Attention UK investors! You know we created that massive broker comparison table? Well, we’ve gone back to the coalface and updated it in order to help you find the best online broker for you.
Filling in the nation’s potholes with a thimble would have been more fun. But it would not have produced a quick and easy overview of all the main execution-only investment services.
Investment platforms, stock brokers, call ’em what you will… we’ve stripped ’em down to their undies for you to eyeball over a cup of tea and your favourite tranquillisers.
What’s changed with this update?
With every update, we add a fresh comment to the thread below the broker table to highlight the key changes.
This time I’ve noted:
Most of the cost-cutting action is around ETF SIPP portfolios.
Freetrade has introduced an annual subscription fee for its SIPP of £119.80. As in: you get a reduced rate versus its monthly subscription fee if you pay for the whole year in one go.
That makes Freetrade the cheapest SIPP for investors with assets valued over £80,000.
Under £80,000, InvestEngine is now neck and neck with Vanguard on cost, but unlike the latter it doesn’t restrict you only to Vanguard ETFs.
I’ve added Robinhood UK to the trading platforms table. It’s only offering US stock trading in a GIA for now.
Finally, iWeb is waiving its £100 account signing-on fee until 30 June. The offer is well worth a look if you hardly ever trade or fancy pulling off the ‘cheapest stocks and shares ISA hack.’
See the ‘Good for’ column of the table for a summary of which platforms have an edge for what.
Or better yet study the table closely to find the best online broker for your situation.
Who’s the best broker?
It’s impossible to say. There are too many subtle differences in the offers. The UK’s brokers occupy more niches than the mammal family. And while I know which one is best for me, I can’t know which one is right for you.
What we have done is laser focus the comparison onto the most important factor in play: cost.
An execution-only broker is not on this Earth to hold anyone’s hand. Yes, we want their websites to work. We’d prefer them to not screw us over, go bust, or send us to the seventh circle of call centre hell. These things we take for granted.
So customer service metrics are not included in this table. It’s purely a bare-knuckle contest of brute cost for services rendered.
Why should DIY investors flay costs as if they were the tattooed agents of darkness? Because the last thing you need is to leak 1% in management charges. Especially not in light of annual after-inflation expected returns of less than 3% on passive portfolios for the next decade.
This makes picking the best value broker a key battleground for all investors.
Using the table
We’ve decided the main UK brokers fall into three main camps:
- Fixed-fee brokers – charge one price for platform services regardless of the size of your assets. In other words, they might charge you £100 per year, whether your portfolio is worth £1,000 or £1 million. Generally, if you’ve got more than £12,000 stashed away then you definitely want to look here. Bear in mind that fixed fee doesn’t mean you won’t also be tapped up for dealing monies and a laundry list of other charges.
- Percentage-fee brokers – this is where the wealthy need to be careful. These guys charge a percentage of your assets, say 0.3% per year. For a portfolio of £1,000 that would amount to a fee of £3. On £1 million you’d be paying £3,000. Small investors should generally use percentage-fee brokers. However even surprisingly moderate rollers are better off with fixed fees. Many percentage-fee brokers offer fee caps and tiered charges to limit the damage. But the price advantage still favours the fixed-fee outfits in most cases.
- Trading platforms – brokerages that suit investors who want to deal mostly in shares and more exotic securities besides. Think of sites like Interactive Brokers, Degiro, and friends. Beware: don’t imagine zero-commission brokers are giving it away. Their services cost money so they’ll be making up the difference somewhere. Probably in less obvious fees such as spreads.
The table looks complex. But choosing the right broker needn’t be any more painful than ensuring it offers the investments you want and then running a few numbers on your portfolio.
Help us find the best online broker for all of you
The final point you need to know is that our table’s vitality relies on crowd-sourcing.
We review the whole thing every three months. But it can be permanently up-to-date if you contact us or leave a comment every time you find an inaccuracy, fresh information, or a platform you think should be added.
Thanks to your efforts as much as ours, our broker comparison table has become an invaluable resource for UK investors looking to find the best online broker.
Take it steady,
The Accumulator
A great resource for the DIY investor and appreciation for all the hard work that has gone into creating the comparison table – brilliant!
Great work – very useful!
I think this is quite helpful but personally I would place a lot of importance on the company I am trusting my money to
Looking at what happens when financial companies get into trouble, often the clients’ money gets dipped into to keep companies going longer than their natural life…
…and then there are some financial companies that are just run by crooks like Maddoff
If something goes wrong FSCS compensation is actually quite limited if you have even been saving for a decade or more. There are also no guarantees about how long you will have to wait toget any compensation paid out. If an administator is involved it could well take years before you see your money back
Equally once you have a decent sized portfolio a fixed custodian fee (not a % based one) isn’t such a big additional annual cost
I would much prefer to pay a (small) premium to hold money with a more transparent quoted company like Hargreaves Lansdowne or Alliance Trust rather than some of these private outfits where you have little way of knowing who is behind it and what they might be doing with your money
Even then you can’t control what custodians they use or what stock lending they do however…
Thanks for putting all this data together. Perhaps someone could now start developing an online tool which allows you to import your own portfolio and calculate the cheapest option for your holdings on an individual basis….?!
I’d second Neverland’s comments about who you trust with your money. I’ve even considered splitting my investments between two or more providers to spread the risk but for now I’m sticking with Hargreaves Lansdown. Too big to fail, anyone?
A few years ago I was involved in a fundraising exercise at a technology company and had to contact every single broker that held investors’ shares in my employer via a nominee account so they could ask the underlying shareholders if they’d like to invest in a loan note. Hargreaves Lansdown were by far the most helpful and professional. With many of the others it was like dealing with a call centre. Unfortunately I can’t remember which ones were the worst.
> Perhaps someone could now start developing an online tool which allows you to import your own portfolio and calculate the cheapest option for your holdings on an individual basis….?!
http://www.comparefundplatforms.com/compare.aspx
Some great work there – a really useful resource (and some good research too!)
For those that are interested in the pure cost angle (for funds only):
https://www.rplan.co.uk/compare
This lets you compare the costs of up to 3 brokers side by side. The pros are that it’s fairly comprehensive, the cons are that it works with a standard basket of 10 funds (so you can’t enter your specific funds to compare). Disclaimer: we wrote this one, but it has been running for over a year and dissected and featured in a number of papers, so we’re fairly sure it’s unbiased and accurate.
http://www.comparefundplatforms.com/
This lets you compare specific funds across different providers. The pros are that you can enter you own funds, the cons are that it only covers a limited number of providers (8 out of 36 providers so far.)
Of course isn’t and shouldn’t be the only consideration – service and functionality is important too (arguably more important that pure cost.) But it’s hard to assess whether you’re getting value for money without knowing how much things cost, so it’s useful to work that out.
HTH –
@Neverland
When it comes to investing in funds, it’s worth bearing in mind that when you invest through a provider (such as Hargreaves, ATS or any other outfit), your money isn’t held by the provider – it’s held by the fund manager. So even if the provider goes bust, your money is safe so long as it’s invested (i.e. held by a fund manager.)
This wouldn’t apply for money that you hold in cash with them; however, most of the smaller providers use platforms such as Cofunds or Fidelity and the cash accounts are managed by the platforms, so once again if the provider went bust you would be fine so long as the platform doesn’t (and Cofunds for instance is bigger than HL despite being privately held, managing £50bn to HL’s £30bn, so it’s probably less likely that Cofunds goes bust than HL!)
The same doesn’t apply to shares of course.
@Nick
“So even if the provider goes bust, your money is safe so long as it’s invested (i.e. held by a fund manager.)”
So as long as its actually been invested by the broker, its in a fund, the fund is actually registered under your own name or the defunct brokers’ records are up to date and recoverable….
Focusing solely on costs -> horsemeat lasagne
@Neverland
“So as long as its actually been invested by the broker, its in a fund, the fund is actually registered under your own name or the defunct brokers’ records are up to date and recoverable….”
Sure – you’re right that it’s possible that the broker didn’t invest your money as they said they would (i.e. they stole your money); that they fraudulently register the holding in their own name rather than as the nominee; that they don’t keep proper records etc. etc. I’m not sure if any brokers in the UK have been accused of that so far (I certainly don’t know of any, but could be wrong.)
Most smaller brokers use platforms; platforms tend to be large and manage a lot of assets (e.g. Cofunds £50bn, Fidelity FundsNetwork £40bn); they’ve been around for a while, and likely won’t disappear tomorrow. When you invest with a platform, the broker often doesn’t even know of the transaction until the platform tell them about it (i.e. many small brokers use a site provided by the platform to handle new investments, and don’t handle your money directly at any point.) I just meant to point out that these platforms aren’t exactly fly-by-night outfits that are likely to disappear from one day to the next; my personal opinion is that you are no more likely to lose your money with a platform than with HL or ATS.
For what it’s worth, I had some investments with a provider that went bust, but because the provider was using Cofunds, it only took a letter to Cofunds to switch to another provider.
“Focusing solely on costs -> horsemeat lasagne”
Couldn’t agree more – cost is obviously important, because it affects your returns; but far from the only thing to consider.
