Candid Money Guide to: ISA discount brokers
When you buy funds or shares within a shares individual savings account (ISA), a practical and often cost effective way of doing so is via an investment platform - either directly or via a 'discount' broker. We've compared a number of platforms and brokers to see who gives the best deals.
1. Decide whether buying direct is right for you
If you need investment advice then buying direct from a platform (or via a discount broker) is probably not for you, as you won't get any. Consider using a good independent financial adviser (IFA).
But if you’re comfortable making your own investment decisions then you’ll almost certainly reap benefits by buying direct from a platform. You'll save on advice fees and platforms normally offer cheaper versions of funds than those sold by fund managers directly.
2. Choose a level of service that suits
While you shouldn’t expect much in the way of service from platforms and discount brokers, some do offer guidance and research that you might find helpful. However, this usually comes at a cost via higher platforms fees - the very cheapest deals simply offer a ‘no-frills’ transaction service.
Whichever you choose you should be able to check your investments online.
3. Check whether you already hold investments via a platform
If you already hold investments via a platform, such as Cofunds or Fidelity, it usually makes sense to buy new investments on the same platform if you are happy with it, keeping everything in one place. This could affect your choice of broker as most tie themselves to one platform.
4. Select the platform/broker providing the best deal for the service you desire
Overall platform/broker costs can vary widely - see our extensive comparison below. If you’re autonomous and not fussy about choice of platform then opting for the cheapest will probably be your best option, otherwise you might get better value paying a little more for added services and/or investment choice.
5. Choose the investment(s) you wish to buy
If the platform/broker you've chosen provides investment research you might find this helpful in making your choice. You may also find our guide to investing useful.
Note: we have a dynamic comparison tool at www.comparefundplatforms.com, where you can compare costs and features based on your own crieria.
To help you find an attractive deal we’ve compared 21 platforms and brokers using several typical scenarios.
How we carried out the comparison
We have assumed 3 scenarios: holding funds only, holding shares only and a 50/50 mix of the two, with assumed annual growth of 7% before charges and any initial dealing fees. As the impact of some platform/broker charges changes with investment size, we assumed portfolios of £10,000 (4 shares/funds, 2 of each if 50/50, with 2 deals a year) and £100,000 (10 shares/funds, 5 of each if 50/50, with 4 deals a year).
The comparison shows the lost return due to platform/broker charges over 10 years (all links are unpaid). Ranked on £100,000 funds only cost.
Last updated: 16 March 2015.
|Platform/Broker||FUNDS ONLY||SHARES ONLY||FUNDS & SHARES|
|Notes: One off £200 set up fee then £5 per deal, no annual fee.|
Candid Verdict: High set up fee, but cheap thereafter if you don't trade funds very frequently. Be warned, awful website and basic service.
|Notes: Flat £12.50 annial platfiorm ISA fee plus £12.50 per deal.|
Candid Verdict: Generally a very good deal on mid to larger sized portfolios unless you trade very frequently.
|Notes: Flat £80 annual platform ISA charge (includes 2 free deals per quarter & family accounts can combine), £10 per deal (£1.50 monthly dealing).|
Candid Verdict: Very good value on larger portfolios thanks to fixed annual platform fees, especially if you don't trade frequently.
|Alliance Trust Savings
|Notes: Flat £75 annual platform ISA fee plus £12.50 per deal (£1.50 monthly dealing).|
Candid Verdict: Usually good value on larger portfolios thanks to fixed annual platform fees. Dealing fees can become excessive if you trade frequently.
|AJ Bell Youinvest
|Notes: 0.20% annual platform fund ISA fee capped at £50 per quarter. Funds £4.95 per deal and shares up to £9.95.|
Candid Verdict: Generally good value for both funds and shares.
|Notes: 0.25% annual platform ISA fee, minimum £20 maximum £200. Fund and share dealing up to £10 per deal.|
Candid Verdict: Reasonably competitive on medium to larger sized portfolios, lots of fund information and tools.
|Notes: Uses the Fidelity platform and costs 0.25% a year, from which Cavendish receives 0.05%. No fund dealing fees.|
Candid Verdict: Very good value for small to mid sized portfolios - especially if you want to use Fidelity's platform.
