Isa savers who switch to a cheaper direct-to-consumer platform could save £230 a year, according to a mystery shop.
Analysis by personal finance expert Andrew Hagger from financial services research firm Moneycomms found that Isa holders with a £30,000 invested through a platform could save up to £230.25 a year by switching to a cheaper provider.
He also found investors could save an average of £55.54 a year by transferring the same portfolio to the cheapest platform.
It was based on portfolio of £30,000 investment with the same five funds: Woodford Equity Income, Old Mutual UK Alpha, MFM Slater Growth, Standard Life UK Smaller Companies, Vanguard Life Strategy 60 per cent Equity Fund.
The mystery shopping exercise, which was commissioned by online investment platform Rplan, looked at a sample of 21 providers.
Cheapest and most expensive of 21 leading fund platforms in Hagger Report1, based on £30K portfolio
Most expensive platforms in survey | Cost of £30K portfolio | Cheapest platforms in survey | Cost of £30K portfolio |
Sharecentre | £517.50 | Cavendish | £287.25 |
iWeb | £425.40 | Charles Stanley Direct | £289.80 |
Chelsea FS | £394.80 | AJ Bell Sippdeal | £297.75 |
Standard Life | £375.00 | TD Direct Investing | £309.00 |
AXA | £355.50 | Barclays Stockbrokers | £318.00 |
Alliance Trust | £344.50 | £319.80 |
Source: rplan
Mr Hagger pointed out some platform charges were difficult to work out.
“Platforms do target investors with different amounts to invest, and this does go some way towards explaining the various levels of charges.”
He said there was “no doubt” that lack of transparency also plays a role.
This was echoed by Nick Curry, director at Rplan, who suggested there is a “deliberate lack of transparency” among some platform providers in the absence of regulation, leading to “wide variations” in charging levels.
Mr Curry said charges should be expressed in both percentage terms and pounds and pence so investors can see the impact of fees they are paying.
HM Revenue & Customs data shows that in the 2012/13 tax year Isa savers had an average holding of £26,408.
Steven Nelson, research manager at the Lang Cat, said: “Platform pricing varies significantly when taking into account individual circumstances, so we’d urge customers to be clear about exactly what it is they’re looking for when comparing costs side-by-side.”
katherine.denham@ft.com
