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What to expect in this article
- Make sure you pick a platform that offers the choice of investments you want. For example, although most platforms stock ETFs, some provide a wide range while others offer only a handful.
- A small line-up can be useful if you find yourself overwhelmed by the sheer diversity of ETF products available.
- On the other hand, the most interesting and lowest cost ETFs are usually found at brokers who offer a large selection.
- A good broker will provide a search function that’ll enable you to quickly scan their product list. If you’re not sure they have what you need, then email the platform’s customer service team for a definitive answer.
Execution-only is the cheapest way
An execution-only stockbroker service is the cheapest way to invest as you do not pay fees for advice. Execution-only means you open an investment account online, or in-app. You are then free to trade your investments on a do-it-yourself basis. Of course, this means that your platform will not help you decide which investments to pick. Although justETF offers up-to-date information on best and worst ETF performers and plenty more market data besides. When it comes to fees, choose the platform that best suits your situation and investing style. If you’re an active trader then look out for generous dealing fee discounts for frequent trading. If you intend to buy several ETFs every month then consider regular investment schemes or ETF savings plans that enable you to slash dealing costs to the bone. £1.50 per purchase is typical for a regular monthly investment. The trade-off is those buys are limited to a set day of the month. A few ‘zero commission’ brokers even allow you to trade for free, though you may find they levy additional charges for other services. Even zero commission brokers still have to make money. If you rarely trade then focus on brokers with highly competitive platform fees. This charge covers the administration of your account and varies depending on the provider and whether you hold an ISA, SIPP or General Investment Account (GIA). Most platform fees will fall into one of three main categories:- The percentage fee: The platform charges a percentage of the value of your assets. This is best for investors who have relatively small accounts.
- The flat-rate fee: The platform charges a fixed amount per day or month regardless of the size of your account. This is best for investors with large accounts. For example, it makes more sense for an investor with £100,000 in assets to pay a £100 flat rate fee per year than to pay £300 to a platform that charges 0.3% per year.
- No platform fee: You can’t beat zero costs for value, although make sure you check whether the broker’s other fees apply to your style of investing. A few platforms charge nothing at all to run your ETF account, so we’ve collated these plus some other highly competitive offerings in the table below.
Fee schemes vary – check which platform is right for you
Naturally, there isn’t a single low-cost platform that suits absolutely everyone. The best value platform for you will depend on the size of your assets, the number and type of accounts you hold, plus the type of investments you trade and how often you trade. It’s also important to check that a platform offers the right accounts. ISA and GIAs are universal but Junior ISAs or SIPPs may not be available. A few platforms offer a discount for family accounts although most do not. Check a platform’s account services page or its FAQ before committing. Generally, you’ll fund your account with a debit card or direct debit payment and can move cash back to your bank account using a BACS transfer. Bear in mind that most execution-only platforms offer a very streamlined service. If you want to place telephone orders or receive paperwork in the post or access investment research then you will pay a lot more. If portfolio tools are important to you then a few platforms offer demo accounts so you can try before you buy. Very few brokers levy exit fees anymore, so it’s relatively simple to switch if you decide a platform isn’t for you.justETF tip: As a rule-of-thumb, the brokers that offer the most intuitive user experience are app-first, or have attractive, thoughtfully designed websites that are easy to use.
Are you protected by the investor compensation scheme?
The Financial Services Compensation Scheme (FSCS) offers compensation to UK investors if an FCA authorised broker collapses and there’s no other way to retrieve your assets. The scheme offers up to £85,000 compensation per person per platform should it ever be needed. Essentially, this is the investment version of the scheme that steps in to protect cash deposits if a bank fails. All good broker’s operating in the UK are covered by the scheme so it’s worth making sure your platform is one of them. You can find out more about the scheme here.Comparison: Platforms with highly competitive ETF investing offers
| Broker | Comment |
|---|---|
| InvestEngine* | Zero platform fee and zero dealing fee. Low cost SIPP for small investors |
| Trading 212 | Zero platform fee and zero dealing fee |
| Interactive Brokers | Zero platform fee and very low trading fees. Great range of ETFs available from overseas stock exchanges |
| iWeb | Zero platform fee for ISAs and GIAs |
| X-O.co.uk | Zero platform fee for ISAs and GIAs |
| Vanguard | Zero dealing fee and low cost SIPP for small investors |
| Saxo* | Great range of ETFs available from overseas stock exchanges and low dealing fees |
| AJ Bell Youinvest | Platform fee capped at £42 for ETFs (£120 for SIPPs) plus discount for regular trades |
| Fidelity | Platform fee £0 for ETFs in GIAs. Capped at £90 for ISAs and SIPPs. That’s especially cost-effective for large SIPPs |
| Hargreaves Lansdown* | High-profile, well regarded for customer service |
Source: justETF Research (Jun 10, 2024)
* You would like to open a custody account? If you use one of the affiliate links behind "More information" or the broker logos as a starting point, we will receive a commission. Thank you very much! Please note: When investing your capital is at risk. If you are unsure, please seek independent financial advice.
ETF Investing with ...
- InvestEngine: InvestEngine is a unique ETF-only investment platform that doesn’t charge for trading and doesn’t levy a platform fee either. (You only pay a fee for their SIPP account or if you require managed portfolio services.) You can invest from as little as £1 and can also take advantage of a range of useful tools including savings plans that automate your investments and a superb one-click portfolio rebalancing feature. If you’re looking for an attractive, easy-to-use, low-cost investment experience then check out InvestEngine: We dig into key features in our review about InvestEngine.
- Saxo: Saxo is a sophisticated trading platform that enables you to invest in a huge range of ETFs across up to 31 global stock exchanges. The platform fee starts at 0.12% and trading fees start at 0.08% of the transaction amount (minimum £3) for London Stock Exchange ETFs. Saxo is a richly-featured platform that's ideal for advanced traders, but doesn't provide much in the way of hand-holding for beginners. Check out our review about Saxo to learn more.
