How to find the best Isa provider and how much they cost

Picking an Isa platform that makes sense for your priorities, needs and investment style can have an impact on how successful you are as an investor, as well as making for a more pleasant experience.

Even if you have long been a loyal customer at the same provider, your choice of platform is worth reviewing from time to time, as the platform market and your investment skills and preferences evolve, and your portfolio grows.

We look at what changes Isa providers have made to their offerings in the past year to bring you up to speed, and also ask: is it worth using different platforms for different needs?

Latest changes

Platforms have been busy since the publication of our 2022 Isa Special. In a difficult year for investors, many have added new features and reduced costs, with the changes targeting a range of different investor profiles.

For investors with large portfolios, AJ Bell’s YouInvest stepped up its game last July by lowering its platform fees for fund investors. There is now no charge on the value of fund holdings above £500,000. It charges 0.25 per cent on fund values up to £250,000, and 0.1 per cent on values between £250,000 and £500,000). Previously, the platform charged 0.10 per cent for fund portfolios with a value between £250,000 and £1mn and 0.05 per cent for values between £1mn and £2mn. Investors with portfolios of £2mn or more save £1,000 a year with the new fee structure.

Thanks to its fixed fee structure, Interactive Investor already had a very competitive offering for investors with mid-sized and big portfolios, but its pitch was not quite as compelling for smaller investors, who had to shell out a bigger proportion of their holdings in fees. However, earlier this year the platform launched an ‘Investor Essentials’ plan that lets you hold up to £30,000 for £4.99 a month – half the price of its standard Investor plan. Dealing fees are extra.

Fidelity also tweaked its fees earlier this year, but this was more of a mixed bag. On one hand, its dealing fee was reduced to £7.50 from £10, and the foreign exchange fee also decreased slightly. But the annual cap on its platform fee for shares, investment trusts and ETFs increased to £90 from £45 previously, which is not quite as competitive.

Freetrade revamped its offering last year, launching a ‘standard’ plan that made Isas more expensive but also gave access to a higher number of stocks. From May, investors who choose to pay a monthly charge will see the fee rise to £5.99. The charge for anyone choosing to pay on an annual basis will stay at £59.88 a year. The foreign exchange fee is also rising from May.

Hargreaves Lansdown has recently reduced its fees on Junior Isas and Lifetime Isas. No platform or dealing fees now apply on Junior Isas. The annual platform fees for Lisas will be reduced from 0.45 per cent to 0.25 per cent. This applies to equities (for which the fee remains capped at £45 a year) and the first £1mn of funds. For funds, the fee was previously 0.45 per cent on the first £250,000 and 0.25 per cent between £250,000 and £1mn; other recent changes that caught our eye include the platform launching an online ‘bed and Isa’ and ‘bed and Sipp’ service. If you wanted to transfer your assets from a general investment account to an Isa on the platform, you previously had to do it manually by selling all your holdings and then buying them back one by one. With the capital gains tax and dividend allowances reducing from April, and competitors such as AJ Bell and Interactive Investor already offering a bed and Isa service, this felt like a gap the platform needed to plug.

Meanwhile, for those who invest across the pond, Bestinvest has launched free dealing in US shares. Note that there is a 0.95 per cent foreign exchange fee and its dealing fee for UK shares remains £4.95.

The right platform for you

If you want to change your platform or open a new account, the best way to pick the provider is to think carefully about how you are likely to go about the investment process and what your priorities are.

Costs remain a key consideration, but depending on what you invest in, the cheapest platform in general won’t necessarily be the cheapest platform for you – and it might be worth spending a bit more in exchange for a better quality of service.

For example, while Hargreaves Lansdown is in many ways comparatively expensive, if you only invest in shares and exchange traded instruments its Isa fee is capped at £45 a year. If you don’t trade much, it is a fairly competitive price, especially when paired with the platform’s usability and customer service. On the other hand, if you don’t mind a very basic set-up and do like to trade semi-regularly, a barebones trading platform such as Trading 212 can be really cheap.

For investing in funds, Vanguard is an inexpensive option, but you can only invest in the provider’s own funds through this platform.

In our table, we also compare how platforms fare when it comes to offering dividend reinvestment and regular investing services, both of which can really boost your total returns. If you have multiple accounts for different family members, see our previous article on the subject (‘Picking a platform for the whole family’).

In a nutshell, platforms all have slightly different strengths and weaknesses. Holly Mackay​, founder and chief executive of Boring Money, sums it up this way: “Hargreaves Lansdown remains very good, but it is now notably more expensive. AJ Bell is a good all-rounder. Vanguard has fewer features and less flexibility but is good for people who want to set and forget. Interactive Investor is generally hard to beat on cost, and so on.

“There is a lot of choice out there, so I’d encourage people to identify which thing matters most to them – and then search accordingly to get the right fit,” she concludes.

Multiple platforms

If different platforms are good at different things, is it worth using more than one? “We can definitely overthink this. Platforms certainly have different strengths and weaknesses, but the convenience of having one single platform has a lot to be said for it,” says Mackay​.

The pros of using a single platform include not having to learn where everything is more than once, having just one set of login details, and being able to make changes to different accounts from the same place. And some platforms, such as Charles Stanley, charge their platform fees on a client basis rather than on an account basis, meaning that if you hold multiple accounts and your overall portfolio is big enough, you also have a cost advantage.

On the other hand, if there is a big difference in your investing style between different accounts, the cost gap might be significant enough to warrant juggling two different platforms. “If you’re a wheeler-dealer on your own account, but have something much more simple in the kids’ Junior Isas, you might prioritise a good app and low dealing costs for your account, but look for a low-cost provider with ready-made solutions for the kids,” says Mackay.

Finally, a reason to use multiple platforms for your portfolio might be to spread the risk. As we have discussed (‘How much money should you have with one platform?’, IC, 9 October 2020) there are strong financial regulations around ringfencing in place to make sure that even if a broker does go bust, investors get their money back. But the final line of defence if things truly go spectacularly wrong is the Financial Services Compensation Scheme, which is limited to £85,000 per investor – a potential reason to consider diversifying your platforms if you want to be very careful.