Nothing wrong with horsemeat lasagne Neverland, unless of course you paid for beef 🙂
Good analogy though.
I’m quite partial to horsemeat lasagne
A lot of effort has clearly gone into the broker comparison – great work. Even after just a short review I can see where to save on fees, thanks for saving me all the head scratching and spreadsheets!
@webnibbler — Thanks for the feedback, and to everyone else. Even getting the extra wide page size was a bit of a faff, but glad to hear it was worth it. Together we should be able to keep this resource up-to-date and useful now.
John,
Neverland: Shares are also held in a nominee account, therefore if the broker goes bankrupt the shares are fully protected.
Regards,
John
This sounds really useful – I’ll take a peek tonight – can’t sit on Monevator for too long at work 😉
@John
Haven’t you heard of pooled nominee accounts?
http://www.moneyweek.com/investment-advice/how-to-invest/strategies/what-to-do-if-your-stockbroker-goes-bust-56514
@John
Thats pretty much the opposite of how I understood the “benefits” of nominee accounts. However trying to work out the cost / benefit of a personal CREST membership account v. a run of the mill nominee account defeated me.
Cracking stuff, keep up the good work!
Thank you,
I compiled some information about costs and features when I made some research about:
* Stock Brokers
* Fund supermarkets
I’ve linked your table there as well to make it easier to find in the future…
Cheers!
An incredibly valuable resource.
One tiny little thing… where a different wrapper is available on a platform/broker/whatever, would it be possible to use a ” ” ” on the charges line rather than a ” – “, as otherwise it looks like there’s no charge, or not available? 🙂
I’ve noticed that some different variants of clean class funds are appearing. For example JPM Natural Resources:
http://www.trustnet.com/Factsheets/Factsheet.aspx?fundCode=SPCOM&univ=O
Has a “B” class, and a “C” class with different AMCs (it looks like the “B” class is free of trail, and the “C” free of trail and platform fees). Would there be any value in adding an additional category, where you have access to these “Superclean” funds? (Alliance Trust, for example, only has the “B” class of this, and is still charging the platform fee. I think).
I’ve been trying to decide between TD Direct and Hargreaves Lansdown, being a bit of a sucker myself for big/reliable brands. I’ll be investing around 50-100k, via both a trading account and an ISA, into a mix of passive and active funds and possibly a few shares. Here are my thoughts in case anyone finds them useful or cares to comment.
At face value, HL has a much better website (and better app), looks easier to use and has a clearly laid out and wide-ranging product selection. By contrast, TD has a mediocre trading website, makes it pretty hard to find products, and when you do find them (e.g. funds) the array can be quite bewildering. One-nil for HL.
However, TD is quite a bit cheaper under the current pricing structure:
* No annual charges at TD vs. £45 per year at HL (assuming >£9k of shares & ETFs in the ISA)
* ETFs and shares costs about the same to trade (£12.50 vs. £11.95)
* Active funds are generally cheaper at TD (~0.75% clean AMC + 0.35% = 1.1% total cost) vs. HL (~1.5% dirty AMC), but not always, for example if TD’s version has 1% AMC and HL discounts down to 1.25%
* Passive funds are also generally cheaper at TD (~0.25% + 0.35% = 0.6%) vs. HL (~0.25% + £24 per fund, which only works out cheaper than TD at £7k+)
Furthermore, TD makes it fairly obvious that 0.35% is its post-RDR position, whereas HL has failed to provide any clarity. Since HL make an average of 0.6% trail commission after rebates, I can only assume they’ll go for a charge in the 0.5%-0.6% range to preserve their profit margin. Since this is much higher than their competitors, they’ll presumably try to make up for it by stocking funds with AMCs lower than already clean levels at competitors. (Is that what “super clean” funds are?) If they go for 0.55% and get active funds down to ~0.65% then that makes the total cost 1.2%, which is acceptable next to TD’s 1.1% (as outlined above). Clearly there won’t be much room for manoeuvre on passive funds. Whatever happens, HL will still be more expensive than TD.
But it’s worse than that. HL obviously aren’t clarifying their position because they want to keep the current gravy train going as long as possible. I think their service looks great, but I can’t sign up with a company that’s uncompetitive on costs and less than straightforward with its customers. So basically I think I’ll go with TD.
A 0.35% charge on top of a passive ultra low cost tracker fund is pretty expensive in my opinion, H-L can be very cheap still if you opt for a minimum fund size. Say you have a small total pot you can still achieve diversification with a single Vanguard Lifestrategy fund.
With larger amounts the H-L flat rate per fund is actually quite reasonable, I think whether it increases will depend on the total % of their clients’ money is invested in tracker funds vs active funds and shares.
If everyone invested the way I do (well probably most of us on here do) they really wouldn’t make a vast amount of money, but I’ll wager most H-L clients are brainwashed into active funds.
@gjs – with a 100K portfolio you’d be looking at a platform charge of £350 with TD. HL have already trailed that they will go for a percentage charge so they will be around the same or worse if they try to maintain those fat profit margins you mention.
Alternatively: Alliance Trust – flat fee £96 (for 2 accounts) plus trading charges and a big brand, Sippdeal – £100 (for 2 accounts) plus trading, very user friendly, and finally iii – £80 plus trading minus some freebies.
Excellent table. Thanks!
You say “and finally iii – £80 plus trading minus some freebies.”
Maybe I’m reading this wrong. Don’t you mean ‘£80 including trading’? The £20 quarterly charge is used for trading, i.e. 2x £10 trades/quarter or about 12x £1.50 regular investments.
Only one improvement I would make, and that is to make it clear who owns which broker. I think that Halifax, Motley Fool and iWeb are all owned by Lloyds, so if you have an account with more than one, I assume you are only covered by one 50K nominee guarantee.
Steve
The Accumulator, the forthcoming % charge you mention for H-L, do you think that is likely to be applied to the low cost passive funds such as Vanguard index trackers or just active funds?
If so my masterplan is scuppered!
@ Steve – it was just short-hand to encapsulate the idea that someone might want to trade more than £20 per quarter. If you don’t then the freebie trades mean you won’t pay more than £80.
On the subject of compensation, another reader posted recently that the guarantee operated at the fund provider level not the broker level. So your Vanguard funds would be covered for 50K, your HSBC funds would be covered for another 50K and so on. I haven’t checked this out myself yet, but worth investigating.
@ Semi – I think it’s highly probable that HL will apply the same charge across the board. That’s what every other clean fund broker has done (even TD come August). HL have gone on record to say that they would have to charge at least 0.28% to turn a profit. But as gjs says they’re used to more like 0.6%.
@TheAccumulator – the 50k limit per fund manager is correct – Cofunds has some documentation on this here: https://www.cofunds.co.uk/docs/gbub/fscs-and-asset-protection-cg37-gbub.pdf (see section 3, at the top of page 2.)
Many thanks, this extremely useful table along with many of the other very helpful pages on this site have freed me from my ongoing paralysis of indecision about investing as a newbie; I have now opened up an account and am starting a passive portfolio!
Yay! Well done, purple monkey. Fingers crossed for you.
As a fan of this site (and thank you for the table) I just have to give my two-half pennies worth on the subject of online brokers.
I have accounts with H&L, Barclays Stockbrokers (via SAGA), iWeb, Selftrade & Equiniti because they all have different strengths and weaknesses. I am of the ‘keep the costs low school’ and a consideration for me is to reinvest dividends. This means the cost is important and if you can choose which stocks to reinvest and if SCRIP or DRIP is possible, since this is the cheapest way to dividend reinvest. Note I am not talking about Funds or ETFs just direct investments into a company. The way I use all the above Brokers I pay no management charges, except for the SIPP.
(1) SCRIP or DRIP is possible with Equiniti or Barclays & for Barclays it is an all shares or none for LSE shares. (Also if you are over 50 use SAGA as they are Barclays Stockbrokers but cheaper!). So I use them for any shares that have SCRIP or DRIP like Santander, National Grid, SSE etc. Barclays gets ‘nul point’ for transferring in shares – I started in February and am ….. still waiting. However the rest of their service has been very good.
(2) H&L are costly in money and time as they charge £10 to re-invest dividends and wait till you have £200 and again it is all or none but no SCRIP or DRIP. However, if you want to invest in US or Canadian stock markets they will make sure you only have 15% withholding tax deducted. So I use them for investing in US & Canadian stocks and a SIPP because the 0.05% charge is good for a small holding (& it is limited to £200) and do not dividend reinvest. Their customer service is excellent.
(3) Selftrade are only able to make 15% withholding tax on US shares. However Selftrade allows you to choose individually which shares to re-invest dividends in, as long as they are in the FTSE100 and some that were in the FTSE100, for just £1.50. Again they do no SCRIP or DRIP, so I use them for FT100 shares not invested via (1). Their customer service is not as good as H&L and they have made some non-critical but irritating errors.
(4)iWeb is also all or none dividend re-investment for LSE shares for £2, again no SCRIP or DRIP. They have good access to overseas stock markets BUT do not help with any withholding tax. I use them for shares on AIM & FT250 or smaller that I are not with (1) or (3) as it is only £5 to trade. Their online secure IM is very good and their follow up is excellent – they are owned by Halifax.
