Barclays Stockbrokers has become the latest DIY investing platform to draw swords on pricing, but for investors the offer is much the same as deals from other big brokers. The platform has gone head-to-head with Fidelity and Hargreaves Lansdown, with an administration fee of 0. Analysts say the so-called 'pricing war' is more of a 'pub brawl' as there is not much difference for the average investor.
Is the platform pricing war turning into a mere pub brawl, like the ones on the BBC soap EastEnders? Investing platforms have been reforming their pricing as a result of a looming ban on receiving commission from fund managers. From this April, they must charge customers upfront fees rather than basing their businesses on these backdoor payments - a practice that gave rise to a perception their services were 'free'.
Financial advisers already levy fees, as they were banned from taking commission from January Barclays Stockbrokers is in competition with Fidelity and Hargreaves Lansdown, which both announced new pricing structures in the past few weeks.
From March, investors with Barclays Stockbrokers will see a new fund administration fee of 0. Barclays, Fidelity and Hargreaves Lansdown make up 52 per cent of the DIY platform market, according to analysts at the Platforum, and their pricing is broadly similar.
The graph below shows there is no single platform that will be the best overall for all types of investors. The best platform depends on the amount invested, according to figures from Platforum using standard clean share classes.
For new ISA investors on Axa Self Investor there are no fees until 1st Maybut Platforum has used the pricing that will apply from then onwards. While these three are the biggest DIY investing platforms, there are others that offer a variety of services and tools, all with different pricing.
Our guide to picking the best DIY investing platform should help you make a choice. In comparison with Barclays, from 9 February Fidelity will charge 0. This falls to 0. From March, investors on the Hargreaves Landsown Vantage platform will pay a 0. All three have no charges for fund transactions but are competing closely on the annual management charge.
But price should not be the only deciding factor. You should also consider the choice of funds and tools on offer with the platforms. Barclays says users will have access to funds with an average annual management charge of 0. The Fidelity average is a notch lower than the average 0. Investors will eventually only be able to put money into commission-free funds, known as clean funds, from April But unlike on some other platforms, Barclays Stockbrokers customers will see this done automatically.
Clean funds have most fees stripped out so even after admin charges are added back in again they offer the opportunity for higher returns over time. It is hoped that this change will ultimately bring down the cost of fund investing, as DIY platforms are negotiating with fund managers to strike preferential deals that would allow them to sell clean funds at lower rates than rivals. Also, some fund managers are believed to be clawing back part of the commission they used to pay to middlemen instead of passing reductions along to investors.
City watchdog the Financial Conduct Authority has warned platforms not to switch investors' money into clean funds automatically if this turns out to be disadvantageous. Where all three of the top brokers differ is over Isas. If you just hold funds in an Isa, none of them will levy extra charges on top of the administration and annual management charges.
However, there is more to pay if you want to hold investment trusts and shares in an Isa. Fidelity has no charge for product wrappers such as an Isa. Hargreaves Lansdown will charge 0. If the latest announcements make you reconsider where you hold your investments, ensure you check how much it may cost to leave.
Some of these costs could be recouped as some platforms are offering cashback for people who transfer their holdings. The views expressed in the contents above are those of our users and do not necessarily reflect the views of MailOnline. By posting your comment you agree to our house rules.
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Fund and trust ideas for income investors Going for growth? Fund and trust ideas for emerging markets Dumb tracker, cheap do-it-all fund, or smart beta? How you can track the market. The investment industry's world of abbreviations Accumulation - any income generated by the fund like dividends or interest is automatically reinvested. Income - any income generated is distributed by the fund instead of being reinvested.
Distribution - any income generated is distributed by the fund instead of being reinvested. Retail - the fund is aimed at ordinary investors.
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