Which Isa platform should you pick? We compare the different brokers

Price is a key consideration for investors trying to select an Isa platform, but

Individual Savings Accounts have become a hugely popular feature of the investment landscape since their launch in 1999. With an extended allowance to play with, new vehicles in the Isa suite and the growth of the online investment market, the possibilities for Isa investors are opening up all the time.

April’s increase in the annual limit to £20,000 was just the latest stage in the evolution of Isas, coming at the same time as the addition of the Lifetime Isa and a year after the launch of the Innovative Finance Isa. The basic appeal of Isas remains unchanged, however: simplicity, tax-efficiency and low cost.

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The Financial Conduct Authority is examining price competition among the platforms through which a growing number of investors hold and run their stocks and shares Isa accounts. Price is still the most important factor for many investors when assessing which platforms are most suitable for their Isa needs.

To help readers make a well-informed decision, we asked the lang cat, a platforms consultancy, to provide Isa charging information for some of the leading direct-to-consumer platforms, in the form of ‘heatmap’ tables that allow comparison of costs at different levels of fund investment. The figures represent the core platform charges as well as any annual Isa administration charges. The green cells are the least expensive, with the shade becoming redder as the pounds add up.

Event-driven charges, such as re-registration or exit fees, are not included, which you should bear in mind if you want the flexibility to move around.

There are three categories of heatmap here, reflecting the lang cat’s new segmentation of the direct investment platforms universe, which is designed to help investors compare different services on the basis of what they actually do for them.

These are the categories:

‘Do it yourself’ (DIY): These are platforms that leave most of the work to the investor and typically just carry out their instructions. Investors using the services in this group would ideally have a clear idea of why they’re investing; understand their own appetite for risk and capacity for loss; and be able to research their options using the available information. 

‘Do it with me’ (DIWM): These services are aimed at investors who are comfortable with making the decisions but who would also value some help. In other words, there’s no need for hand-holding but the full DIY approach still feels a little daunting. The help provided tends to come in the form of fund lists, objectives based fund options or risk-based portfolios (although the task of working out the appropriate risk level lies with the investor).

‘Do it for me’ (DIFM): These providers are often classed as robo-advisers, as they take the investor through the whole process, from fact finding and working out a risk profile to putting a portfolio together. While some will provide a personal recommendation (which means it’s advice, and you have recourse to the Financial Services Compensation Scheme and the Financial Ombudsman Service should things go wrong), others will guide you towards a solution but without making an actual recommendation (so it’s not advice). The investments tend to be mainly passive, typically in the form of exchange traded funds (ETFs).

-Top 10 most popular investment trusts – September 2017 

Several providers appear in both the DIY and DIWM segments, as they offer both types of service. Let’s have a look at how the pricing compares.

Do it yourself

Table 1 looks at investment in funds and adds in the cost of four ad hoc fund transactions in the year (which could be buys or sells, or two full switches). It does not take into account underlying fund charges. It’s a mixed bag, with charges varying considerably across different Isa fund sizes. The contrasts can be explained to some extent by charging structures.

 

TABLE 1: DO IT YOURSELF
PROVIDER £5k £15k £25k £50k £100k £250k £500k £1m
Portfolio size as a percentage
AJ Bell Youinvest 0.37 0.29 0.27 0.26 0.26 0.25 0.18 0.14
Alliance Trust Savings 2.40 0.80 0.48 0.24 0.12 0.05 0.02 0.01
Aviva Consumer Platform 0.40 0.40 0.40 0.40 0.38 0.36 0.31 0.15
Barclays 1.20 0.40 0.25 0.22 0.21 0.20 0.20 0.15
Bestinvest 0.40 0.40 0.40 0.40 0.40 0.40 0.30 0.25
Cavendish Online 0.25 0.25 0.25 0.25 0.25 0.20 0.20 0.20
Charles Stanley Direct 0.25 0.25 0.25 0.25 0.25 0.25 0.22 0.19
Close Brothers A.M. Self
Directed Service
0.25 0.25 0.25 0.25 0.25
0.25