Another consideration if you have an ISA is what happens to your REITs. I have found that Selftrade have paid me with 20% tax deducted inside my ISA. The whole idea of having a REIT in an ISA was to get this 20% back! I am currently waiting for Selftrade to get back to me – I asked when/if I was going to be refunded this 20%?
The lesson from this was READ the SMALL PRINT as pooled nominee accounts can’t always give you favourable tax treatment on dividends. This is why Selftrade can’t get you 15% withholding tax on Canadian shares – you will have 30% deduct with them. So I have taken to asking brokers before investing what happens to the tax on the dividends/PIDs/overseas payments/Bond interest?
I also recommend to closely scrutinise the dividends you do receive. H&L just credit a figure to your account but Selftrade helpfully supply a detailed note with all the information including the tax deducted.
Great comment, HalfFull. Thank you.
@ Nick – many thanks for that, link. I missed your comment earlier.
Hi all,
I’m new to using online brokers and have an entry-level questions about the mechanics of how it works so please be gentle.
I’m looking to invest £300 per month into 4 separate funds – will I pay a dealing charge for each of the funds e.g. £12.50 per fund = total £50?
This seems like a hell of a lot over the course of a year. Appreciate it if somebody can clarify this for me.
Thanks
Just had a thought about the table (which is a great effort although probably getting a bit confusing)…. not sure its that easy but maybe some comparison costs would be useful. I know people are trying to cut costs but sometimes we get stuck on percentages little realizing that actually to the size of your portfolio its on £5 difference and so negates transferring. TBH though not sure its that’s easy! I guess doing it for a model passive portfolio could work….. o well ignore me 😉
@Confused – dealing costs are for shares/etf’s only funds don’t carry them (unless you use a naughty IFA)
Thanks Geo,
So if I am paying in 300 p/m I can split that between my chosen funds and the only charges I will pay are the annual fund charges?
I’m just looking for a simple service so can anyone recommend / have experience of using either TD, Share Centre, or Hargreaves L for what I am proposing?
Thanks a lot
@Confused
Yep that’s right and that’s what I do with TD and HL
If just staring out HL (With some Black Rock Trackers)
What out as i think TD still have issues with vanguard and can only take a minimum of £200 per fund. Fine with Blackrock or HSBC.
@Confused – if you are investing yourself – that’s generally true. Some things to look out for:
*some providers still charge an initial charge on the amount you invest, but that’s fairly rare nowadays.
* Some providers also charge extra for specific funds (e.g. HL charges £2/month for funds on which they don’t receive any commission.)
* All providers take payment in some way, shape or form. Some receive commission on the annual fund charge, some charge an explicit fee on top of the fund charge. In all cases, you will pay the provider as well as the fund manager. In some cases, the provider fee is bundled into the annual charge, in some cases it’s not (these are the ‘clean share classes’.) For instance, HL’s fee is bundled into the fund, whereas TD or iii charge an explicit fee (TD’s is a percentage, iii is a £ dealing charge.) I don’t know of any providers that don’t charge anything at all.
I hope this helps. Also, there are other providers beyond HL, TD or Share Centre! (You might consider Cavendish if you are keen on cost, Charles Stanley if you want access to a range of investment options, or rplan if you want better investment and analysis tools. Disclosure: I work for rplan.)
@Confused, what Geo said, though you need to beware that some brokers charge for both ETF and fund transactions. Alliance Trust and Sippdeal do this. So if you used these supermarkets and bought four funds per month then yes, you would face £40-£50 charges each month. That is, as you say, a hell of a lot for a modest investment.
If a broker charges for funds, or if you decide to use ETFs, you can a) trade quarterly instead of monthly, and b) trade just one fund each quarter, with rotation. That will cut your costs by a factor of 12, but with insignificant difference in diversification and performance over the long haul.
Much obliged for the updates. Earlier iterations of this chart helped me get off the fence. But would it be fair to say that volatility in broker charges exceeds market volatility for newbies?
I’ve only been in a position to put money into the market in the past year and have had to react reasonably frequently to changes in charges in terms of what I buy and hold. I know this is a particularly volatile time because of RDR and related changes but I’d be interested in strategies to cope with this long term. Food for thought?
@ Confused – what Jumper said, except you can buy funds / ETFs for £1.50 a pop if you use regular investment schemes. Not a problem obviously if you buy funds from a broker that doesn’t charge dealing costs. Ultimately, those brokers will get their money back in other ways, though, as Nick mentioned. The comparison table shows you how the different brokers charge.
Your choice should ultimately come down to how much you’ve got invested. Well over 20K then go for a flat-rate broker. Under that then think Charles Stanley. Some platforms appear free (or as near as dammit), Cavendish being a good example. Bear in mind that they will have to change their pricing model in the next couple of years, so be prepared to move if you go down this route.
Interestingly I just contacted CS about opening a new shares ISA as I had seen they were the cheapest option and imagine my surprise when i got this response:
” our telephone execution only ISA dealing service, please be aware, from 1st October 2013 you will be charged an annual management fee, a minimum of £180. Charles Stanley are adjusting their fees from the 1st October this year, therefore the first attachment 70.34 details the fee schedule from the 1st October, the second 5.81 is valid until 30th September.”
Am I being simple here and missing something or did their service just massively hike up their fees from 0.25% (Assuming i’m only starting with a £1000!). I was just looking to start up a simple Vanguard Lifestyle fund.
@ Phil – they seem to be quoting you for a telephone dealing service which is always considerably more expensive than the online service.
@ Inebriator – The name of the game is to be with a low cost broker, not necessarily the lowest cost broker. That would mean upping sticks far too often and it’s not going to make a big difference to your ultimate return. It may be worth calculating the difference in pounds and pence and if the gap is just the price of a good meal, well, then it’s probably not worth the hassle of moving, especially once you factor in the cost of the transfer itself.
Ah, many thanks, finally found link to “Charles Stanley Direct” so have taken the step and setup my ISA acocunt – now just to wait for my months paycheck so I can afford the £500 min intial buy on Vanguard Lifestlye 80% acc!
Another stupid question but can anyone outline what potential gains(and losses!) I may see from this investment – the details for this fund say a 1.4% yield? I assume this was 1.4% dividend last year plus and value gained/lost in over all share/index values? Thanks.
Phil, the yield will refer to dividend / interest payments, you’ll find the overall return quoted in annual performance figures on the factsheet.
I tried the Do-It-Yourself investing until I wrecked my portfolio with a massive disaster. You have come up with great points about choosing the right broker. I think I’d work with clean class brokers. Job well done!!
@Phil
There are two ways to buy funds on Charles Stanley Direct. Either as individual purchases, which have the £500 minimum, or by setting up a monthly payment which occurs on the 10th of every month and has a minimum of only £50.
When I tried to setup the monthly payment of only £50 it got rejected by the system. When I contacted CSD support they said that was a bug an manually setup my monthly payment plan at £50 a month.
The “sticky wicket” here is how hard it is to move once you are established with a number of shares/funds etc within one platform.
I started my investing with Selftrade, so now I’m kind of stuck there for my individual stock picks. I’ve added Vanguard via Alliance since learning about them via your & other blogs.
The challenge now is drip-feeding into both platforms to keep the fees down. However, my income is lumpy so it’s hard to plan this to avoid all charges, apart from sitting on a little more cash, which is the route I see myself going to be honest. A little cash earning minimal interest is still better than quaterly fees!
Re Charles Stanley Direct. The minimum initial lump sum for a fund is £500 but one can then top up that fund at £100 minimum. Not obvious until one encounters it, but CSD confirmed that information. Rather perversely if one tries to top up using the fund basket then the minimum is still £500 per fund. Sigh. Their website has been recently updated and has a few broken links.
Has bestinvest dropped Vanguard funds then?
Pity, they were on my list for when I next need to add another broker.
Who else would be good for a Vanguard fund portfolio?
Bestinvest still have all the Vanguard funds available, as of just now.
@Hamzah
I am topping up my Vanguard LifeStrategy fund by £50 a month, and I made no lump sum payment into it. It may be different on a fund by fund basis.
@Alistair Sheehy Hutton
I’m a lump sum investor, so have no experience of using the monthly savings facility of Charles Stanley Direct. One initial drawback of selecting them as my broker of choice was the £500 minimum for lump sum investments (other brokers have lower limits). I wish to set up a portfolio of funds, so rebalancing (for example) would be rather coarse with £500 lump sums. Therefore it was a pleasant surprise to find I could feed in smaller amounts once the portfolio was established.
I am aiming for a core holding of Vanguard Life Strategy 60% equity, with a lower proportion of a few additional tracker and specialised sector funds. Topping up these other funds benefits from the lower lump sum.
My point was to highlight information that may inform the choice of broker, particularly since all sources I checked (including Charles Stanley Direct) did not mention the lower lump sum investment allowed once the initial purchase had been made.
