FT Adviser (22/01/2019) – Investment platforms have been criticised for their charges as research found the cost difference between the highest and lowest-cost platforms was more than the average UK salary.
Research by Boring Money, on behalf of platform Interactive Investor, found the impact of charges over 30 years on the average stocks and shares Isa balance meant customers of the lowest-cost platforms would be £33,000 better off when compared with the highest-cost platforms.
Boring Money had factored in 5 per cent annual growth after charges and assumed a 50/50 split between funds and shares.
It assumed an average Isa balance of £51,306, no additional contributions, and six trades a year for rebalancing purposes – representing the average number of trades per year for stocks and shares Isa customers of interactive investor.
According to the research, Halifax Share Dealing provided the best outcome for investors with larger pots (those greater than £50,000), with the total investment value over 30 years standing at £215,730.
Interactive Investor came second at £215,580.
Lower down the table were Fidelity, Charles Stanley Direct, Bestinvest, and Hargreaves Lansdown at £205,460, £200,970, £195,280 and £182,700 respectively.
Alan Chan, director and chartered financial planner at IFS Wealth & Pensions, said charges were an important consideration when choosing an investment platform as they acted as a drag on investment returns.
However, he added they were not the only consideration for an investor.
He said: “It is the same reasons why we don’t all shop at Lidl. Other factors like fund choice, fund share classes available, ease of access, financial stability and so on also play an important role.
“For instance you may find a platform that is cheaper but it might not have the fund you want to invest in or, if it does, you cannot invest in the lowest cost share class.
“Alternatively, it could simply be that the platform does not have a smartphone app to monitor your investments or customer service is very poor. It’s important to consider the whole package of what you are getting for your money.”
Full article link: https://www.ftadviser.com/investments/2019/01/22/platforms-under-fire-for-charges/