Fee calculator launched to compare fund platforms

Boring Money’s new fee calculator allows investors to compare costs across these differing fee structures.

A new fee calculator tool has been launched to help investors better understand how fund platform charges significantly vary depending on the amount invested.

According to Boring Money, the consumer finance website, investors face an uphill task to compare the platform market due to complex fee structures, often shown in percentages. Although a small number, including interactive investor, Money Observer’s parent company, charge a fixed fee.

Holly Mackay, chief executive of Boring Money, notes: “Trying to work out what we pay for investment services remains shockingly difficult. Customers tell us they want to see a single fee in pounds and pence, but instead they have to build complex Excel spreadsheets with multiple inputs to try and work out what each provider costs.”

Boring Money’s new fee calculator allows investors to compare costs across these differing fee structures, receiving a figure in pounds and pence that’s based on the total amount an individual is planning to invest.

Investors first input the size of their portfolio and select how this is split between different investment tax wrappers (Isas, Sipps, Jisa or a normal trading account). Investors then choose to select all brokers or tailor their selections to either ready-made portfolios, DIY or choose to select Boring Money’s best buys. With this information, the calculator tells the user how much they can expect to pay yearly for various platforms.

A key feature is the ability to move the investment amount along a sliding scale. This helps to give investors an idea of when having a fixed fee or percentage fee platform makes more economic sense. As a rule of thumb those with over £50,000 to invest are better off using a fixed fee platform.

However, it should be noted that the calculator has inbuild assumptions about the number of trades an investor will make a year and the types of investments they own. According to the Boring Money, this is because many investors are unaware of their annual number of trades or asset class split. However, investors that are more confident and engaged can override the assumptions.

The calculator also allows investors to see how different platforms stack up on metrics other than price, including user recommendation and Boring Money’s own ratings.

Alongside the launch of the calculator, Boring Money has started a campaign for fairer fee disclosure.

Mackay says: “There’s endless talk and very little action. We know that customers want to see fees in simple £ amounts. We know they want to be able to compare.

“We are calling on the industry to improve this fundamental part of disclosure and acknowledge that transparency is not the same as clarity. We think every part of the chain – from platform to asset manager – should have some way for consumers to understand in simple £ terms what any given investment would cost. So they can make informed and confident decisions.” 

Click here to use the calculator.

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