One of the nice things about the Charles Stanley Direct monthly investing service is you can just activate it for a month and then immediately turn it off again after the “monthly” payment has been made. So if you don’t mind being limited to what day you make your lump sum payment on you can put in anything down to the £50 minimum.
Youinvest (SIPPDEAL as was) have now announced their new charges to take effect from 1 Jan 14. It is significantly different to the present model (much more expensive) so perhaps you will have to revisit their charges and update your matrix sooner than you thought.
Been holding off on moving to a SIPP with HL for a single lifestrategy fund for a while now and disappointed they have not announced their changes yet.
So instead of waiting any longer I’ve just initiated a large transfer which will no doubt complete the day they make a change to mean it’s now an unfavourable choice!
great work.
@larry- hope that transfer to HL didn’t turn out to be an expensive mistake! Though, it seems if you complain loudly enough, they might come up with a special rate to keep you…
Just to let you know I am with H&L and they have emailed to say they are NOT going to charge separately for Investment Trusts -Hurrah. Obviously enough of us complained or said they were going to walk.
Fidelity say that on 3rd March they’ll introduce a range of trackers with ongoing charges starting at 0.09%.
Regular investing at Alliance is now £5, or at least that’s what they’ve been charging me. I had a £100 direct debit set up for a regular addition to my Vanguard fund…. so that was in effect a 5% fee.
If you write to them you can increase the minimum transaction investment to either £300 or £500, so your charge in % terms comes down. Of course you are then not entering the fund at so many price points
Alliance do a £5 and a £1.50 version. I think the £1.50 version is called Monthly Online Dealing. Their system is a bit arcane. The £5 one is legacy.
12 monthly dealing fees at £5 + £90 annual platform fee on £100 monthly deposits into a lifestrategy fund with ATS represents 12.8% in costs..
@The Accumulator. I need to do some querying with an Alliance person to understand the difference. The description between the 2 charges on their pricing table is far from helpful:
“Regular Dealing by Direct Debit £5”
vs
“Online Monthly Dealing by Direct Debit £1.50”
@Rhino. Yes, I guess it would be. That doesn’t reflect my situation though as I have lump sums already in my Alliance Vanguard ISA so the annual platform fee is somewhat diluted. I’ve moved my minimum transaction to £300 so it will be 4 purchases over the year costing £20, so 1.66%. Still need to change this to be the £1.50 charge though to lower this to 0.50%.
Another hurrah for H-L dropping the plan to charge separately for investment trusts.
I had already switched from non-capped tracker funds to ETFs which have charges capped at £200 in their SIPP (£45 for ISA)
And now, in light of this latest U turn, I’m drip feeding into an investment trust. You can do this through H-L regular investments for only £1.50 per month, at least for the more well known investment trusts (eg City Of London, Personal Assets).
@ Tyro – did Fidelity say Ongoing Charges or did they say Annual Management charges?
@ Accumulator – Ongoing charges. Presumably this is because with their new platform fee of 0.35 ad valorem (at least for the first quarter of a million) holding all our lovely HSBC trackers currently at circa 0.25 is going to become rather expensive, so the new trackers will mitigate the hit on a passive portfolio.
http://www.ftadviser.com/2014/02/07/investments/etfs-and-trackers/fidelity-to-expand-passive-range-to-seven-funds-s5hkYy9yQROsCpF4ciK5zJ/article.html
The ongoing charge numbers here seem to match those quoted on the Fidelity website for the funds that are already out. I’ve been keeping an eye out for the details of which low-cost funds they were launching as my modest SIPP may be finding its way to Fidelity shortly.
does an OEIC have a ‘nominal value’? Is this the launch price?
Thanks, Tyro and Premierfella. Still not as good as holding the best of Vanguard and Blackrock on the most competitive brokers.
Great blog – and a really useful bit of info…thanks…
Unhappy with the way HL have decided to triple my fees I’m looking for an alternative. I e-mailed Halifax Share Dealing to ask if they would expand their range of Vanguards funds and they wrote back today saying they’ve added a load of funds. I checked the website today and most of Vanguards funds have appeared.
While I’m still doing my research this looks like a possible alternative with reasonable fees…
Worth checking out if you feel let down by HL
So, if I wanted to drip feed about £400 a month into a Vanguard blended 60% shares/40% bonds fund, who would be the best broker to go through?
I posted the same question on last months thread on Broker Pricing but I think it got lost in the volume of comments, so apologies for asking again.
Does anybody know what happens to hard/soft closed funds when transferring to another broker?
Cisnes, what do you mean by hard/soft closed funds?
As I understand it, soft closed funds are ones that allow existing investors to invest new money, whereas hard closed ones don’t allow any new investments.
Ah, sounds like active management to me, not my bag.
@ Alistair Sheehy Hutton
How do yo manage that then? When I try doing £50 a month, it says “The calculated investment quantity for this order value is less than 1. Please enter a higher value and try again.”
I can’t seem to do it for less than £150 a month.
@Chiggers
Send a secure message stating exactly which fund you wish to invest in and what amount, they will set it up for you. I faced the same issue and phoned in in the first instance, but was advised to go down the message route to make sure that the right team saw it.
Thanks Luke, I’ll do that.
Really useful information in this article and in the comments !
I’m about to choose a new broker so this info is timely.
I have moved my SIPP, spouses SIPP and daughters SIPP to the Liberty SIPP. Adult SIPP charge £150.00 + VAT per annum. Child under 16 – no annual fee (as long as there is a adult SIPP held). Able to invest in Vanguard Lifestrategy Fund monthy/quarterly/annually or one off contribution with no additional fee (1 x collective fund investment covered by annual SIPP charge – additional funds attract additional £25+ VAT per annum) – also has a SIPP bank account in the name of the client which pays 1% interest on any cash held and not invested. Moving away from HL.
William, thanks very much for tipping us off about Liberty SIPP. I’ll try to find a way to incorporate them.
X-O use Liberty Sipp for their own Sipp offering.
Can anyone recommend a way of getting past the custody fee’s associated with holding stocks and shares with Charles Stanley direct. There are no charges if 6 or more chargeable trades are placed in a six-monthly charging period, however At this current point in time I won’t be adding to My ETF holdings and therefore am all ways likely to have this charge eating away at my returns. Do you use a specific platform for holding your ETF’s?
iii have a note on their SIPP pages:
Please note, we will be introducing our new SIPP account pricing soon.
http://www.iii.co.uk/sipp/why-us
Can’t imagine they’ll go down
Apparently iii increased new customers by 346% in the first 3 months of the year, cant remember where i read this now… HL by 33% also i think
Thanks for the update.
The £1.50 regular investing fee for Hargreaves Lansdown only applies to regular investments in FTSE 350 shares.
It’s free to invest regularly in funds.
Hi
I’m mainly a couch potato when it comes to FI blogs despite learning so much from them – maybe nothing much to share yet – but I did want to post something to say that I recently requested a transfer of my Vanguard Life Strategy Fund ISA from Hargreaves Lansdowne to Charles Stanley Direct – largely thanks to info&advice on Monevator, as was the decision to start saving into that fund. Fees were the obvious driver but I’ve noticed a few slight queries round and about over whether other platforms would match HL’s great reputation for customer service. Well.. sofa so good … CSD have really impressed me with fast, straightforward and regular communications on everything, and the site is just as user friendly. They’re currently chasing HL for me who seem to be dragging a little with the transfer. Phone and email contact have been equally good. Just thought it might be worth sharing. Thanks to Monevator and commenters alike for quality critical advice 🙂 🙂
Another couple of additions you may want to consider for future updates are http://www.nutmeg,com and http://www.moneyontoast.com. Whilst not strictly DIY, for investors starting out who haven’t got the time or inclination to do it all themselves they could be an alternative to the likes of a guided portfolio from the likes of HL, CSD et al. The former is an execution only/non-advised type offering, whilst the latter is ‘simplified’ advice. Both seem reasonably charged and have relatively sound investment methodologies underlying, albeit not 100% passive approach.
quite interesting article, broker comparison IF you buy mutual funds.
http://www.telegraph.co.uk/finance/personalfinance/investing/isas/10611058/Tables-cheapest-fund-supermarkets-for-Isa-investing.html
Is investor protection distinct for an ISA and a SIPP? In other words, if one had both on the same platform, would both be separately protected, or is only the total relevant?
Hi Accumulator,
These table updates are incredibly useful in this ever-changing fee broker landscape – although I imagine a very tedious job. I had one question I have been musing over and wondered if you can help me with?
I have just recently moved from a percentage broker to a fee only broker (Iweb) as my ISA increased in value to such a degree it became logical however I plan to start saving again and making regular monthly deposits. I wondered whether it would be cheaper for me to open the new ISA with a cheap percentage only broker with no exit fees and trading charges and then transfer it over to Iweb at the end of the ISA year to join the rest of my savings – to avoid the regular £5 on trades. I wondered if you think this could every be cash efficient. I hope this question makes sense.
Cheers,
BigPat
If the expected return really is 2.5% after inflation which is about 4.5% than I am going to skip investing in stocks. Sounds like return free risk to me!
