Investment platforms have been criticised for their charges as research found the cost difference between the highest and lowest-cost platforms was more than the average UK salary.
Research by Boring Money, on behalf of platform Interactive Investor, found the impact of charges over 30 years on the average stocks and shares Isa balance meant customers of the lowest-cost platforms would be £33,000 better off when compared with the highest-cost platforms.
Boring Money had factored in 5 per cent annual growth after charges and assumed a 50/50 split between funds and shares.
It assumed an average Isa balance of £51,306, no additional contributions, and six trades a year for rebalancing purposes - representing the average number of trades per year for stocks and shares Isa customers of interactive investor.
According to the research, Halifax Share Dealing provided the best outcome for investors with larger pots (those greater than £50,000), with the total investment value over 30 years standing at £215,730.
Interactive Investor came second at £215,580.
Lower down the table were Fidelity, Charles Stanley Direct, Bestinvest, and Hargreaves Lansdown at £205,460, £200,970, £195,280 and £182,700 respectively.
Boring Money also looked at the average stocks and shares Isa and found the impact of charges over 30 years was even greater.
A customer in the lowest cost platform would have £52,000 more in their Isa at the end of this period than an investor in the highest cost product.
The research assumed an average Isa worth £51,306 and then added in an annual contribution of £10,124 over 30 years, this being the average stocks and shares Isa subscription in the 2017 to 2018 tax year, according to HM Revenue & Customs.
It assumed one twelfth of this lump sum would be invested monthly into one fund and one share (24 trades per year).
In this scenario, Halifax came out top in terms of total investment after 30 years at £908,300, with Hargreaves Lansdown and Bestinvest at the bottom at £867,500 and £856,280 respectively.
Richard Wilson, chief executive of Interactive Investor, said bigger pots did not bring a greater workload or increased costs for platforms and suggesting otherwise was "nonsense".
He said: "The platform industry has a dogged obsession with percentage fees, and this research lifts the lid on why. Essentially, the more money a customer has in their pot, the more they will tend to pay in charges.
"Obscure platform charges serve only to reinforce the feeling that somewhere in the chain we are being ripped off."
Holly MacKay, chief executive of Boring Money, said competition in the DIY investing market was not working as well as it should.
She said: "I have been working with investment platforms for 20 years now and I struggle to work out what I would pay on many platforms who have complex structures with multiple parts. Trying to compare like with like is unacceptably complex."
She said most cost comparisons only looked at a single year period but over a much longer timeframe the decision of where to invest could make a significant impact on the end value of someone’s life savings.
Magnus Wheatley, managing director of Charles Stanley Direct, questioned the validity of the research.
He said: "Cutting data to suit individual platform pricing is fraught with pitfalls. No two investors are alike and savvy clients select their platforms based on the features that different platforms offer."
Mr Wheatley said Charles Stanley waived the platform fee for clients holding stocks and shares in their Isa if they did one chargeable trade per month, which then amounted to a total charge of £138 per year.
"A client could hold several million pounds in an account and only be charged this sum," he said. He added the platform had a loyalty scheme which "aggressively" cut rates.
Danny Cox, head of communications at Hargreaves Lansdown, agreed investors needed to choose the provider that offered the best value for them, based on their individual requirements.
He said: "Our clients value the excellent service, investment tools and research, the extensive choices, the full range of tax wrappers, the mobile app and now the new active savings service."
Jason Hollands, managing director of business, development and communications at Tilney Investment Management, which owns Bestinvest, said different fee structures worked well or less so dependent on the level of assets held.
He said: "Fixed fee structures or those with minimum thresholds can be particularly costly for investors with more modest amounts to invest – like the vast majority of the public who are actually on average earnings."
Fidelity did not want to comment.
Alan Chan, director and chartered financial planner at IFS Wealth & Pensions, said charges were an important consideration when choosing an investment platform as they acted as a drag on investment returns.
However, he added they were not the only consideration for an investor.
He said: "It is the same reasons why we don't all shop at Lidl. Other factors like fund choice, fund share classes available, ease of access, financial stability and so on also play an important role.
"For instance you may find a platform that is cheaper but it might not have the fund you want to invest in or, if it does, you cannot invest in the lowest cost share class.
"Alternatively, it could simply be that the platform does not have a smartphone app to monitor your investments or customer service is very poor. It’s important to consider the whole package of what you are getting for your money."
Dippy Singh is a freelance reporter for FTAdviser
