What’s a fair price to pay for DIY investing? On average £25 a month say investors but many want to pay much less
- One in ten said investing firms should charge nothing
- But 4% said they consider more than £100 per month a fair charge for investing
- Two thirds of investors like the idea of firms charging a fixed subscription fee
The average investor considers £25 per month to be a fair price to pay for using DIY investing platforms – much higher than what most companies actually charge, a new survey has found.
Just over half put fair costs as their top priority when choosing who to invest with – but what is considered fair varies greatly according to age and how much money is invested.
One in ten said investing firms should charge nothing, while 4 per cent considered more than £100 per month to be fair, according to the survey of 1,000 UK adults with money invested outside a pension commissioned by DIY platform interactive investor.
The average of £25 also masks the fact that a cumulative 32 per cent consider a charge between £5 or less and £10 a fair charge.
DIY investing charges: Perceptions of fair pricing increase with the value of investments held
Perceptions of fair pricing increased with the value of investments held, from £13.80 per month for those with under £25,000 up to £38 per month for those with £250,000 or more.
Experience, however, has the opposite effect. Novice investors said they were prepared to pay £30 a month, which was more than those who had invested for more than ten years.
Investors aged 55 and above with on average investments worth £200,000 considered £17 a month to be a fair charge – half the £34 that 35 to 54-year-olds with similar amounts invested were prepared to pay.
Paying £25 a month can be considered expensive, given that fixed-fee investing platforms like interactive investor and Freetrade charge £4.99 per month for their entry-level pricing plans.
The survey also found that there was considerable overlap between what investors consider fair and what they believe they are paying their provider.
On average, UK investors think they are paying £26 a month, just a pound more than the amount they consider fair.
Some 13 per cent said they did not believe they paid anything at all, while 4 per cent reported paying more than £100 per month.
Fair enough? The average of £25 masks the fact that a cumulative 32% consider a charge between £5 or less and £10 a fair charge
New investors typically believe they are paying £30, exactly the figure they consider fair, falling to £22 per month for those who have been investing for more than ten years.
The findings suggest the need for greater understanding of actual charges as reforms to stop consumers being ripped off by financial firms loom, according to interactive investor.
Fair pricing rules are on the way
From July, under the Financial Conduct Authority’s consumer duty reform, banks, insurers and other financial companies will be required ‘to act to deliver good outcomes for retail customers’, for example by pricing their services fairly.
Financial companies fear the reforms could damage the sector, with City of London minister Andrew Griffith reportedly having harshly criticised the FCA at a recent dinner.
According to a report by the Financial Times, Griffith said the reforms could lead to a flurry of lawsuits by opportunistic claims management companies.
But consumer groups have previously welcomed the rules, which are expected to end rip-off charges and fees through more transparent promotions, and make it easier to cancel or switch investments.
Rocio Concha, the director of policy and advocacy at the consumer group Which?, previously said: ‘The financial industry must get on board with these new protections, and firms that are in a position to do so now shouldn’t wait for them to be formally introduced to deliver positive change for consumers.
‘Where businesses fail to meet the new rules, the FCA must stand ready to impose tough penalties.’
The survey also found that two thirds of investors agreed with the idea of firms charging a fixed subscription fee, as opposed to a variable percentage basis, which was the preferred option of 15 per cent of survey respondents.
Around a quarter believe fixed subscriptions are a fairer way to charge, think it’s a simpler method, or find it more appealing, while 16 per cent also think this is a more transparent way to charge.
Compare the best DIY investing platforms and stocks & shares Isa
Investing online is simple, cheap and can be done from your computer, tablet or phone at a time and place that suits you.
When it comes to choosing a DIY investing platform, stocks & shares Isa or a general investing account, the range of options might seem overwhelming.
Every provider has a slightly different offering, charging more or less for trading or holding shares and giving access to a different range of stocks, funds and investment trusts.
When weighing up the right one for you, it’s important to to look at the service that it offers, along with administration charges and dealing fees, plus any other extra costs.
To help you compare investment accounts, we’ve crunched the facts and pulled together a comprehensive guide to choosing the best and cheapest investing account for you.
We highlight the main players in the table below but would advise doing your own research and considering the points in our full guide linked here.
>> This is Money’s full guide to the best investing platforms and Isas
Platforms featured below are independently selected by This is Money’s specialist journalists. If you open an account using links which have an asterisk, This is Money will earn an affiliate commission. We do not allow this to affect our editorial independence.
|Admin charge||Charges notes||Fund dealing||Standard share, trust, ETF dealing||Regular investing||Dividend reinvestment|
|AJ Bell*||0.25%||Max £3.50 per month for shares, trusts, ETFs.||£1.50||£9.95||£1.50||£1.50 per deal||More details|
|Bestinvest*||0.40% (0.2% for ready made portfolios)||Account fee cut to 0.2% for ready made investments||Free||£4.95||Free for funds||Free for income funds||More details|
|Charles Stanley Direct||0.35%||No platform fee on shares if a trade in that month and annual max of £240||Free||£11.50||n/a||n/a||More details|
|Fidelity*||0.35% on funds||£45 fee up to £7,500. Max £45 per year for shares, trusts, ETFs||Free||£10||Free funds £1.50 shares, trusts ETFs||£1.50||More details|
|Hargreaves Lansdown*||0.45%||Capped at £45 for shares, trusts, ETFs||Free||£11.95||£1.50||1% (£1 min, £10 max)||More details|
|Interactive Investor*||£9.99 per month, or £4.99 under £30k holdings, £12.99 for Sipp||£5.99 per month back in free trading credit (does not apply to £4.99 plan)||£5.99||£5.99||Free||£0.99||More details|
|iWeb||£100 one-off||£5||£5||n/a||2%, max £5||More details|
|Etoro*||Free but no Isa or Sipp||Investment account offers stocks and ETFs. Beware high risk CFDs in trading account||Not available||Free||n/a||n/a||More details|
|Freetrade*||Free for Basic account, £4.99 per month for Standard with Isa||Freetrade Plus with more investments and Sipp is £9.99/month inc. Isa fee||No funds||Free||n/a||n/a||More details|
|Vanguard||0.15%||Only Vanguard funds||Free||Free only Vanguard ETFs||Free||n/a||More details|
|(Source: ThisisMoney.co.uk Jan 2023. Admin % charge may be levied monthly or quarterly|