Thursday, 28 May 2015

A New ISA Platform For My Funds

In recent weeks I have been giving a little thought to the cost of my revised strategy of holding some of my portfolio in funds as opposed to shares or investment trusts.

With my current broker, AJ Bell Youinvest, there is no platform fee on these shares and ITs in my existing ISA portfolio however, they will charge me 0.20% for holding funds such as my recent additions of Vanguard UK Equity Income and their LifeStrategy funds.

Now this may not sound like a lot of money and if I were investing the odd £1K or £2K I would not be overly concerned to be forking out £4 p.a. for the convenience of holding a range of investments under one roof so to speak.

However, if I were to invest £20,000 in funds then the charges would be £40 p.a. and I start to sit up and take a little more notice.

The Options

The first port of call is Monevator's excellent comparison page - I quickly scanned through to see if there are cheaper options for holding funds.

The percentage fee platforms all seem to charge more than AJ Bell so they are swiftly ruled out.

From the flat fee options, iWeb would be good except they would charge me £200 to open a new a/c so they are out. The others have quite high quarterly charges - some of which are linked to frequency of dealing - I will not be doing much dealing at all so no help here.

The one option worth looking into further is Halifax Share Dealing who charge £12.50 p.a. platform fee and a rather high dealing fee of £12.50. As I will not be buying/selling, this should not be a problem - I do not anticipate more than two trades per year.

I double check the research with comparefundplatforms. I enter ISA, funds, £25,000 - 3 funds, 2 trades per year and to run for 20 yrs.

The top two results are iWeb with a cost impact of £1,069 (0.03% annual) and Halifax £1,544 (0.10% annual) - I suspect the iWeb cost does not include the £200 new a/c fees. I am really not sure why they have recently introduced this charge - it looks like I would save by going with them over 20 yrs but the initial charge is too much of a hurdle so I have decided to stick with Halifax.

AJ Bell comes out at £3,557 (0.24% annual) which confirms my decision to shop around a little.


I then check out the Halifax website which looks pretty good to me. The main thing of course is to make sure the funds I want are available and indeed, they offer over 2,000 funds including a full range of the Vanguard funds I require.

I have just spent 10 mins. opening my new S&S ISA account online which was very straight forward and I am now just awaiting receipt of my password before I can operate my new account and start to build my funds portfolio with Halifax.

Its probably a good idea to keep an eye on broker costs as well as the OCF with investments. For example, the costs of holding say £20K Vanguard LS funds with AJ Bell would be 0.20% broker and 0.24% fund = 0.44% and with Halifax 0.06% platform and 0.24% fund = 0.30%. This represent a modest saving of £28 p.a. - every little helps (now where have I heard that before!).

So long as there is no platform fee from AJ Bell for holding my shares, investment trusts and ETFs, it makes sense to leave that part of my portfolio where it is for the time being. However, I will remove my recently purchased Vanguard funds and transfer the proceeds to Halifax and will now use my new broker to build my holding of funds.

What broker do readers use for their investments - leave a comment and let other know what you think - are they good value?


  1. I must admit this is one area (among many) where I'm quite lazy. I don't really try to minimise the cost of my accounts. I do go with ones that are "low cost", but having chosen various brokers many years ago I tend to just stick with them "forever".

    I guess it depends on the cost/benefit of shopping around and the potential savings versus the cost of my time and effort!

    1. John,

      Thanks for stopping by. I think one of the reasons for not really considering funds up until recently has been the extra cost factor. Like you I tend to be a bit lazy and stick with what is familiar - bit like using the same bank a/c I suppose.

      When the advantages of using funds became clearer, I thought maybe I could justify the little bit extra but I am a bit more alert when it comes to saving a few ££ and over time, the savings will add up.

      As for time/effort - probably no more than an hour or so in total mainly using the two comparison sites which saves a great deal of 'leg work'.

  2. I think you're probably right here. iWeb and Halifax are owned by the same people. However, if you're not trading very often (and with bigger sums, perhaps) Halifax's lack of £200 fee is a major attraction.

    When I joined iWeb the fee was just £25. I soon made that back through the discounted fees. Even at £200 I would have made my money back by now. But their decision to raise it is pretty peculiar in my eyes. I am a little concerned about what this is indicative of.

    Oddly enough, I have been looking to potentially doing the opposite journey and opening an AJ Bell standard dealing account at first to test them out. Has your experience been good with them?