I wrote to Cavendish online a couple of weeks ago and they said, ” the fees we charge are down to Fidelity FundsNetwork and although we have raised with them the possibility of putting a cap on their fees at the moment this is not something that they are considering. We do realise that this means for our clients with larger investments we are not as competitive as we were.”
Shame, they are very easy to work with.
oh and I meant to say thank you for another great post, I love the humour, spot on!
Hi TA,
I am not sure where that 2.5%pa return on equities comes from. The linked FSA report concludes that the real return on equities will be 4%-6%pa. (See section 5.2 and Table 5.6). A bit pessimistic in my view but still way better than 2.5%!
Cheers
In 2013 Credit Suisse reckoned 3% p.a. real for equities over the next 20 to 30 years.
https://publications.credit-suisse.com/tasks/render/file/index.cfm?fileid=88F22B53-83E8-EB92-9D555B7A27900DAC
I don’t use a broker, but I think this is a great guide for people who do. Finding a broker can be tough. They will all claim to be the best or help you the most, but obviously that’s not true. I would go for a broker that earns more money when you earn more money. Some brokers are paid to give tips on certain stocks and that’s shady business.
I see the IG index are offering share dealing and ISAs now, with low currency conversion rates.
@ Dearime – SIPPs and ISA distinctions don’t come into it. It’s your total per institution – either fund manager or broker: http://monevator.com/investor-compensation-scheme/
@ Raj – that refers to a 60:40 portfolio.
@ Big Pat – It would be a little cheaper. Cavendish Online is your best bet. Wouldn’t save you much more than £40 though and transferring can be painful.
@ Paul S – see page 62. Most people aren’t 100% in equities! The 60:40 portfolio earns 5.1% at the bottom of the central range. Subtract 2.5% inflation and you have a real return of 2.6%. Can’t remember where the other 0.1% went. Close enough.
difficult to see whats changed – need some means to see the ‘before’ and ‘after’ shot, possibly a short ‘changelog’ summary tagged on the front of the article each time it gets updated?
According to latest data from Vanguard, Lifestrategy 100% has 6230 holdings @ 28/2/2015. Amazingly 60% and 40% have 16913 holdings!
This website is marvellous and next week I’m going to read Tim Hale. I have a portfolio with a wealth co. ( one of the big ones) fees are high but have started to see a good return at last . I’m not putting any more money their way though, instead DIY’ing my annual ISA. As I’m retiring in 5 years, going for the Vanguard LS 40/60. A question: is there any need to look for another similar product to invest my annual ISA or is there enough diversification in this fund for me not to worry. If I ‘m not sure whether i need to dripfeed and who i do this with.
Hi Ivan,
LifeStrategy is an extremely well diversified fund and there isn’t really another product that matches it. The only reason I’d look for another fund is if you want to diversify the risk of something happening to Vanguard.
They are the biggest fund manager in the world and reputable, so the risk is small but not non-existent.
See: http://monevator.com/investor-compensation-scheme/
I’m not sure I’ve understood your question about drip-feeding but I think this might help: http://monevator.com/lump-sum-investing-versus-drip-feeding/
Broker / platform options here: http://monevator.com/compare-uk-cheapest-online-brokers/
Non-Vanguard funds-of-funds here: http://monevator.com/passive-fund-of-funds-the-rivals/
A lot of traditional pension funds have a multi-asset approach similar to LifeStrategy. Some even have low fees, and some even use trackers as the core of the investment. For example, Friends Life have “Balanced Index Fund of Funds” that uses active asset allocation on top of (mostly) Blackrock trackers, and there is an “Enhanced” version that uses active funds in some less efficient areas. I’m currently paying 0.4% in fees for holding the latter fund in my company pension, which is very competitive with LifeStrategy held in most SIPPs. I’m a fan of SIPPs but for many people a personal pension will be able to deliver the goods.
Great and fascinating read through the tables rating, although I was a little surprised at the results for TD Direct Investing (the guys my ISA is with). I have a relatively modest portfolio (over £50k), but it costs me only my share or ETF trading rates – I would have thought this would have made it suitable both for ETF but also for Share Only infrequent ones (such as myself)? I think my charges come in at around 3 trades per year (maybe less), and the auto dividend reinivest. Looking through the table I think I need to investigate iWeb!
Thanks for taking time to put the comprehensive list together!
I have a TD Direct account — I find the regular investing options waaay too restrictive compared with – say – iii.co.uk
@Mathmo – I know what you mean the regular is restrictive but I dont drip feed I fund and choose what and when to buy…
Yes so do I, although I value the ability to reduce my trading costs by going for monthly buys on lower value rebalancing.
I am resident abroad and could not convince a UK-based broker to take me on. So I went for a US broker, and the one I opted for and the others I looked at all seem to be much cheaper than their UK equivalents. No platform fees, no inactivity fees, etc, just dealing fees (around 8 to 12 dollars a go), though I think maybe they have exit fees. Any idea why it is so much more expensive in the UK?
Fantastic website by the way
@gadgetmind
Not really the place for a discussion about this, but your comment about Friends Life funds is so close to what I’m trying to puzzle through at the moment. I’ve realised that the “stick a pin in the list” approach that I took to selecting funds in my FL company pension approx 10 years ago perhaps wasn’t the best option… I’m looking to shift my allocation to something more sensible and slowly trying to work out how to pick from the limited selection of funds on offer.
I rejected the FL balanced fund of funds due to its odd geographic allocation (~30% UK, 15% US, 15% Europe, + others) and its rather vague stated aim. Instead I’m favouring a Blackrock World (Ex-UK) equity index, together with the corresponding UK equity index. Still need to check whether the world index covers emerging markets, and also find something in UK govt bonds.
However… with the limited set of funds on offer, but the benefit of matched contributions from my employer, and a fixed charge for any of the funds (so there’s no cost advantage of one over the others), I’m not sure whether an over-analytical approach is really worth it.
I agree regards the geographic mix on that fund, but such a “home bias” is very deliberate. As it happens, I did initially “dilute” this by also holding that Blackrock tracker alongside, but I’ve now switched again given the rather high valuations in the US. I will admit to still holding a Blackrock EM tracker, which you might like to consider
April 2014 to April 2015 my return from my mix on FL was 14.7%, which isn’t to be sniffed at! It’s very close to the 15.5% I achieved in my SIPP.
BTW, LifeStrategy also has quite a high home bias, or did last time I checked.
The link to the broker table seems broken to me:
http://monevator.com/compare-uk-cheapest-online-brokers/
@Lostpupp — Thanks, it is being weird at the moment… is it working for you now?
@The Investor – Yes, working now.
@Lostpupp — Cheers!
Thanks for the update to the table – an excellent resource.
For various reasons, I’m looking at moving from having a private bank handling the bulk of my investments to a diy approach.
I was surprised to find that the FSCS limit for stocks and shares compensation is £50,000.
I understand the separation that is usually applied to nominee accounts and the protection that this is supposed to give.
However, in the circulstances that a broker is going bust it’s quite likely this would be a time that the separation might not be all that was expected!
Should I be looking to limit my investments with any one broker to no more than £50,000?
Please note that Vanguard do not provide accumulating ETFs similar to ishares SWDA / IWDA and therefore attract extra dividend distribution taxes in euroland. These can easily add 25% to the TER 🙁
@ EUGB – could you provide more details, please. I haven’t heard of that problem before.
@ Ron – it’s a very personal decision. This is my best stab at summing up the situation: http://monevator.com/investor-compensation-scheme/
Ultimately, I do think it comes down to preference. Are you the sort of person who’s prepared to deal with the hassle factor of multiple accounts in order to sleep better at night?
Diversification is always good at some level, but I personally wouldn’t set that level at every 50K.
Dividend distribution taxes for non-accumulating ETFs occurs when emigrating from the UK to some of the other EU countries (BE, GER, Por ..) where ISAs and SIPPs scheme equivalents do not exist and thus non-equity financial products (typically less than 75% equity) are then subject to extra taxes annually at 25% plus.
One solution is to invest in accumulating ETFs in the UK and avoid this future problem at a later date (or not emigrate 🙂 )
Re compensation: Thanks for your thoughts and your very useful earlier post – food for thought!
Am I right in thinking that buying a fund (which has £0 trading cost) in Selftrade will count as a trade and therefore will waive the quarterly inactivity charge?
I’ve just bought LS100 in Selftrade in an ISA and was going to ask the same question? If anyone can answer that would be mega. Looks like their minimum is 1 unit as i couldn’t buy £100 worth but it let me do £150.
Does anyone else have trouble with their broker when it comes to them paying dividends in a timely manner ? I have been using alliance trust for a few years, however, they have recently become very erratic paying out the dividends for funds (FTSE companies on their own seem to be fine). It isn’t unusual to have to wait over a month after the payment date from the fund. Doesn’t give me much confidence that if I wasn’t sending them emails asking why they are late paying maybe they wouldn’t pay it at all? Does anyone else have similar experience with any other brokers?
