Vanguard and AJ Bell Youinvest have come out on top in Which?’s latest survey of the best DIY investment platforms.
The sharp increase in levels of household savings over the past year, combined with record low interest rates, has seen many people turn to investing.
The rise in the number of customer registrations on investment platforms – online and smartphone-based services where you can buy and hold a range of investments – has been stark.
Vanguard reported a 130 per cent increase in users in the year to March 2021, and AJ Bell Youinvest saw a 30 per cent increase in registrations in 2020 – a third of whom were from people under the age of 30.
Which? surveyed nearly 2,000 of its members and analysed 11 online DIY investment platforms based on customer ratings and costs.
Rankings were based on six criteria: online tools, customer service, investment information, whether it met the customer’s needs, value for money and customer score.
Leading the way were Vanguard and AJ Bell Youinvest with customer scores of 77 per cent and 72 per cent respectively. Both were named a Which? Recommended Provider (WRP) for the third year running, a title that can only be earned if the platform does not receive any below-average scores for any of the criteria or have a customer score of less than 70 per cent.
Vanguard, one of the world’s largest fund managers, was praised by survey respondents for being ‘straightforward’ and ‘efficient’ – and was the only platform to receive five stars for value for money.
While there is a limited selection of investments (75 of its own funds), fees are some of the lowest on the market at just 0.15 per cent a year (capped at £375 a year for accounts over £250,000). Vanguard does not charge for trading funds and its funds have low ongoing costs – at 0.2 per cent on average.
AJ Bell Youinvest offers a larger range of investments, with more than 2,000 funds, shares across 24 stock markets and a variety of other assets. Users will also receive access to a more extensive range of investment information, including handy guides, tools and the ability to see funds ranked by their Morningstar Rating.
Customers praised AJ Bell Youinvest’s ‘easy to navigate website’ and ‘excellent range of investment opportunities’. It costs more than Vanguard, but remains cheaper than many competitors. Investors will pay 0.25 per cent on the first £250,000 of funds, then 0.1 per cent on any amount between £250,000 and £1 million. To buy or sell a share, investment trust, exchange traded fund or bond you’ll pay £9.95 and 0.25 per cent to hold them, capped at £3.50 a month.
For larger portfolios, Interactive Investor, which performed respectably with a customer score of 68 per cent, is a cost-effective option. Fixed monthly fees – ranging from £9.99 to £19.99 depending on the plan – make it an attractive proposition for investors with more than £50,000 in their portfolio.
Another platform worth considering for investors with larger portfolios is Halifax Share Dealing, which had an overall customer score of 63 per cent. Its flat £36 annual platform fee is the cheapest on offer for large portfolios. However, Which? members complained about a lack of information on investment opportunities.
Hargreaves Lansdown, the biggest platform featured in the survey, finished sixth with an overall customer score of 66 per cent. While customers did commend its ‘first class’ customer service and range of online tools, its annual fee of 0.45 per cent makes it pricier than many competitors for funds. Some survey respondents said they have lost trust and feel ‘disappointed’ with the platform after it continued promoting the Woodford Equity Income fund on its Wealth 50 best buy list until the day the fund was suspended in June 2019.
Finishing bottom of the pack for the fourth year in a row was Barclays Smart Investor, with a disappointing overall customer score of 48 per cent.
Some survey respondents’ dissatisfaction stemmed from the provider switching its service from Barclays Stockbrokers to Barclays Smart Investor in 2017. Others were disappointed by high charges, a limited range of investments and a website branded ‘unbelievably complicated’ by one survey respondent.
Barclays told Which? that since last year it has ‘invested a huge amount in the stability and operational strength of the platform’, and was always looking at new ways to improve its customers’ investing experience.
Jenny Ross, Which? Money Editor, said:
“Whether you’re a new or experienced DIY investor, your choice of investment platform is crucial, as both costs and the level of service on offer can vary considerably.
“In addition to platform charges, don’t forget to take into account the fees for buying and selling investments, especially if you plan to trade regularly.
“If you find you’re paying more in charges than you need to, it could be time to switch.”
Notes to editors
- Which? surveyed 1,896 members of its online panel between 25th February and 11th March 2021
- To be a Which? Recommended Provider, platforms cannot be among the three most expensive platforms in our fund trading scenarios, nor can they be among the three most expensive deals for any of the eight portfolio sizes in our pricing scenarios – from £5k to £1m.
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