Regular readers of MoneyWeekwill know that we always take a look at which stockbrokers and fund supermarkets are a good choice if you're looking for a low-cost home for your Isa. That doesn't mean that cost is the only thing we take into account it certainly isn't but it's what we talk about most.
This year, we decided to try another approach. If you completed our Isa survey last month, you'll know that we asked you about what mattered most to you when choosing a stockbroker or fund platform, which providers you currently used and how you rated them on those criteria. The aim was to focus much more explicitly on what you care about and to get your experiences of using different providers.
The results were interesting. The top consideration was security of access to your account something that we didn't entirely expect. This may have something to do with the number of high-profile news stories in the last couple of years about cybersecurity and attacks on company websites. We agree this is a serious concern and would like to see some brokers tighten their security.
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The financial strength of the company also rated highly no surprise there. A reliable and user-friendly dealing website, efficient administration, helpful staff and access to a wide range of investments are other important choices. These are not radical findings, but there are certainly firms in the industry who seem to have forgotten that providing a good service is key to retaining customers, as some of your comments on some individual firms made clear.
Low costs were not a top priority, coming towards the middle of the pack. Many of you are willing to pay a premium or at least a fair price for good service, as the continuing popularity of Hargreaves Lansdown shows. What you mostly say you don't care about at all are add-ons such as research, data and articles on investing you're quite happy to get this kind of information from other sources.
All this sounds very sensible to us. So we took your ratings on each broker in the categories that matter most to you, and used them to calculate which providers you seem most satisfied with overall. The conclusions pretty much matched MoneyWeek's personal experience with a range of different firms. Below, we've listed the top three highest-rated brokers and your verdict on their strengths and weakness (for this, we only looked at firms with enough votes to be meaningful, so some smaller providers that anecdotally offer a solid service were excluded).
Our views on the best brokers
Obviously, the best choice of broker will vary depending on your investment needs. Indeed, because many brokers tend to do one thing well, but others less well, there may be no ideal choice. That's why we're not surprised to see that a number of you use more than one provider. Yes, it means slightly more work in keeping track of your investments, but can also mean more satisfactory results all round.
So let's take a look at a few different examples, taking into account both your views and the providers' services and charges (you can find a table of charges for major providers here). If you're looking for a firm that offers both a good range of investments and competitive costs, AJ Bell Youinvest is hard to beat. It's a low-cost option for shares, investment trusts and exchange-traded funds (ETFs) in a standard dealing account, an Isa or a self-invested personal pension (Sipp). It's not quite such a cheap choice for holding unit trusts and open-end investment companies (Oeics), because it now charges both a custody fee and a dealing fee on these. However, we approve of its decision to offer a range of low-cost portfolios built with tracker funds that can be held without paying the custody fee a good move to help beginners with small accounts.
If you're solely an open-end funds investor, don't need anything exotic and have a small portfolio or want to make small, regular monthly contributions into an Isa, Fidelity can be a good choice (Fidelity is a fund manager, but its fund supermarket offers funds from other firms). However, if you sign up directly to Fidelity, you pay higher fees in most circumstances (and a minimum annual charge) than if you go via Cavendish Online. It's the same underlying service and your money is still held with Fidelity, but Cavendish is a discount broker with a more favourable arrangement with Fidelity than Fidelity offers to individuals.
For readers who plan to trade a bit more frequently in UK shares, ETFs, investment trusts or popular open-end funds, take a look at iWeb Share Dealing. This broker is owned by Halifax and is the same underlying service, but operates with a different charging structure to Halifax's own-brand offering. You need to pay a £200 fee to open your first account (subsequent accounts have no opening fee), but thereafter there is no annual Isa fee, no custody fees and £5 per trade to deal in any type of investment that the firm offers. Obviously you need to be planning to trade a reasonable amount or hold the account for a while to earn back the cost of the account opening fee, but if you think you will, this provider is worth considering.
You can hold shares from major international markets in an Isa if your broker permits it, but currency costs can eat into your returns. So you want to look for a broker whose currency commissions are towards the lower end of the range. Possibilities include Youinvest, iDealing, the Share Centre,and Saxo Capital Markets.
Lastly, if the quality of service is your top consideration, the major firms with the highest ratings in our survey were Hargreaves Lansdown, Youinvest and Share Centre. Details of your verdict on each are below.
Hargreaves Lansdown is by far the biggest player in the UK market for DIY investors and well over half of you say that you have an account there or have done in the past. Despite its size and the fact it's adding new customers at a rapid pace, customer satisfaction seemingly remains high, which is no mean feat. The firm is known for a very solid all-round offering and the ratings you give it reflect that: it scores well in almost all categories. Hargreaves Lansdown is more expensive than many of its rivals and your responses reflect that, with lower satisfaction ratings on dealing costs and account fees. However, the fact that many readers recognise that, yet are willing to continue using it, speaks volumes for how well the firm is doing.
AJ Bell Youinvest
Youinvest has been around since 2000 (under its former name of Sippdeal), but for a long time didn't have the widespread brand recognition of some other established firms. That's largely because it began as a Sipp provider and only added Isas and standard accounts five years ago. But since then, it's grown rapidly and our survey suggests that it's winning users away from some well-known rivals. Youinvest performed well in all of the categories you say you care about and beat Hargreaves Lansdown in cost-related ones. The weakest rating although still good came for the ease of use of its website, which we agree was previously a little clunky (it has recently undergone a redesign that has greatly improved it).
The Share Centre has always had a reputation for providing good service at a higher price than many rivals, in part because it has charged higher account fees than a lot of UK stockbrokers. As rivals have introduced or raised account fees to reduce their dependence on dealing fees and "trail commission" from funds, the difference has eroded and Share Centre looks less expensive. So we weren't surprised to see it perform strongly. It did well across most of the major categories, with its weakest rating being for its range of investments. The firm's coverage of specialist unit trusts and Oeics is narrower than Hargreaves Lansdown or Youinvest, but it still includes all the funds most readers are likely to want.
Cris Sholto Heaton is an investment analyst and writer who has been contributing to MoneyWeek since 2006 and was managing editor of the magazine between 2016 and 2018. He is especially interested in international investing, believing many investors still focus too much on their home markets and that it pays to take advantage of all the opportunities the world offers. He often writes about Asian equities, international income and global asset allocation.
Cris began his career in financial services consultancy at PwC and Lane Clark & Peacock, before an abrupt change of direction into oil, gas and energy at Petroleum Economist and Platts and subsequently into investment research and writing. In addition to his articles for MoneyWeek, he also works with a number of asset managers, consultancies and financial information providers.
He holds the Chartered Financial Analyst designation and the Investment Management Certificate, as well as degrees in finance and mathematics. He has also studied acting, film-making and photography, and strongly suspects that an awareness of what makes a compelling story is just as important for understanding markets as any amount of qualifications.
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