Isas, apps and platforms: Where to invest your money
Hosts Val Cipriani and Holly McKechnie from Investors Chronicle's Women & Wealth podcast discuss how to choose an investment platform, covering key factors like costs, investment options, and support levels. They categorize platforms into money apps, traditional DIY platforms, and trading platforms, then provide brief overviews of five major UK platforms: Hargreaves Lansdowne, AJ Bell, Interactive Investor, Vanguard, and Fidelity.
Summary
The episode opens with an explanation of what investment platforms are — essentially bank-like services used for investing — and why choosing the right one matters. Holly outlines four key factors to consider: costs, range of available investments, level of support and resources, and ease of access (website vs. app). The hosts emphasize that the 'best' platform is highly dependent on individual investing style, portfolio size, and experience level.
The discussion then focuses heavily on fees, using an AJ Bell example to illustrate the compounding impact of costs over time: a 3.5% annual fee on a £100,000 investment over 30 years would consume over £350,000 in charges despite a 6% annual return. Holly explains that fees come in different forms — percentage-based vs. flat annual account fees, and trading fees — and that the optimal structure depends on portfolio size. Percentage-based fees favor smaller portfolios, while flat fees become more economical as portfolios grow.
The hosts then categorize the main types of platforms. 'Money apps' (e.g., Plum, Moneybox, Wealthify, Moneyfarm) are described as slick, beginner-friendly, and sometimes robo-advisory, but often have layered, opaque fee structures and limited investment choices. Traditional DIY platforms (e.g., Hargreaves Lansdowne, AJ Bell, Fidelity, Interactive Investor) offer broad investment ranges, strong customer service, and educational resources, but at higher cost. Trading-focused platforms like Freetrade and Trading 212 are noted for offering free ISAs and low costs, making them attractive for smaller portfolios, though they lack the depth of traditional platforms.
The hosts then give brief profiles of five major platforms. Hargreaves Lansdowne is praised for its investment range but flagged as expensive, with a recently reduced headline fee of 0.35%. AJ Bell is described as comprehensive with a 0.25% annual fee, competitive for portfolios under £20,000. Interactive Investor uses a flat-fee structure with tiered plans, making it expensive for small portfolios but potentially cost-effective for those holding multiple accounts. Vanguard is highlighted as a simple, low-cost option restricted to its own passive funds and ETFs, with no trading fee. Fidelity is characterized as middle-of-the-road on cost and range, expensive for share dealing but free for fund dealing, and particularly strong on educational resources.
The episode closes with Holly advising listeners not to feel paralyzed by the decision, noting that platforms can be switched and should be reviewed periodically as portfolios grow and goals evolve.
Key Insights
- The hosts argue that a 3.5% annual platform fee on a £100,000 investment earning 6% per year over 30 years would consume over £350,000 in charges — more than the investor's final pot of ~£200,000 — illustrating how seemingly small percentage fees devastate long-term returns through compounding.
- Holly contends that money apps may be a reasonable entry point for total beginners but warns they should not be considered a long-term home for a portfolio, primarily because layered fee structures (subscription fee + annual holding fee + fund management fee) can be more expensive than they first appear.
- The hosts assert that the optimal fee structure — percentage-based vs. flat fee — flips depending on portfolio size: percentage fees are cheaper for small portfolios while flat fees become more economical as a portfolio grows, meaning a platform that suits a beginner may become a poor fit over time.
- Val notes that Vanguard's platform restricts investors to Vanguard's own passive funds and ETFs, making it unsuitable for anyone seeking to actively select investments or attempt to beat the market, but well-suited to those wanting a simple, low-cost, hands-off approach with no trading fees.
- Holly argues that Fidelity's strongest differentiator is not its pricing or investment range — both of which are described as middle-of-the-road — but its depth of educational resources and investment guidance, which she suggests may justify the higher cost for investors who are new but keen to actively learn.
Topics
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