|Charles Stanley Direct
|Notes: 0.25% annual platform ISA fee, falling to 0.15% above £500,000. No fund dealing fees but shares £10 per deal.|
Candid Verdict: Generally pretty competitive, especially for smaller to mid sized sums.
|Clubfinance Frequent Trader
|Notes: 0.24% annual platform ISA fee (min £30 per quarter). No fund dealing fees, shares up to £2.50 per deal.|
Candid Verdict: Expensive for smaller portfolios, reasonable to good value on larger if you trade shares very frequently.
|Notes: 0.35% annual platform ISA fee on first £50,000 then 0.25% (flat 0.25% on shares). No fund dealing fees, shares £8.95 per deal.|
Candid Verdict: Mid range cost, little reason to use over cheaper rivals.
|Notes: 0.35% annual platform ISA charge on portfolios below £50,000, 0.25% up to £1m or 0.10% if above, plus £10 annual fee. No fund dealing charge, shares £12.50 per deal.|
Candid Verdict: Relatively expensive with insufficient redeeming features to merit using.
|Notes: 0.40% annual platform ISA fee on first £50,000, 0.30% on next £100,000, 0.20% on next £250,000 then 0.15% on balance. £7.50 share dealing fee, fund dealing free.|
Candid Verdict: Much cheaper than it used to be following introduction of own branded platform. But still hard to see a reason for using over rivals and customers on the older charging system (via Cofunds) still paying very high fees.
|Notes: 0.35% annual platform ISA fee, no fund dealing fees.|
Candid Verdict: Mid range cost. Useful fund and portfolio tools but becomes expensive on larger portfolios.
|Notes: 0.35% annual platform ISA fee on portfolios up to £250,000, or 0.20% on those above. No fund dealing fee.|
Candid Verdict: Mid range price, reasonable value on smaller portfolios but less so on larger.
|AXA Self Investor
|Notes: 0.35% annual platform ISA fee (0.20% if portfolio £250,000 or more). No fund dealing fees.|
Candid Verdict: Mid range cost, little reason to use over cheaper rivals.
|Notes: 0.40% annual platform ISA fee on first £250,000, then 0.20% up to £1m. No fund dealing fee, shares £7.50 per deal.|
Candid Verdict: Good quality fund research and online portfolio analysis tool, but rather expensive overall.
|Notes: 0.45% annual platform fund ISA fee on first £250,000, 0.25% on next £750,000 then 0.10% on next £1m. Shares cost 0.45% a year capped at £45. No fund dealing fees, shares up to £11.95 per deal.|
Candid Verdict: Generally good reputation for service and plenty of information available, but expensive in most scenarios.
|Notes: Uses Cofunds platform charging 0.23% a year plus Commshares 0.24% broker charge. No fund dealing costs.|
Candid Verdict: Far too expensive, no reason to use over cheaper alternatives.
|Notes: Uses Cofunds platform charging 0.20% a year plus Chelsea's 0.40% broker charge on first £250,000, progressively reducing on amounts thereafter. No fund dealing costs.|
Candid Verdict: Very expensive, hard to justify fund research being worth the hefty premium over rivals.
How do platform/broker ISAs work?
Platforms are the administration services that ultimately hold your funds/shares, the main benefits being access to lower cost 'clean' fund versions, holding everything in one place and viewing your portfolio online. You can buy direct from most platforms, although a few only sell via discount brokers. The latter will usually levy their own fee, but might provide research, guidance or platform discounts to help justify this.
Are all platforms/brokers the same?
No. Charges vary. And while some provide potentially useful research, others simply offer a ‘no-frills’ bargain basement transaction service.
Should I buy direct from a platform?
If you’re comfortable making your own investment decisions, then yes. You’ll normally get a cheaper deal compared to investing directly with a fund provider or via a financial adviser.
However, if you need help then don’t underestimate the value of good independent financial advice. Granted, not all advisers are worth their salt, but there are some good ones out there.
What service can I expect?
Not much, you’re generally on your own. However, some platforms and discount brokers do publish guidance and research, which you might find helpful. At its most basic this might simply be a few suggested fund choices, although a handful of brokers do publish more extensive research including updates on whether a fund is worth continuing to hold following manager changes etc.
Can I move between platforms?
Yes, you need to transfer your investments, either as cash or 'as is' (called 'in-specie'). Fees may apply for either or both, so check with your existing platform.