In the back
[ PLATFORMS & PENSIONS ]
50 / 51
I still believe that, despite their protests to the contrary,
platforms try to confuse people with their pricing. It just
isn’t clear, easy to understand or easy to compare
For example, a relatively new
investor putting small amounts
Pricing variables include:
of money into an ISA each month
may find Hargreaves is the cheapest
• Headline platform fee – as a
option, because their portfolio is so
percentage of the value of your
small – say £5,000 – that a 0.45 per
portfolio
cent per annum platform fee with no
• Headline platform fee – as a fixed sum buying charges makes it economical
per month, quarter or year
at £22.50 a year. Interactive Investor
• Different accounts with different
with its fixed cost model of £9.99 per
charges (for example SIPP, ISA or
month would cost them £119.88.
dealing account)
Someone with £249,000 would
• Costs for share trading (buy and sell) be paying £1,120.50 per annum in
• Costs for fund dealing (buy and sell)
platform fees to Hargreaves and the
• Regular investment dealing costs
same £119.88 to Interactive Investor (ii).
• Dividend reinvestment
• Costs for ISA and SIPP administration Changing circumstances
• Interest paid on cash
If you are a long-term customer of
• Drawdown costs
Hargreaves and joined when you had
a relatively small portfolio, it may be
All of the platforms have different
worth seeing how much you’re really
ways of baking up these charges
paying compared with the opposition,
into their own overall fee “recipe”
particularly if your investments are
and it is dependent on your own
worth a lot more now.
circumstances, such as how often
The many cost variables and
you trade, the size of your portfolio,
charging styles make it complex
whether you are accumulating or in
enough before you consider the fact
drawdown and so on.
your portfolio is constantly changing.
FE TRUSTNET
The relatively new investor with
£5,000 may well have been on the
right platform when they started
investing, but their portfolio is likely
to have grown over time and its
charges with it.
Just because your portfolio rises
in value, the cost of administering it
doesn’t, thanks to modern technology.
So, percentage-based charging
models will carry on taking more in
charges as your portfolio is added to
and (hopefully) grows.
Value, not price
Hargreaves is one of the most expensive
percentage-based charging platforms in
the UK, so if you have a larger portfolio,
regardless of the peripheral charges
it has just axed, it will be taking nigh
on half a per cent of your investments
from you each and every year.
However, it does offer what is widely
regarded as the best service in the
market and it is the only platform that
Useful resources
• If you are considering • Another useful website, moving platforms, it is Monevator, offers some about cost. Try out the
worth carrying out a little valuable advice on websites first and see if
research beforehand, selecting a platform you’re comfortable with
particularly as there is
such a diverse range of
• The Lang Cat is another
options to suit every type gem of a website,
of investor containing a wealth of
• Remember, it’s not all
the language, style, user
experience, information and
tools
insights on platform • Often, smart investors
investing for private try out a new platform
Fund Platforms website investors, including with an ISA account first,
helps you to select from 18 a range of useful just to get a feel for it.
platforms based on your guides and cost “heat If it works out, you can
specific needs. It also has a maps” written in an consolidate your remaining
useful calculator approachable style investments down the line
• Justin Modray’s Compare
trustnet.com