: Sharesoc (https://www.sharesoc.org/; no connection with them other than as a subscriber) had a small item on closer links to the companies for beneficial shareholders in their magazine of Mar 2023 (Issue 123)



There's an earlier article by Roger Lawson on individual and pooled nominees:
https://roliscon.blog/2019/11/01/law-commission-error-on-segregated-accounts/

As to executors duties and certificated holdings, I persuaded my mother to put all her certificates into her broker's nominee (a couple of years before she died, as it happens). She'd held out against them for years. It took us about 6 months to find and herd all the ancient share certificites into the nominee (and we did eventually find them all thankfully, no need for indemnity insurance). If I'd had to trace/chase all those share certificates when I was doing all her other estate paperwork (I was the sole exor), it could have been a royal PITA (and at a time ot grieving, and she'd just moved house a year before so stuff was slightly in different places). Having her shares in the broker's nominee saved me a lot of hassle, and it was a simple matter to move the shares from her account at the broker, to my and my sister's account at the broker. And, as noted elsewhere on this thread, the broker will do the probate valuation for you (for a fee) which might save you a bit of hassle and look 'official' from a broker for tax purposes (rather than your own figures). YMMV. I have also heard from a broker and also noted on this thread that if you cannot find a share certificate, Registars will require indemnity insurance for a replacement certificate and this can be quite difficult and expensive to arrange.

Note that HL are permitting voting on shares held in their ISA (I have an HL ISA). I understand also II offer similar.


tlf threads on pooled/individual nominees and costs etc
https://lemonfool.co.uk/viewtopic.php?f=26&t=24425
https://lemonfool.co.uk/viewtopic.php?f=26&t=32168