Existing investments, ISAs and pensions can also be transferred and consolidated on the platform of your choice.
Consumer-oriented platforms vary considerably. Some platforms only offer funds, while others give you access to investment trusts, UK and overseas shares, ETFs, corporate bonds and government securities. Some offer lots of tools, research and model portfolios to help you work out the best investments to meet your needs, while others are more basic. However, it is the platforms varying charging structures which can make it most difficult to work out which will give you the best deal. Here are some of the main charges you may have to pay:
Set-up charge
A one-off fee when you first open an account. This is quite rare, though it can be quite attractive in the long run. IWeb, part of Halifax share dealing, charges an upfront fee and no regular admin charges after that.
Annual charge
Most platforms make a regular charge, either monthly, quarterly or annually for as long as you hold your account. Some charge a flat fee of, say £75, while others take a percentage of the value of your holdings, around 0.2% to 0.4%. The percentage fee may reduce depending on the size of your investment.
Dealing charges
When you buy and sell investments you may have to pay a dealing fee of between £2.50 and £15 for each deal. This is normally the case with investment trusts, shares etc. However, some sites such as Interactive Investor allow you two free trades a quarter, while many do not charge for buying and selling funds.
Other charges
Depending on how you intend to use your platform account, there are other charges worth taking into account, such as for regular investment (some platforms have a lower dealing charge for regular savings); dividend reinvestment (some platforms charge less for dividend reinvestment, or do a sweep once your dividends reach a certain amount); and for setting up income drawdown.
Exit charges
Platforms normally charge you a fee if you want to cash in or transfer your investments elsewhere. They may make a per holding charge if you want to transfer the funds or shares you hold instead of taking cash.
Generally speaking, a platform with a flat fee is preferable to one with a percentage-based charge if you have a large amount of money. However, these platforms tend to charge you for buying and selling funds, while those which charge a percentage may offer free fund dealing. So if you are an active investor, you may be better off paying a percentage, whereas if you are a buy-and-hold investor, then a flat fee may be best for you. Run the calculator to find out more.
A comparison website such as ours, allows you to input the type of investments and wrappers you hold or want to and could help you work out which might give you the best deal, depending on your requirements. Run the calculator to find out more.
Article is accurate at date of writing.
FAQs
Platforms normally charge you a fee if you want to cash in or transfer your investments elsewhere. They may make a per holding charge if you want to transfer the funds or shares you hold instead of taking cash.
What are investment platform fees? ›
It's what you pay them to hold investments in your account. The charge is usually stated as a percentage of the value of the investments in your account, or some providers charge a flat rate instead. The account charge is often also referred to as: Service charge. Platform charge.
What does platform fee mean? ›
What Is the Meaning of Platform Fee? A platform fee is a cost that you have to pay when you use an online platform to do things like book a place to stay, buy things, or sign up for services. The fee helps the platform cover the expenses of running the website, like keeping it secure and providing customer support.
What is the difference between platform fee and service fee? ›
Platform Services means the products and services that Platform Users receive from a Stripe Connect Platform, regardless of whether fees are charged (e.g., web development, customer support or hosting services). Service Fee means a fee charged by us to you for the administration of your credit facility.
What is the average platform fee? ›
Platform management fees
The charge may be made monthly or annually, however annual is most common. For investment providers charging this fee annually, the fee could commonly range from 0.2%-0.45% (though it may be capped at a set monetary value). As a monthly charge the fee could typically cost £4.99 upwards.
How are platform fees calculated? ›
Fee defined in a legal contract? Platform Fee means an asset-based fee that is paid to the dealer manager. This fee accrued daily and is calculated based on the number of shares outstanding that day, excluding shares issued under the company's distribution reinvestment plan.
What investing platform has the lowest fees? ›
CMC Invest was rated our best low-cost broker in Finder's latest Share Trading Awards because it offers low overall fees across different investment strategies, whether you're an active or passive trader of global or local stocks.
What does platform mean in investing? ›
Platforms allow investors to open a variety of brokerage or trading accounts, including margin accounts, cash accounts, retirement accounts, and self-directed accounts. Through these accounts, traders can make buy and sell orders for stocks, bonds, exchange-traded funds (ETFs), and mutual funds among others.
Do trading platforms charge fees? ›
Trading platforms and brokerages charge different fees for services, depending on their offerings and your activity. Whether you're a day trader or a long-term investor, brokerage fees and trading fees can cut into any potential returns.
How much does a wealth management platform charge? ›
The average fee paid to financial advisors and wealth management firms is usually between 1-2% of the total investment sum of the client's account annually.
Only developers who sell paid apps or in-app access to digital content or services, are subject to a service fee, and more than 99% of those developers are eligible for a service fee of 15% or less.
Why am I getting charged a service fee? ›
A service charge is a fee collected to pay for services related to the primary product or service being purchased. The charge is usually added at the time of the transaction. Many industries collect service charges, including restaurants, banking, and travel and tourism.
What is the disadvantage of a fee for service plan? ›
The overall disadvantage and major criticism of this approach, however, is that it often leads to higher costs. The more services a healthcare professional provides, the more money they generate.
Why is there platform fee? ›
The Platform Fee is an application service fee that is charged for some services and to support product improvement and user experience through innovation and technology enhancement.
What is a platform processing fee? ›
any form of charge payable by or on behalf of a retail client to a firm in relation to the provision of a platform service and which is agreed between the platform service provider and the retail client.
What is the average number of clients per financial advisor? ›
A good average number of clients per financial advisor to have is usually in the range of 50 to 150. But you may need fewer than that if you're primarily targeting high-net-worth individuals. Finding your ideal number of clients can depend largely on your goals as an advisor.
What are normal investment fees? ›
The industry typically refers to this as an investment management fee and averages between 1-2% of assets (i.e. A $100,000 investment could cost you between $1,000 - $2,000 annually). In recent years, thanks to technology and higher overall awareness, these fees have fallen closer to an average of 1%.
What are the investment fees? ›
Investment fees are fees charged to use financial products, such as broker fees, trading fees, and expense ratios. Investment fees are one of the most important determinants of investment performance and are something on which every investor should focus. Over time, minimizing fees tends to maximize performance.
What is the investment platform? ›
Investment platforms enable you to buy and sell investments and give you tools to easily monitor the performance of your portfolio. A wide choice of platforms is available, all with differing charges and fees.
