Compare Best Investment Platforms 2020

You’ve got a meaty £20,000 a year tax-free ISA allowance which should be the first investment you consider making every year. And before you choose your ISA you need to choose the platform you’re going to manage it on.

What is an investment platform?

If you’re going to buy a can of beans – first of all you have to choose the supermarket you’re going to, before you choose which brand of beans.

The online “platform” is your supermarket. It’s where your ISAs and other investments can be held and managed online.

Why do you need one?

You don’t have to use a platform to manage your ISA: you could be old-school and contact funds directly and get paper records. (Though most funds will try to steer you towards online management.)

But a plethora of online investment platforms have sprung up because it’s easier and cheaper to manage your investments this way:

  • You can hold all your ISAs in one place: cash ISAs, stocks and shares ISAs, a Lifetime ISA and any Junior ISAs
  • Plus any other fund holdings or shares that you’re trading outside of a tax-free environment, from a general trading account
  • Plus a SIPP (Self Invested Personal Pension)

One place to go, one password, one tax statement…

How do you choose an investment platform?

You don’t want to get so overwhelmed by this-or-that-factors that you put off making the decision.

At the same time, the services offered by the different types of platforms vary widely, and so do the costs.

And this isn’t a chop-and-change decision that you’ll revisit every year or so: those costs will be charged year after year.

Amongst the most popular platforms, for a small portfolio…

  • Annual ISA account charges can range from zero to £100 a year.
  • Annual fund charges range from zero to 0.45% of portfolio value, plus fund trading charges from zero or £1 per transaction to £12.50 per transaction – depending on the size of your portfolio and how frequently you’re trading.
  • Share charges range from 0.1% – 0.45% a year, plus per-transaction charges of up to £12.50 per trade, for less-frequent traders.
  • Pension account charges range from zero to £180 a year.
If you're not sure where to invest, it can be helpful to see where others are considering putting their money. To help you make a more informed investment decision, see below for our Top 5 Most Popular Investment Plans by category, based on the number of brochures requested by new investors and our existing customers in the last month.

Oliver Roylance-Smith

Head of Investment & Savings

So here are the Top 10 criteria you’ll want to consider:

1 Do you already have an idea of the funds you want to invest in?

In which case, look to see which of the platforms offer those options.

For example, for some people their top priority is using the power of their money to support ethical investments:

Choose ethical investments

You may be interested in cutting out the middleman and investing directly in companies in growth industries that have promising ideas and products. The returns may be greater, but you  won’t have the security of having some or all of your investment covered by the Financial Services Compensation Scheme:

Choose peer to peer lending

You may be most comfortable investing in property and want to put all your money there:

Choose property  investments

Or you may want buy foreign shares (not all platforms cater to this) or trade in ETFs (exchange-traded funds – usually tracking an index).

2 Do you want to manage your own ISA investments, or have someone else do it for you?

Your answer to this will depend on:

  • How confident are you about investing?
  • Will you enjoy getting underneath the bonnet?
  • Do you have enough time to be an active manager?
  • Would you mistrust someone else making these decisions on your behalf – or have more confidence in their market knowledge than your own?

You can choose from:

Do it with me platforms and Do it for me platforms

You get a range of active investment management, from advice and assistance to completely hands-free:

Managed fund platforms

Invest From
£50 per month
Fund Choice
Over 140 providers and 3,000 investment options
ISA Transfers

Why we like it: Invest from as little as £50 a month or with a £1,000 lump sum. Investment choice from over 140 fund providers, giving you access to 3,000 investment options. One low-cost service fee of 0.35%. Great service – from investment guidance on website through to UK-based phones team. PathFinder, Select 50, Investment Finder – investing tools for beginners to advanced investors. 24/7 access via online Account Management system.

Important information: Investment ISAs are tax-efficient wrappers for long term investments. Capital at risk. Charges may apply.  Tax rules may change in the future and whether particular tax rules benefit you, will depend on your individual circumstances. ISA transfer charges may apply, please check with your provider.

 

DIY platforms

You manage your own investing, but usually with a fair amount of research support from the platform:

DIY investment platforms

Investor Fund ISA Service

Investment Fund ISA Service

  • Wide range of UK and international investment funds
  • Ready made funds or pick your own
  • Ethical fund options
  • Open online in less than 10 minutes
  •  Access to expert independent ideas and analysis
  • Invest from £25 per month or £100 lump sum

L&G Investment Fund ISA Service »

CAPITAL AT RISK

3 Do you want to invest just in funds, or shares and funds?

Check what’s on offer, if you want to have the flexibility: some platforms don’t offer both.

4 Do you want your platform to be independent or fund-owning?

Do you want to be able to invest in independent funds, or are you happy investing via a fund manager such as Legal & General that offers just its own funds?

  • Platforms such as Nutmeg, Shepherds Friendly and Scottish Friendly offer their own funds as well as managed portfolios including other products.

5 Do you have a self-invested pension?

You may want to look for a platform that can manage your SIPP as well: not all of them can.

6 Do you want to do a lot of trading?

Active investors will want to look for a platform that offers the best research, and the lowest fees for volume trades in funds, and stocks and shares.

 7 How easy to use is this platform: what kind of tools and customer service does it offer?

These are often the criteria that count most highly with users, so do some research and read the reviews.

  • Many investors are prepared to pay a bit more in fees  for a platform that offers really useful apps and services.

 8 How much are you investing?

You will want to look at the fee structures, and the thresholds for reduced fee charges.

  • Platforms that charge flat-rate fees work better for large investors with £50K or more in their portfolios.

9 How has this platform performed?

This is a key consideration if you’re looking at having your investment managed by the platform, rather than going DIY.

You’ll want to look at the kind of returns that its investors have been getting: read the reviews and compare the results of the platforms you’re considering.

10 And finally… how much will it cost?

If you’ve worked through the other decision criteria first, you’ll understand that you shouldn’t choose solely on cost.

Some of the more expensive platforms are highly rated by their clients for usability and client support, or show consistently good returns.

Hargreaves Lansdown and Bestinvest, for example, charge tiered account management fees which are higher than others, but they’re rated highly by investors for ease of use and good customer support.

  • Choosing active management of your investments isn’t always cheaper than DIY: there are some price advantages to trading in scale.
  • There has been a push to get platforms away from commission-based charges towards “clean pricing” annual fees.
  • You need to be looking at annual administration charges, dealing fees, and any other costs, including exit charges.

Undecided on your options?

When it comes to making investment decisions using the services of a qualified independent investment adviser may be worth considering.

Most IFAs will offer a free no obligation initial discussion. A good adviser based on what you are looking to achieve will put together a plan for your situation. Part of this plan may be helping you to decide what investment platform is suited to your situation.

We have partnered with an organisation Unbiased UK who will help you find a qualified adviser in your area. Find an investment adviser »

If you’ve decided to switch platforms…

DON’T withdraw your money from your ISA, and then pay it into your new account. It all has to stay quarantined within an ISA “wrapper” to hold onto the tax advantages.

  • Instruct the platform you’ve chosen to move your funds over for you. (Get them working for their fees from Day One…) That way you’ll preserve their tax-free status.

No news, feature article or comment should be seen as a personal recommendation to invest. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular plan. If you are at all unsure of the suitability of a particular product, both in respect of its objectives and its risk profile, you should seek independent financial advice.

Tax treatment of ISAs depends on your individual circumstances and is based on current law which may be subject to change in the future. ISA transfer charges may apply, please check with your provider.

Written by Jennifer Stevenson ,
16th December 2019