How to choose the best (not the cheapest) investment platform

James Connington 23 September 2017 • 6:52am

Hotel bar — Top shelf: the cheapest option may not suit all investors Credit: Jake Eastham

All that most investors need from an investment shop is the ability to easily buy and hold a selection of funds in an Isa or pension at reasonable cost, along with a usable website and decent customer service when required.

Naturally, cost is often the most important factor for investors – and Telegraph Money regularly reports on how the various firms compare in this respect.

This was highlighted by the angry response from customers of Barclays Stockbrokers when they were moved over to the bank’s new Smart Investor service recently.

Seasoned users are disappointed, with one reader claiming the new, simpler service “lacks the functions and data rival brokers have provided for years.”

Investors have lost the ability to deal in overseas shares, the new service is uncompetitive for those with portfolios of £100,000 or more, and basic information about investment trusts is absent.

So, if we put cost aside, which is the best investment platform?

There is no single answer for everyone, as it depends on exactly what you want from your investment shop.

To establish the leaders in a number of categories, we spoke to investment expert Holly Mackay, who has opened accounts in her own name with all the major platforms, and consulted reviews from StockBrokers.com of the best platforms for share dealing.

StockBrokers’ ratings for Barclays have not been included, as they relate to its old service. The old service did rank highly in a number of areas, and some of these features may have been maintained.

Another point to bear in mind is that Interactive Investor and TD Direct are merging and customers will soon be moved to a single platform under the Interactive name. The details have yet to be confirmed.

I G Group, which is mentioned here, offers access to stocks and exchange-traded funds as well as more complex – and risky – investments such as derivatives and currency.

It doesn’t offer access to regular investment funds.

Customer service

Hargreaves Lansdown, the largest of the investment shops, is well known for its customer service.

Ms Mackay said: “Hargreaves remains the clear winner here. Their people on the phones pick up quickly, are human beings and know their stuff.”

StockBrokers gave Hargreaves four stars out of five for customer service. It ranked Halifax as the best, however, with four and a half stars. Other platforms to receive four stars included I G, A J Bell Youinvest, Fidelity and Alliance Trust.

Investment options

The most comprehensive platforms will offer access to a huge range of funds, exchange-traded funds and stocks.

Typically, newer services offer fewer options, as it takes time to build up a suite of different types of asset.

“Those platforms that come from a stockbroking heritage will typically have the fullest ranges of investments,” said Ms Mackay. “So I’d suggest A J Bell, Interactive Investor, Hargreaves Lansdown and Barclays Smart Investor as the best for range of investment choice.”

This tallies with StockBrokers’ ranking, which had Hargreaves as the winner for its investment offering on four and a half stars, followed by Interactive Investor and T D Direct (soon to become Interactive) on four.

Usability

While the home pages of certain investment websites may look glossy, they can be less intuitive once you create an account and log in.

“This is where many platforms fall down – the parts of the websites where you actually trade can be awkward to use,” said Ms Mackay.

“I find the most usable investment websites to be the new Fidelity website – although not for share traders – and Hargreaves Lansdown.”

Readers of Ms Mackay’s website, Boring Money, rate Hargreaves as the best. She also highlighted MoneyFarm and Nutmeg, two “robo-services”, for their user-friendly automated adviser services.

StockBrokers ranked I G as having the best platform and tools with four and a half stars, followed by Interactive Investor, Hargreaves Lansdown, T D Direct, A J Bell and Alliance Trust, all on three and a half.

Help and analysis available

Many platforms offer research, analysis and buy lists to help you decide how to invest. These tools need to be taken with a pinch of salt, as it’s in platforms’ interest for you to invest more, but they can be useful.

“It depends on how complex you want to be,” said Ms Mackay. “If you’re a beginner and want some help filtering fund lists and reading up on research and tips, I like Chelsea Financial Services and Hargreaves Lansdown. If you want more technical charts and data across both funds and shares, try Interactive Investor or T D Direct.”

StockBrokers gave Interactive Investor, Hargreaves Lansdown, T D Direct, A J Bell and Fidelity four stars for their research. I G and Interactive were ranked the most highly for their efforts to educate investors.

International trading

Most of the major platforms offer international share dealing; Barclays’ new service is a notable exception. However, they tend to allow transactions to be conducted only in pounds, with the investment shop handling the currency conversion – and charging a significant fee to do so.

T D Direct, however, allows investors to hold nine different foreign currencies in their trading or Sipp pension accounts, enabling them to avoid the currency conversion fee.

Investors can then use a competitive specialist currency exchange service such as Transferwise to convert their cash and fund the account.

Although full details of the Interactive/T D merger have not been released, Telegraph Money understands it will retain T D’s international trading features.

Remember, no matter what the platform, Isa investors can hold cash only in sterling.

Mobile App

Not all platforms offer mobile apps. Out of those that do, some don’t offer mobile trading, meaning that the apps are just for research and account monitoring.

Of the major platforms whose apps do offer trading, I G and Hargreaves Lansdown have the best-rated ones on the Google Play store (for Android users).

Hargreaves’ app has a five-star rating on the iTunes store, making it the highest rated for iPhone users. The nearest competitor is Interactive Investor on three stars.

Overall

If you don’t mind paying for it, it’s hard to go wrong with Hargreaves Lansdown. However, A J Bell ranks similarly in a number of categories and has lower platform and share dealing fees, although it charges £1.50 for fund dealing while Hargreaves is free.

Depending on the final details, the merged Interactive and T D Direct group has the potential to be a compelling offering. If the flat charge remains, it will be cheap for larger portfolios and will have advantages for those who trade internationally.

For more active investors who mainly want to trade shares, I G is a strong option.

According to Ms Mackay, Boring Money users are most likely to recommend Charles Stanley, Hargreaves Lansdown and A J Bell Youinvest.