0.25

0.25
Clubfinance 1.60 0.53 0.32 0.16 0.08 0.03 0.02 0.01
Fidelity
Personal Investing
0.90 0.35 0.35 0.35 0.35 0.20 0.20 0.20
Halifax Share
Dealing
1.25 0.42 0.25 0.13 0.06 0.03 0.01 0.01
Hargreaves Lansdown 0.45 0.45 0.45 0.45 0.45 0.45 0.35 0.30
Interactive Investor 1.60 0.53 0.32 0.16 0.08 0.03 0.02 0.01
iWeb 0.90 0.30 0.18 0.09 0.05 0.02 0.01 0.00
James Hay
Modular iPlan
3.75 1.42 0.95 0.60 0.43 0.25 0.23 0.20
rplan 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35
Saga
Investment Services
0.40 0.40 0.40 0.40 0.40 0.40 0.30 0.25
Santander 0.35 0.35 0.35 0.35 0.28 0.23 0.22 0.16
Selftrade 0.77 0.46 0.39 0.35 0.30 0.27 0.20 0.10
Strawberry 0.80 0.42 0.39 0.37 0.31 0.27 0.26 0.26
TD Direct
Investing
1.02 0.30 0.30 0.30 0.30 0.30 0.25 0.15
Telegraph
Investor
0.40 0.30 0.30 0.30 0.30 0.12 0.06 0.03
The Share
Centre
1.75 0.58 0.35 0.18 0.18 0.07 0.04 0.02
Trustnet
Direct
1.20 0.52 0.41 0.33 0.24 0.10 0.05 0.02
Willis Owen 0.40 0.40 0.40 0.40 0.35 0.26 0.21 0.18
PROVIDER £5k £15k £25k £50k £100k £250k £500k £1m
Portfolio size in sterling
AJ Bell Youinvest £19 £44 £69 £131 £256 £631 £881 £1,381
Alliance Trust Savings £120 £120 £120 £120 £120 £120 £120 £120
Aviva Consumer Platform £20 £60 £100 £200 £375 £900 £1,525 £1,525
Barclays  £60 £60 £62 £112 £212 £512 £1,012 £1,512
Bestinvest £20 £60 £100 £200 £400 £1,000 £1,500 £2,500
Cavendish Online £13 £38 £63 £125 £250 £500 £1,000 £2,000
Charles Stanley Direct £13 £38 £63 £125 £250 £625 £1,125 £1,875
Close Brothers A.M. Self
Directed Service
£13 £38 £63 £125 £250 £625 £1,250 £2,500
Clubfinance £80 £80 £80 £80 £80 £80 £80 £80
Fidelity
Personal Investing
£45 £53 £88 £175 £350 £500 £1,000 £2,000
Halifax Share
Dealing
£63 £63 £63 £63 £63 £63 £63 £63
Hargreaves Lansdown £23 £68 £113 £225 £450 £1,125 £1,750 £3,000
Interactive Investor £80 £80 £80 £80 £80 £80 £80 £80
iWeb £45 £45 £45 £45 £45 £45 £45 £45
James Hay
Modular iPlan
£188 £213 £238 £300 £425 £625 £1,150 £1,950
rplan £18 £53 £88 £175 £350 £875 £1,750 £3,500
Saga
Investment Services
£20 £60 £100 £200 £400 £1,000 £1,500 £2,500
Santander £18 £53 £88 £175 £275 £575 £1,075 £1,575
Selftrade £39 £69 £99 £174 £299 £674 £1,023 £1,023
Strawberry £40 £63 £98 £185 £310 £685 £1,310 £2,560
TD Direct
Investing
£51 £45 £75 £150 £300 £750 £1,250 £1,500
Telegraph
Investor
£20 £45 £75 £150 £300 £300 £300 £300
The Share
Centre
£88 £88 £88 £88 £184 £184 £184 £184
Trustnet
Direct
£60 £78 £103 £165 £240 £240 £240 £240
Willis Owen £20 £60 £100 £200 £350 £650 £1,025 £1,775
Note: Annual core platform and Isa admin charges. plus four ad hoc fund transactions. Fund charges no included. Source: the lang cat, as at mid-August 2017

Among the most expensive at lower fund levels are the platforms (including Alliance Trust Savings and Interactive Investor) with flat fees rather than percentage-based charges. The flat fee structure means the charge remains the same even as the investment pot grows, which is why they are usually the cheapest for the biggest fund sizes. iWeb does charge at the £1 million point, but it can only be seen on the pounds and pence table because the total fees are so low that the percentage is miniscule.

So, for investors with Isa portfolios of around £100,000 or less, the cheapest options include AJ Bell Youinvest, Cavendish Online, Charles Stanley, Close Brothers and iWeb. At the other end of the scale, however, the lowest charges are levied by the flat fee providers, including Interactive Investor.

Do it with me

This heatmap (table 2) contains a column showing the ongoing charges figure (OCF) or total expense ratio (TER), representing the underlying fund management charge of a sample model portfolio. This is added to the platform/product cost to give the annual total cost of ownership at each of the standard portfolio sizes.

