Broker Hargreaves Lansdown sparks investment price war The changes are expected to have wider significance in a market where Hargreaves has been dominant and where competition, until recently, has been limited. The announcement comes at the start of what the industry calls "Isa season" - the run-up to April 5, the end of the tax year, when most investors buy funds in tax-free Isa wrappers. Selecting the right fund supermarket can have a significant affect on the cost to investors and therefore the returns they receive. Comment: Why investors should leave Hargreaves Lansdown Ian Gorham, the head of Hargreaves Lansdown, said customers would save £8m a year. We are now reducing the cost of investing in funds, saving our clients an estimated £8m per annum. As a result, most clients will be paying even less when investing through Hargreaves Lansdown. Here Telegraph Money runs through the numbers and explains how if you are a Hargreaves Lansdown customer you will be paying less in the future. What was the old pricing model - and what has changed? Hargreaves Lansdown, like other fund "supermarkets" or firms operating as investment middlemen, has been forced to make changes to its pricing model due to new rules. Until now, these supermarkets made most of their money in the form of undisclosed commission from the fund managers whose products they promoted. From April, supermarkets will not be allowed to receive behind-the-scenes payments from fund managers. Under the old system a fund supermarket would typically charge investors around 1.5pc a year (£150 on a £10,000 Isa). Of this £150, the supermarket keeps around half of the money or £75. The other half goes to the company that runs the fund, such as Invesco. Some supermarkets, including Hargreaves Lansdown, handed back some of this commission as a bonus, averaging 0.17pc for Hargreaves. The average Hargreave customer therefore pays around 1.33pc a year, or £133 on every £10,000 invested. What are the new charges - and how do they compare? Hargreaves has introduced an explicit, annual charge of 0.45pc a year for the majority of its customers - those who have investments worth less than £250,000. For those with more than £250,000 in total savings with Hargreaves, the fee drops to 0.25pc. The 0.45pc annual charge is higher than some of its rivals, including Charles Stanley and Cavendish Online (both 0.25pc regardless of the sum invested). Alliance Trust Savings and Interactive Investor both remain far cheaper for those with big portfolios as they charge fixed annual fees and charges each time you buy and sell funds or shares. ATS, for example, charges £90 for holding your Isas and a £12.50 dealing fee. Comparing Hagreaves to these players is difficult and depends on your circumstamces. Even comparing it to rivals who charge in the same way, by percentage, is difficult because Hargreaves, due to its size and buying power, has managed to negotiate specially reduced prices for hundred funds that are listed on its website. The average annual management charge in Hargreaves Wealth 150 fund list, which comprises the most popular investment funds, will be reduced from 0.75pc to 0.65pc. Some 27 of these funds will be even cheaper - charging just 0.54pc. This compares favourably to other fund supermarkets that price funds on average at 0.75pc a year. In total a Hargreaves Lansdown client will now expect to pay 1.1pc a year in charges, to both the fund supermarket and the fund manager. This will net the average customer a saving of around £2.30 a year on every £1,000 investment. The savings increase alongside the fund size. An £100,000 nest egg will be better off by £230 a year under the new prices. We crunched the numbers to show how Hargreaves compares against rival fund supermarkets. These will be updated as other companies change their prices, so bookmark the page: http://www.telegraph.co.uk/finance/personalfinance/investing/10567911/Revealed-The-cheapest-and-most-expensive-fund-supermarkets.html Why were the rules changed? Two major fund shops, Barclays Stockbrokers and Fidelity Personal Investor, are yet to announce their new charges. Many of the smaller fund shops, such as Bestinvest and Chelsea Financial Services, are also keeping their powder dry. The Telegraph understands the firms that have not yet announced will unveil their new prices imminently, and it is expected that the overall costs for savers will be reduced. Fidelity said it will announce its new fees next Wednesday and promised to be cheaper than Hargreaves for "the majority of investors." Even on current prices, customers would save by switching to a rival offering new model such as Charles Stanley Direct or Alliance Trust Savings. Analysts said today's announcement will put pressure on rivals to reduce their fees even further, such is Hargreaves Lansdown's dominance of the fund shop market. City traders reacted to Hargreaves' announcement by marking its share price down by about 4pc. More money predictions for 2014: Enter your email here to receive our weekly newsletter