    1. As you say DD, a little bit of a mystery why iWeb should increase the new a/c fee from £25 to £200 - maybe they only want to attract the high rollers?

      As for AJ Bell, I have been reasonably happy with them - the main bone of contention was imposing an extra layer of £100 p.a. 'custody' charges on my drawdown sipp last year. This is offset by the fee-free ISA so taking the two together, mustn't grumble I suppose!

  3. Cautiously counting28 May 2015 at 10:54

    I use Hargreaves Lansdown for both ISA and SIPP. Clearly in hindsight not the cheapest, but they did a cracking job on the advertising.

    I went for the best UI, especially mobile. I didn't really look at cost against other platforms, just against my current pension providers annual charges and standard banks ISA charges, so at the time it looked incredibly cheap.

    I know I am overpaying for the service, but I like the platform and to be able to see all the investments in one place, and with other bank accounts, pension accounts premium bonds etc the admin overhead is a key decision.

    I will probably change at some point - a big spreadsheet will be needed to work out exit fees + reinvestment fees etc vs staying put.

    I'm not interested in saving a few ££ each year, but the ££ will get bigger over time!

    Will be interesting to see the result of your survey!


    1. CC,

      Thanks for taking the time to share your experience. I have seen many references to HL performing well on customer service and as they are the market leaders, I guess a lot of small investors welcome this aspect and are prepared to pay a little extra.

      I did not consider them as an alternative for my situation as obviously their charges for holding funds is more than double the charges of AJ Bell.

      As you say, it will be interesting to hear of the experience of others.

  4. You can reduce Halifax's £12.50 dealing charge down to £2 by setting your purchase up as a regular investment. Add cash to your account in the usual manner, then set it to buy what you want at the next available investment date. About a week afterwards cancel the regular investment (or if you want to make the same purchases a few months later, just suspend it).

    They also run monthly £3.95 commission offers at about a week's notice, so you can reduce your selling costs provided you can wait a bit.

    1. Thanks for this - sounds like it could well work out cheaper than I anticipated. The £3.95 deal will be good when I sell my 4% units at the end of each year to produce my 'income'. This would only be 0.02% of my £20K investment.

  5. I use HL for my SIPP as its simple to use, there is lots of information and in my mind a SIPP is more complex so i want better service and it just feels easy with HL- however i am mainly etfs and shares so the rates arent too bad

    i like a bit of diversity so my ISA and trading account is ii. At the begining of the year i fill my ISA from my trading account then use the quarterly ii fee to buy through the year into my trading account which i will then roll into my ISA the next year


    1. Jim,

      Thanks for that - as you say, the charges with HL work out a little better using mainly shares, etfs and ITs and they are capped.

      I had poor service from ii after they moved their platform from Halifax in 2012 - in the end I moved my account over to AJ Bell, so I would not consider them again - maybe they have improved in recent years but I had a lot of problems with late dividend receipts in particular. They did not seem suitable as I anticipate at most 2 trades per year which would cost me £80.

  6. One of the problems with long-term investing is that you end up with a collection of brokers and platforms. Over 20 or 30 years, the best / cheapest offer will change several times, and it can be quite a hassle and expense to shift your money over.

    The last account I opened was with iWeb (just before the opening fee went up) and I like it. But I still have "legacy" accounts with YouInvest (still competitive) and also HL and Fidelity (no so cheap, but both better than they used to be).

    As to why iWeb put up the fee, it seems clearly designed to discourage new accounts. So maybe they've hit a ceiling with their infrastructure and need to pause for breath. Or it could be more sinister. I hope not.

  7. 7C,

    I have been with Youinvest for about 8 yrs with my sipp and maybe 3 yrs with my ISA - they seem fairly consistent and, as you say competitive so happy to leave my investments with them. Halifax seem to have a good reputation so, if they remain the best place for my funds, I will probably stay with them. I am not one for chopping and changing too much.

  8. I have some funds in a HL SIPP. I was aware that the 0.45% fee is on the high side, but I intend to move to drawdown in about three years and their lack of any further fees is attractive. As is mentioned above though, I've only recently realised that the 0.45% fee is capped at £200 p.a. for investment trusts, ETFs and shares. So, that means for accounts valued over £44,444 the fees are capped for these investments.

    My SIPP is somewhat above that value and it is being aggressively added to as we head towards retirement. I'm going to convert the portfolio into some similar Investment Trusts over the next week or two, and should save a lot of fees over the years.

    Thanks for the conformation about the fee cap at HL.