The platforms that are cheap on this heatmap tend to be so right across the different investment sizes, with the most expensive similarly consistent. This is explained largely by the underlying investment costs. Where the OCF/TER figure is high, the total cost of investing is likewise (see Bestinvest, Hargreaves Lansdown and the Share Centre). The lowest-cost options here are mostly those based on passive investment portfolios, including AJ Bell Youinvest, Fidelity Personal Investing, TD Direct and Vanguard.

TABLE 2: DO IT WITH ME
PROVIDER OCF
/TER (%)
£5k £15k £25k £50k £100k £250k £500k £1m
Portfolio size as a percentage
AJ Bell Youinvest 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50
Aviva Consumer Platform 0.75 1.15 1.15 1.15 1.15 1.13 1.14 1.06 0.90
Barclays 0.45 1.47 0.79 0.66 0.66 0.65 0.65 0.65 0.60
Bestinvest 1.47 1.87 1.87 1.87 1.87 1.87 1.87 1.77 1.72
Cavendish
Online
0.15 0.40 0.40 0.40 0.40 0.40 0.30 0.30 0.30
Charles
Stanley Direct
0.78 1.03 1.03 1.03 1.03 1.03 1.03 1.01 0.97
Close Brothers A.M. Self
Directed Service
1.17 1.42 1.42 1.42 1.42 1.42 1.42 1.42 1.42
Fidelity Personal Investing 0.25 1.15 0.60 0.60 0.60 0.60 0.45 0.45 0.45
Hargr-eaves Lans-down 1.44 1.89 1.89 1.89 1.89 1.89 1.89 1.79 1.74
HSBC 0.81 1.06 1.06 1.06 1.06 1.06 1.06 1.06 1.06
IG 0.20 0.85 0.85 0.85 0.85 0.70 0.61 0.46 0.38
Inter-active
Investor
0.82 2.42 1.35 1.14 0.98 0.90 0.85 0.84 0.83
Natwest Invest 0.60 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95
Prud-ential 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35
rplan 0.26 0.61 0.61 0.61 0.61 0.61 0.61 0.61 0.61
Saga
Inves-tment Services
1.47 1.87 1.87 1.87 1.87 1.87 1.87 1.77 1.72
Standard Life Savings 0.83 1.43 1.43 1.43 1.43 1.43 1.40 1.37 1.30
TD Direct
Investing
0.22 1.24 0.52 0.52 0.52 0.52 0.52 0.47 0.37
The Share
Centre
1.94 1.94 1.94 1.94 1.94 1.94 1.94 1.94 1.94
True
Potential Investor
0.89 1.29 1.29 1.29 1.29 1.29 1.29 1.29 1.29
Trustnet
Direct
0.78 2.58 1.50 1.31 1.17 1.05 0.89 0.83 0.81
Vanguard
Investor
0.22 0.37 0.37 0.37 0.37 0.37 0.37 0.30 0.26
Summary Portfolio size in sterling
OCF/
TER
£5k £15k £25k £50k £100k £250
k
£500k £1m
AVERAGE
COST
0.77 £68 £174 £284 £560 £1,
103
£2,
690
£5,208 £10,
098
HIGHEST
COST
1.94 £129 £291 £485 £970 £1,
940
£4,
850
£9,700 £19,
400
LOWEST
COST
0.15 £20 £60 £100 £200 £400 £750 £1,500 £3,
000
Note: Annual core platform and Isa admin charges, plus ongoing charge for sample model portfolio. Source:the lang cat, as at mid-August 2017. Funds/portfolios used are all balanced mid-risk growth.

Overall, the variable fund costs make for some big differences in price here. If you want to do it with Bestinvest, The Share Centre or Hargreaves Lansdown you’ll be paying close to 2 per cent of your fund, unless it’s worth £500 million or more. In pound terms, someone with a £100,000 Isa fund could pay £400 a year if they go with the cheapest provider, or an additional £1,540 if they use the most expensive. Such differentials can make a real difference to long-term returns.

Do it for me

The assumptions here are the same as for the DIWM category. It’s a smaller group, made up of ‘robos’ that to varying degrees guide you through the process towards a suitable portfolio.

Again, the higher costs across the board are a reflection of the higher underlying investment costs (shown in the OCF/TER column). This makes for some eye-catching differentials between different providers, with Fiver A Day, Simply EQ, UBS Smart Wealth, Wealth Horizon and Investec Click & Invest all among the most expensive regardless of fund size. In contrast, Nutmeg (fixed allocation service), ETFmatic, evestor and Wealthify are among the cheapest.