@ Mr Careful – a month is really excessive. I’m with 3 different brokers/platforms and only occasionally have to wait more than a day or two after the published ‘payable’ date and then it’s usually on the same etfs (e.g. IDVY always seems to be late, for some reason) and I’ve never had to wait more than a fortnight. Halifax Share Dealing say they are allowed to pay up to 10 working days beyond the published pay date, but whether that’s just an in-house rule or whether it’s some kind of industry-wide requirement I don’t know. If one of my brokers started paying dividends very late (and even more if they did it frequently) I would wonder whether their systems were in meltdown, or whether they were in such financial dire straits that they were clinging on to any money coming in for as long as possible. I’d take either as a big red warning sign ….
@Tyro – Appreciate the response. I’ve used different platforms over the years and never had a problem. Really does seem like it is just Alliance Trust. Whenever I call them to chase a late dividend, they always claim they have only just received it late themselves and then have to “send it off” to get the currency changed to GBP which can take up to another 10 days… Likely storey… I wonder if anyone else has had a problem or noticed this with Alliance Trust ?
As an example… VHYL… Vanguard paid dividend at the end of December 2015…. Alliance Trust paid it to me on Feb 5th 2016… Over 2 months late.
@Mr Careful – I hold my VHYL with AJBell YouInvest and that dividend was paid into my account on 29th December.
@ Mr Careful – HSBC paid my VHYL divi on 31st December.
Same as you weenie.. I find you invest pretty good for my Sipp. I use Td direct for my Isa and this is a bit more restrictive / painful…ps td direct maybe selling out to Barclays (yuk) .. Now to the article at hand … I love this website and find this table useful
@Mr Careful — Those numbers from weenie and Tyro do suggest your platform needs to pull its finger out. As has been said, I’d be concerned what I’m missing…
@Alan — Cheers!
@all… I’m fund only…infact, non-etf fund only…
Currently small investor, hope to be less so…maybe break the 20k ‘barrier’ in 2/3 years… Why is charlesstanley (who I’m with) cheaper than self trade…self trade looks free as long as you don’t sell? Or am I totally misreading the table?
selftrade is indeed free, so long as you don’t sell and you do buy at least once every quarter (to avoid the inactivity fee). which is fine, even for a small amount invested, if you definitely will buy every quarter.
note that they don’t have many funds available for automatic monthly investment, so you may need to make the purchases manually. (though you could still have cash added to your account automatically by direct debit.) and if you’re buying vanguard lifestrategy, the minimum purchase appears to 1 whole unit (which is something like £150).
1 way to look at it: suppose you stop adding money to your account at some point, because you have other priorities in life. then you’d start paying selftrade £42 a year in inactivity fees. instead of paying charles stanley 0.25% a year. in which case, selftrade would be more expensive if you have less than £16,800 invested.
Thanks very much gym sock , something to think about…
A few notes on Halifax Share Dealing SIPP. The fee structure is transparent and not too dear, but there are a few quirks.
1) Their default method of accepting irregular (i.e. non-direct debit) contributions is a cheque by post. They have a workaround of a bank transfer + scanned contribution form via email, but then you still have to post the form later. Even using this workaround in my experience the time lag between transferring the money to their bank account and the money becoming available for investment is on average 3-4 working days.
2) The fund appear in your account net, then the 20% tax 6 weeks later. They will not even being the process of recovering the tax until the original contribution form arrives by post (see above). They say the recovery of tax takes up to 6 weeks, but in my experience it’s been 6.5 and once even 8 weeks.
It’s not a massive problem for me given how I use my SIPP, but it will not suit everyone. You have to be a *passive* investor through and through in order to stomach a 6+ week delay … unless you’re happy to pay their dealing fee twice – once when you invest your net contribution and once again when you invest the tax component several weeks later.
Hey @ sock….
Think I’m going to stick Charles Stanley…think it’s worth the extra to set it up on monthly buy and discipline myself to just check once a quarter… Plus I’ve read lots of very poor reviews about self trade…
Just to be clear. AFAIK selftrade isn’t free. Its a minimum of £6 a year if using their regular investment to purchase something.
If you just “bought” funds there would still be an inactivity fee as the funds are “free” to buy and don’t count towards activity.
Thanks Martin…makes the decision easier although was veering away from them anyway cheers
Lets not forget the ways, and there are many. of how our fund managers and no doubt platform managers spend our money.
How does this increase the value of my investments?
Press release Quote:
Ascot Racecourse and Neptune Investment Management are delighted to announce the extension of Neptune Investment Management’s horseracing sponsorship portfolio by backing two races at Ascot; one over hurdles and one on the flat.
The Neptune Investment Management Novices’ Hurdle, over a distance just short of two- and-a-half miles, will be run on 16th February for £25,000.
Conditions for the second race are being finalised but it will be a £50,000 event for three- year-olds over a mile-and-a-half, on Saturday 13th July.
@Mr Careful, Hargreaves Lansdown show VHYL as paid 29th and cleared on 30th December (if I’m reading my statement correctly). Where’s the currency conversion on VHYL? There are Euro and CHF versions, but why would you/they hold them? (The other currency option is called VHYD).
Great overview indeed. However, narrowing the comparison down to the costs is certainly interesting, but neglects other important factors such as:
– customer service
– user experience / innovation
– quality of investment advice
@Silvan — We can only do so much in a table, as you’ll appreciate, and even costs are murky enough to compare in this sector. 🙂
To take your other three factors:
Customer service — Once above the bare minimum of “they get it done” not so important for long-term passive investors with automatic saving and investment plans. They are our main focus here. Can be more important for active traders, I’d agree, but very wide range of possibly subjective reports makes evaluating it properly beyond our current resources. Customer service similarly important when doing something “big” like transferring ISAs, but again feedback from readers suggests this is something of a lottery, although some platforms do seem to me better than others.
User experience / innovation — Generally bad for long-term investors. The ideal broker’s website would probably look like a GeoCities page from 1997, be horrible to spend time in, and thus minimize trading activity. 🙂
Quality of investment advice — The least relevant factor. Best to mainly read Monevator or other independent sources instead of platforms who either want to sell you active funds or encourage you to trade. As for wealth managers and the like, who wants to pay 1% a year for a fancy posh bloke to explain how your pension will be better if you give him 1% a year? There’s a role for Independent Financial Advisors, I think, but independent from platforms.
Just my view, of course, yours may differ. 🙂
Thanks all for feedback on brokers speed of paying dividends fast/slow. Seems like Alliance Trust are the worst I can find who are not paying dividends early. Just to round it off, check out this appalling customer service email reply (I was chasing a dividend payment that was due 19th Jan. 2016 sent my email on 16th and got this reply on 18th)
“Thank you for your email.
I have discussed this issue with the Dividends Team today who have advised that as this particular investment pays dividends out in foreign stock it can take some time for the registrars to convert the funds into Sterling. Therefore we cannot credit your account until we have received the funds in Sterling stock.
Unfortunately we do not have a timescale for this, however I will email you personally once they payment has been received and has been applied to your account. ”
Appalling. Avoid this lot like the plague
Just for clarity… My email was sent on 16th February, so the dividend was already nearly a month late…
on whether free purchases of funds with selftrade count as trades to avoid their inactivity fee, there are some new comments under the actual broker table. from that, is suspect they do count, but selftrade are not making it very clear.
many ETFs, such as VHYL, do pay dividends in dollars, *even* if you buy the version traded in sterling. i.e. the currency they’re traded in is not necessarily the same as the currency they pay dividends in. and other pays dividends in euros. a delay of 1 or 2 days, for your broker to convert the dividend into sterling, is reasonable, but not for several weeks.
Alliance trust savings have increased their charges.
http://m.citywire.co.uk/money/alliance-trust-savings-hikes-account-charges/a886710
Great work, but this table really needs to include FX charges. This is particularly true for ETFs where they could be in another currency, or the declared dividends could be in another currency.
These charges can be huge and any investor should pay particular attention to them when selecting the right platform.
@Mr Careful, to put it bluntly, you broker is lying to you. Mistakes are one thing and acceptable if promptly rectified without loss to you, but being lied to is totally unacceptable. I would suggest you either confront them and put in a formal complaint and demand a free transfer to another broker, or just change brokers. Sometimes brokers offer to cover some or all of the transfer costs. You might find this link helpful if you want to go down the formal complaint route:
http://www.fca.org.uk/consumers/complaints-and-compensation/how-to-complain
@NearlyThere “Where’s the currency conversion on VHYL?” The currency conversion is from US dollars (in this case) to pounds in your account. Your broker will levy a foreign exchange fee to do this, which you may need to look into the small print to find. Buying the sterling denominated version of VHYL, or any other ETF, does not alter the currency that dividends are paid in.
@James, I agree with you that FX charges are something to be considered, but The Accumulator cannot include everything and for fund only investors, the charges are irrelevant. Definitely worth looking into for ETF investors.
Another set of charges worth considering are SIPP drawdown charges for those in or close to drawdown. These can significantly alter the calculations. I am with Hargreaves Lansdown, who are far from the cheapest in the table, but they levy no drawdown charges at all. I really appreciate this as it means I can take whatever income I want, whenever I want to without having to consider the costs. HLs charges are very reasonable provided you avoid funds, trade infrequently and just invest in ETFs and gilts, as I do. I would add that the service is excellent as well.