  9. Cautious Investor30 May 2015 at 21:38

    I, too, came to the conclusion that I will use Halifax for my future stocks & shares ISA.

    I am a very satisfied customer of Youinvest, where my ISA is in Investment Trusts and ETFs, so no platform charge. And also of HL, where my SIPP is also ITs and ETFs and benefits from their platform fee cap.

    But I'm not happy to buy more ETFs and on the same platforms. However good the safeguards at brokers, nominees and ETF providers - and I'm sure they are very good - it's not completely risk-free and protection from the FSCS is limited.

    So this year I will go for an index tracker unit trust and a new broker. Hence Halifax.

  10. Halifax regularly offer dealing at reduced rates - I can't remember the details as I only invest regularly with them or buy a full ISAs worth of ETFs once a year. Usually they send emails once a month offering about £3.95 trades for a couple of hours on one particular day.

    I moved to Halifax from HL as the latter introduced their percentage based fee which raised costs for my entirely passive portfolio from about £50/annum to about £300. The HL website is much, much better and I had a couple of early glitches with Halifax when transferring ISA's in … however, since then it's been straightforward. The staff are helpful and the web chat is useful. Remember that you can still do your research on the HL website, but let Halifax handle the deals ;-)

  11. I'm with Fidelity for my ISA & SIPP. This was pre-RDR when I setup my accounts, I know I could save a bit by going to Charles Stanley or Cavendish but their online account management is really good, changing monthly investments on the fly etc, Morningstar x-ray feature for portfolios and their telephone service has always been good when I've had to contact them.

    Maybe in the future I'll change but at the moment I'm very happy.

  12. I have an ISA with £200K on HL platform holding Shares, ETFs and ITs which have a capped annual fee of £45 pa.
    I have a second ISA on Cavendish/Fidelity Platform with £200 K of OEIC funds with an annual fee of 0.25%
    I would like to introduce some index / life-strategy funds and reduce costs and as Cavendish do not charge any exit fees so I was looking at transferring from Cavendish and amalgamating on HL, selling the funds so I have only ETFs and ITs with a £45 pa total holding fee. Another alternative is to transfer the OEIC Funds from Cavendish to Halifax, sell the OEICs and switch to a few index fund and life-strategy funds on the Halifax platform -
    Do you think keeping index / life-strategy / OEIC funds on a separate (say Halifax) platform offers any advantages over just holding one large ISA containing just ETFs and Investment Trusts on the HL platform ?

    1. I think the HL fees when you start going over a £100k will make them much less competitive than Halifax, IWeb or Interactive Investor. But you need to factor in how often you trade as it is free with HL

  13. im with iweb before they put up their opening charge to £200, I don't think anything sinister about this other than they are not making enough money from their £5 dealing fees

  14. I'm very happy with Selftrade - excellent value for passive investing in funds, as long as you drip something in each quarter to avoid their inactivity charge. If you could live with that slight tweak to your plans, it could give your 20 calculation a _radically_ different outcome. As long as their business model doesn't change: the new owners have committed to sticking with the current setup until 2016; I have my fingers crossed that they will stick with it.

  15. Sorry for the delay in response but away for a long w/end.

    Many thanks to all for you views and experience of various brokers - really useful for myself and maybe others to learn what is working for you.

    I now have my Halifax password so the new account is up and running and I am currently just waiting for the sale proceeds from my funds with Youinvest to reach my bank and can then re-purchase in my new ISA. (If the markets were to take a dive in the next couple of days, I would not be complaining!).

    Passively Simple, good luck with your new blog!

  16. If you like Halifax take a look at Interactive Investor which is a bit more HL like. I believe Interactive Investor, Halifax and IWeb are all built on ths same trading platform under the hood.

    1. Robert,

      Thanks for stopping by with your comments.

      I was under the impression that ii moved away from the Halifax platform in 2012 when they set up their own platform. I had my ISA with them at the time and there were so many problems - particularly with late dividend credits - that I moved my ISA to AJ Bell Youinvest.

      Perhaps they have moved back to using the Halifax platform recently??

  17. Hi DIY,

    I currently use TD Direct for my ISA - zero charge, and I am only in ITs and Shares, so basically the only costs for me are for purchases - £1.50 for divi reinvestment, and a rather high £12.50 per trade (I dont trade that often). I did wonder about changing but for now I dont think its worth it. I need to check that ETFs dont incur a charge as I am looking at expanding the portfolio to utilise that for a little bit of diversification - I'll let yuou know!