TABLE 3: DO IT FOR ME
PROVIDER OCF/
TER
£5k £15k £25k £50k £100k £250k £500k £1m
Portfolio size as a percentage
ETFmatic 0.22% 0.72% 0.72% 0.52% 0.52% 0.52% 0.52% 0.52% 0.52%
evestor 0.13% 0.48% 0.48% 0.48% 0.48% 0.48% 0.48% 0.48% 0.48%
Fiver a Day* 0.50% 1.34% 1.34% 1.34% 1.34% 1.34% 1.34% 1.34% 1.34%
Investec
Click & Invest
0.60% 1.25% 1.25% 1.25% 1.25% 1.16% 1.06% 1.00%
Moneybox 0.23% 0.92% 0.76% 0.73% 0.70% 0.69% 0.68% 0.68% 0.68%
Moneyfarm 0.30% 0.30% 0.50% 0.66% 0.78% 0.84% 0.76% 0.73% 0.71%
Moo.la 0.25% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Munnypot 0.22% 1.33% 1.00% 1.13% 1.13% 1.23% 0.73% 0.53% 0.43%
Netwealth 0.25% 0.90% 0.90% 0.90% 0.83% 0.71%
Nutmeg -
fixed allocation
0.17% 0.62% 0.62% 0.62% 0.62% 0.62% 0.50% 0.46% 0.44%
Nutmeg - full
service
0.19% 0.94% 0.94% 0.94% 0.94% 0.94% 0.70% 0.62% 0.58%
Scalable
Capital
0.25% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Simply EQ 0.15% 1.14% 1.14% 1.14% 1.14% 0.94% 0.84% 0.74% 0.64%
UBS
SmartWealth
0.87% 1.12% 1.12% 1.12% 1.02% 0.97% 0.97% 0.97%
Wealth
Horizon
0.18% 1.18% 1.18% 1.18% 1.18% 1.18% 1.18% 1.18% 1.18%
Wealthify 0.17% 0.87% 0.77% 0.77% 0.67% 0.67% 0.67% 0.67% 0.67%
*We include the 0.25% initial Fiver a Day contribution charge
and also the 0.25% initial charge that the investment manager leviews. For
fairness, we should point out that this means the ongoing charge for Fiver a
Day are 0.84%. (0.34% Fiver a Day management charges + OCF of 0.50%)
Summary Portfolio size in sterling
AVERAGE COST 0.29 £45 £138 £231 £462 £2,
099
£4,
000
£7,
725
£7,
725
HIGHEST COST 0.87 £67 £201 £335 £670 £1,3
40
£3,
350
£6,
700
£13,
400
LOWEST COST 0.13 £15 £72 £120 £240 £480 £1,
200
£2,
300
£4,
300
Annual core platform and Isa admin charges, plus ongoing charge for ‘robo’ managed portfolio. Source:the lang cat, as at mid-August 2017. All funds/portfolios are mid-risk.

A quick comparison of this table with the Do It With Me group reveals that the Do It For Me option is usually cheaper, even though there’s more provider involvement in the process. This is explained by the fact that the underlying investments in the DIFM group are almost always baskets of ETFs, which tend to be significantly cheaper than the active funds generally favoured by investors running DIY and DIWM portfolios.

One consequence of this is that it can be difficult to compare DIFM platforms in terms of investment options, because the ETFs offered tend to look very similar. But where these platforms do contrast is in price. With differences of £860 (at £100,000), £4,400 (at £500,000) and £9,100 (at £1 million) between the highest and lowest charges, it’s clear that cost should be an important factor when selecting your platform.

Looking beyond the numbers

High charges can take a potentially huge bite out of investment returns, especially over the long run. It’s not the only aspect to look at when assessing which platform is the best home for an Isa portfolio, however.

The extent to which you want support and/or guidance is a big factor in this market, hence the segments used here. That will also dictate to some extent the investment choice you have. If you want a wide choice of investment types, look at the range of products available. Not all platforms will offer much in the way of individual shares or investment trusts, for example.

Spend some time navigating provider websites too. It’s important to be comfortable with the architecture of the service you’re using and the way in which it communicates, particularly if you’re in the DIY category. Similarly, you might be influenced by app availability and mobile functionality. While some providers offer various ways of checking your account while on the move, others are still playing catch-up. This is evolving all the time, so if you want such functionality you’ll need to check what the individual platforms make available.

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Steve Nelson, head of research at the lang cat, says: ‘One of the main things to consider when choosing an investment platform is how much help you need in picking where to place your money. There are thousands of funds, equities, investment trusts and others to choose from, and while this could be an exciting challenge for some, it could easily be utterly overwhelming for many others.

‘Fortunately, the market caters for a wide range of needs, which is why we now segment our tables into different camps to help investors navigate the market successfully. Our research shows very clearly that it’s worth doing your research, comparing costs and spending time thinking about what it is that you want from a platform.’ 

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