@Naeclue Interesting comments but am I right in thinking that you will be paying for FX charges on any dividends with HL and this is up to 1.5%. Presumably you have costed it and this charge doesn’t outweigh the other benefits for you?
@James, HL’s 1.5% FX fee is annoying, but they cap their standing charge at £200. I had a look at YouInvest who only charge 0.5% FX fee, but their standing charges are higher for people in drawdown. I hold some iShares ETFs which are accumulating instead of dividend paying and that reduces the fees a bit. YouInvest may work out cheaper for me over all, but not sufficiently so at the moment to make me move.
I have been with HL for years and so far my experience with them is that charges have been reduced over time, such as for buying gilts and scrapping drawdown fees, rather than increasing as with other brokers. I cannot remember how long the standing fee has been capped at £200. Certainly a long time.
Sometimes it is better to stick to the devil you know, especially when you hear stories like those from Mr Careful. I would not want my SIPP to be looked after by whoever he is with.
I’m with Charles Stanley but approaching the point where it may make sense to switch to a fixed fee provider. However, my reading of the table is that there is a dealing fee for funds each time units are acquired. This means that drip feeing in money every month becomes very expensive. Is that right? Currently no charge with CS for me to do this.
@ Naeclue & James – great points both. I’m painfully aware that the table is extremely complicated already (many people just can’t deal with it) and I’m very reluctant to put in any more columns for that reason. I think what I’ll do is reference these issues in the copy that accompanies the table so that people are made aware and can investigate further if they’ve got the energy left to do so!
@ Legal – yes, that’s the trade off for the flat rate fee. Solutions are: use regular investing schemes so you only pay £1.50 a pop. Use fewer funds e.g. Vanguard Life Strategy. Invest quarterly or on a more ad hoc basis when you’ve got a bigger sum together.
I’ll second Naeclue, if you have a reasonable pot and are holding mainly ETFs and investment trusts H-L aren’t bad at all due to the capped charges.
There is automatic dividend reinvestment for ETFs.
You can set up regular investment plans for most common investment trusts as well for only £1.50 per month so easy to drip feed.
My only gripe is you cannot do the same for ETFs, so you have to make larger but less frequent buys when it comes to them.
@SemiPassive
Check out #16 @ Re Regular Investing http://forums.moneysavingexpert.com/showthread.php?t=5448806#topofpage
I haven’t tried it myself, but the regular investing feature seems to be quite flexible and there’s nothing to stop us from using it as a quarterly investment tool. And it should work with etfs as well as shares don’t see why it shouldn’t.
That doesn’t seem to talk about H-L. And no intention of changing providers at the moment.
The H-L regular investment picker has a dropdown box that lets you pick FTSE-listed shares and investment trusts but it doesn’t show any ETFs. There is no technical reason why it couldn’t – you can choose them for one off buys after all – so presumably it is a business one to encourage use of the OEIC funds that they promote.
So tl;dr on 150 comments… 🙂 AJ Bell is dealing fees only and probably best bet for a new infrequent trading 90% buy and hold ‘forever’ individual shares+ETF’s ISA?
If you don’t need the tax wrapper you can save money by bypassing the broker altogether and invest directly.
@Rob — Everyone should use the tax wrapper. Not doing so is a diabolical decision.
Hi,
I’ve got a S&S ISA with HL, and have just ordered Vanguard LifeStrategy 80. It offered the choice of income or accumulation. I chose the latter. However, does it really matter which one?
Also, my total ISA fund is just over £43,000. Is HL the best platform? I find the 0.45 fee quite high, but I can’t work out if it would be cheaper elsewhere. I thought I read about a fixed fee on this forum, but I can’t find reference to it on the HL site. When I tried to research platforms before, it turned out this fund wasn’t available on some other platforms.
Thanks for your advice.
Hi. One year into the excitement of passive investing so new to it all.
Have used Bestinvest for my full ISA entitlement 15/16 and didn’t really know why I chose this platform. I am fund only so a charge of 0.4% seemed ok. For example Charles Stanley is 0.25%, so, better.
My question is, has anyone ever transferred their ISA, is it a pain, is it easy and what problems does it bring, or more importantly, any costs involved? I do have five ETF/Shares to transfer, as well as funds.
In the long term 0.15% seems worth it.
Hi Paul, here’s our best take:
http://monevator.com/how-to-transfer-a-stocks-and-shares-isa/
http://monevator.com/switch-to-cheaper-index-funds/
http://monevator.com/what-are-the-risks-of-being-out-of-the-market/
Youinvest are changing the charge system. Details below:
What are the changes?
We are removing the SIPP custody charge of between £5 and £25 per quarter (depending on the value of the SIPP)
We are removing the £50 plus VAT administration charge for customers in income drawdown where no income is being paid
We are simplifying our charges for paying pension lump sums including tax free lump sums. These will now cost £25 plus VAT
We are reducing our dealing charge for buying and selling funds from £4.95 to £1.50
We are introducing a custody charge for holding shares (including investment trusts, ETFs, gilts and bonds) of 0.25% per year of the value of the investments held. This is capped at £25 per quarter for a SIPP, £7.50 per quarter for an ISA and Dealing account and £5 per quarter for a Junior ISA. There is no custody charge for cash held in your account
We are changing our fund custody charge (which applies to unit trusts, OEICs and structured products) from 0.2% per year (maximum £50 per quarter) to a tiered structure based on the value of funds held:
0.25% per year for the first £250,000
0.10% per year for the next £250,000 to £1m
0.05% per year for the next £1m to £2m
0% over £2m
We can also confirm that our charges for a Lifetime ISA, which is scheduled to be available from 6 April 2017, will be the same as our new ISA charges.
The new charges come into effect from 1 October 2016.
According to a recent e-mail from AJ Bell, they have revised their fee structure for my SIPP:
Share custody charge: 0.25%; Max £100 per anum (replacing the annual fee)
Fund custody charge 0.2% max £200 a year. This is an increase.
So when I opened the SIPP, the annual fee was zero.
Their first increase was to £100
Now they can charge up to £300
For a product which is configured not to be portable, I think this kind of price gouging is unethical. The FCA should look into it, instead of wasting their time with bank accounts, which any idiot can easily move within a few minutes.
Hey Jeff,
Your Sipp is portable to other brokers too.
There may be some costs,(TD none, HL yes), but it definitely can be done. I moved from Equitable to HL and am now considering moving to AJ, though I do not invest in funds – just shares and ETFs.
Good luck anyhow.
Does anyone have any feedback on First Direct’s broker service? On the website it looks similar to most fee-based services. I am interested as we already bank with them and the Fidelity percentage-based fees are racking up! Thanks, H.
How about Beaufort Securities? I’ve been using them for several years now (I have no affiliation to them).
A very simple back end system. £8 a trade. No set up or annual fees.
Thanks for updating – and at a very good time – I am starting to look for next years platforms to diversify my holdings so they are spread around a bit!
FIREin’ London
thanks from me too 🙂 i start investing for the first time at the end of the month 🙂 cant wait 🙂
If I only want to invest in VGLS80, either Charles Stanley or Cavendish online right?
@ J If I were only investing in Vanguard LifeStrategy I would choose something like Halifax share dealing. £2 a trade if regular investing and nothing for holding the investments. There is an additional small annual charge if you hold them in a wrapper.
The H-L regular investment plan does now have ETFS in the share drop down
SnowMan from MSE forum has come up with an excellent google sheets investment platform calculator to estimate the cost of investing with various platforms. Would be worth giving it a go!
Check out the Thread here
http://forums.moneysavingexpert.com/showthread.php?p=71891642
Check out the calculator here here:
https://docs.google.com/spreadsheets/d/1En9DtGId0rdR9GTY3V-sk9TPluHNKu8_i75uHsIDl4E/edit#gid=690765087
-FIREplanter
@J You can use charles stanley or cavendish as you said – you can also use close brothers as well 🙂 i am still deciding between them and td direct for myself 🙂
@All – I am going to be creating my own little space on wordpress about my investment journey – when it goes live, I will inform all you nice people – I also got something else in the works that i feel us UK investors will benefit from, especially the newbies like me 🙂
Possible correction: I called BestInvest yesterday to ask about transferring a pension from elsewhere to a SIPP with them. The lady on the line told me that they charge a £100 fee for the crystallisation calculation, followed by £25 a year for drawdown (your chart says no drawdown fees).
I initially posted this in the comments under the table, but probably better here since it’s a question that others may be able to answer…
@The Accumulator – your summary comment following the table update of 08/01/17 suggests Close Bros could be good for a SIPP holding only funds worth less than £70k. Am I reading correctly from your table that in this scenario there is no platform fee, and no trading fees? I’ve looked at their own website and the key features doc of their SIPP and it does appear there are no charges, but this can’t be right. What am I missing?
@jeff. I agree with your comments about the FCA, though I recently came across something much worse. I am administering the estate of an elderly relative who had some shares and funds with quite a big stock broking firm. There standard charge to sell the holdings and move them into cash was 1.65% !! (More for holdings less than £10K). When I complained and threatened to move everything (possible but not at all easy) and complain to the FCA they reduced to half this which is better but still a rip off. Overall the annual charges on my relatives portfolio must have been around 4% per year. A fantastic way of transferring the savings of a very elderly lady to her broker. (And for a totally disorganised portfolio). It really is completely shocking that the FCA allows this to happen.
@ Scott – their platform fee of 0.25% applies to all products but there is no additional charge on top of that for the SIPP .
Just had a look at the wife’s ISA which has been with m&g since peps first started in 1985 ish. No platform charges but fund fees average 1.4%, £1020 pa. So intend to switch to II who have been very helpful on a peripheral matter (personal reply to enquiry why iShares edge world value was not available in ISA. It should be and they are changing their web site). Y only defence is that platforms haven’t been around that long…… On the plus side, any alternative would be cheaper assuming find switch.
Fantastic post and a very helpful table. Can someone please help me with a noob question on dealing fund charges – interactive investor charge £10 to deal funds in the table and £1.50 for regular investing. If i set up a monthly direct debit into a few funds, would i be charged £10 or £1.50 per fund per month? Thanks!
@YK I am with iii and it would be £1.50 per fund (not sure about ETFs and shares but I think it’s the same). This comes out of your quarterly £20 fee. So you can but 4 different funds per month without paying extra. The only slightly annoying thing is that they batch trades and there is often a delay between them receiving the money and the trade. Also you have no control over the trading date. Still neither of these really matter and overall it is very good value indeed.
There seems to be a trend for eulogising Vanguard. I even have VWRL myself but no person or company is perfect. Their new ISA launch, for instance, is not that attractive – yet. It is even more expensive than Hargreaves, the current punch bag of brokers.
The conventional view that Hargreaves is “not the cheapest” needs to be challenged. I have a Hargreaves ISA capped at £45 per year and SIPP capped at £200. That is cheap. For my general pot over £200k with just three ETFs, how much cheaper does anyone expect them to go without impacting the great service? So far, the fund buyers are subsidising ETF/IT holders to some extent while making Hargreaves a +50% profit margin.
If you have just ETFs I would like to know who would be cheaper?
Depends on the size of your portfolio, how often you trade and account type but check out Fidelity, any other percentage fee broker with a lower % charge if your portfolio size doesn’t hit the cap, and iWeb.
Too good to be true?
My wife and I have held ISAs with iweb for the last 4 years. We hold individual shares and (mostly) Vanguard index funds (the old classic style as I prefer these to ETFs).
It’s no frills but efficiently/adequately does the job for me. On the odd occasion that I have to ring customer service it has been just fine.
There is no ‘annual management charge’ for holding funds, just a £5 trading fee. This compares with £625pa. if I was with AJ Bell or £1125pa. with HL. for the funds I hold.
Have I got this wrong or am I missing something as this appears too good to be true? (No such thing as a free lunch and all that). Even Vanguard Direct would surcharge £375.
Is this sustainable?
I believe iweb is part of the Halifax Group (which in turn is Lloyds) so it is not as if it is a small time outfit ?
On the subject of Vanguards new service, perhaps the ‘percentage brokers’ may retaliate by taking a leaf out of Vanguard’s book and reduce their annual fee on OEICs etc but then remove the cap on ETFs. (as they are becoming so popular)– Just a thought – watch this space!
@ October – you aren’t missing anything. They do charge an upfront fee of £25 to open an account – they put this fee up to £200 for a couple of years – but came back down again. Oh and there’s an additional fee for a SIPP.
I’m with them as well. I guess they’re hoping we trade. If you can resist that temptation then they are tough to beat. You’re right about their parentage too.
Thanks for the hard work: on a bank holiday weekend too. One thing I am not sure about is the comment against Halifax Sharedealing SIPP. It looks more attractive than implied. What am I missing?
@Mr optimistic – which comment against Halifax Sharedealing SIPP are you referring to? Is this in the table, or in readers’ comments? I can’t see anything adverse.
I am having trouble with the server so pls excuse any d!ouble post. Comparison table. Reckons SIPP under 50k only. Looks better than that.
Now that the ii, TD deal has gone through and TD is being merged with ii they are both going to use the ii pricing structure, I will now be paying an account fee for my ETF only ISA. With TD there was no charge for holding ETFs so it looks like a move, as being a very infrequent trader the two free trades per quarter has no appeal. I’ve been looking at Saga Share Dealing & X-O as these don’t charge platform fees or inactivity charges. If anyone has had any dealings with them any information would be welcome.
If you are intend to invest in Vanguard funds, transfer your ISA directly to Vanguard.
Not sure if mentioned but there appears to be a work around for selftrade. You are not charged a £12 a quarter inactivity fee if you are charged a 0.3% quarterly fund fee. For people wanting to hold shares or etfs IT’s etc that don’t really trade you may want to buy £50 of a fund if they’ll let you. You should only be then be charged about 70p a year to hold your shares regardless of pot size of shares. Hope that makes sense. DYOR of course.
Quite a few changes in the platform world going on at the moment. Had a letter from Fidelity re a new platform they are launching imminently. This will allow shares to be dealt and held in ISA, SIPP etc. Great. BUT the big downside is that monthly dealing fees for purchases of ETF’s and IT’s will go from 0.1% of the deal value to £1.50 per deal.
It brings it line with other platforms but takes away a huge reason away for me to use it.
For anyone saving small amounts per month across multiple IT or ETFs this will be a huge increase in charges. Fund dealing remains free, however with a 0.35% platform charge for funds it makes it questionable.
The upside remaining is that IT/ ETF platform charges remain capped at £45 per year. For now anyway….
Great update thanks.
Do we know of platforms that allow for dealing of fractions of ETFs? I think Fidelity do but what about the others?
Is there any reason HSBC’s InvestDirect is not included in the table?
@ Adrian – most do in my experience. Best just to email a specific platform you have in mind if it’s a deal-breaker
@ Jim – yes, it’s not very competitive. There are a fair few platforms out there that don’t make the table because they don’t have a compelling offer
I was a loyal HL investor – but their customer service is on the decline.
I see a steady deterioration.
they simply don’t care about retail customers anymore
they will create many obstacles for withdrawal, super easy to deposit money though!
e-mail response time is around 15 days now (used to be 3-4 days)
think carefully if it is worth allowing them to chip 0.45% of your hard earned money each year for this abysmal care you receive.
From my experience I would suggest trying charles stanley – I am a customer for about the same time, and they are only getting better.
Echo above regarding CSD, phone is answered immediately, secure messages replied to same day. Only quibble is they don’t have a switch function i.e. you have to sell then buy back in.
Useful update, thank you.
@The Accumulator
Thanks for the prompt TA, I’ve just started my ISA Transfer from Cavendish to Vanguard to save slightly on the fees. I’m wondering if now’s a good time to move away from Lifestrategy and start DIY’ing it.
Has there been any more recent updates to ‘9 lazy portfolios for UK investors’ http://monevator.com/9-lazy-portfolios-for-uk-passive-investors-2010/ or ‘Low cost index trackers that will save you money’ http://monevator.com/low-cost-index-trackers/ that I’m missing?
Hi,
Just wanted to say that I’ve recently found this blog, and have found it incredibly inspiring / motivating for me to take control of my finances. Slightly scary, as everything I read leads to more questions, but thankfully not paralysed by analysis. The articles, as well as the comments are always thought provoking. Cheers.
You acknowledge in the introduction its impossible to say who is the best broker, because its different for everyone, but then state the most important factor is cost.
I’m getting old so becoming more prone to https://en.wikipedia.org/wiki/Choice-supportive_bias
and therefore, maybe unnecessarily, look for justification that my choice (HL) is the best. Its certainly (unfortunately) not the cheapest (especially for funds), however for me other factors come into play such as quality of service, their loyalty payments, navigation / information on the site, reputation / stability, flexibility, etc. I have used other brokers and wasted hours (make that days) sorting out (not always satisfactorily) bad service, therefore I value other factors in addition to cost.
I don’t always think cheapest is best and therefore I think other factors need to come into the decision. For anyone from HL reading this you are still too expensive though, so please don’t get complacent.
@ Gaz – the 9 lazy portfolios was a conversion of US portfolios and as such I think many of them are too focussed on domestic equity for a UK accumulator who’s over 5 years from retirement. 8 – 10% in the UK is a better balance, as in the Slow & Steady portfolio.
This piece also has some useful ideas: http://monevator.com/asset-allocation-types/
Although I’m personally now much more cautious about allocations to index-linked gilts: http://monevator.com/why-uk-inflation-linked-funds-may-not-protect-you-against-inflation/
Low cost trackers is due an update soon but the funds in the list will pretty much all get you in the right ballpark.
@ Tim – Thank you very much for taking the time to leave your thoughts, we really appreciate it.
@ Matthew – good perspective and utterly fair comment. HL is excellent for service and that does count. I’ve tried a fair few brokers and found that my needs are so passive that they rarely stretch the abilities of even the bare bones merchants but I do hear you.