Compare Stockbrokers & Investment Platforms

Welcome to the Financial Expert guide on how to choose a stockbroker or investment platform in 2020. Don’t just follow the crowd – use our tools to compare UK stockbrokers and find the perfect stocks & shares ISA for you.

This guide will compare stockbrokers and investment platforms in several categories:

  • The cheapest stockbrokers
  • The best stockbroker for each investing style
  • The investment platforms offering the best sign-up bonuses

The cheapest stockbrokers – at a glance

We’ve compared the fees of several popular stockbrokers so that you don’t have to. Fees are based on a Stocks and Shares ISA account if available.


Share trade

Free

£5.95 - £11.95

£12.50

ETF trade

Free

£5.95 - £11.95

£12.50

Fund trade

N/A

Free

0.5%

Regular trade

Free

£5.95

£2

Phone orders

N/A

1% (£20 - £50)

£25

Annual charge

0%

0.1% - 0.45%

£12.50

FE fee rating

Best for: 

Frequent or low-cost investors

Simple charges

Telephone trades


Investing in stocks and shares is not risk free. Your capital is at risk. Fee data taken from providers on 27/10/2020. Providers may change their fees & charges. Minimum fee and fee caps may apply to % fees. Some charges vary by account size, type of investment and trading volume. For updates or corrections, please contact me.

Your capital is at risk. Other fees may apply.

eToro is the only broker I will feature in this ranked shortlist because it offers commission-free share dealing, with zero annual management charges.

eToro also allows you to trade commodities and cryptocurrencies as well under a different fee structure, although this comes with different risks.

1

eToro - commission-free share deadling

A slick trading platform from a modern broking giant




The industry titan


eToro is a US-based broker which is winning the loyalty of UK investors with their rock-bottom fee structure. 

eToro allows investors to buy and sell stocks & shares with no commission or annual management charges. The platform is slick and provides access to a wide variety of investments, although it doesn't currently offer mutual funds. 

Best for: Share investors looking for low-cost trading.


Visit stockbroker
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Low trading fees

Account charges

Reputation

Investment range

Overall

The best stockbrokers for passive investing

Before you choose a stockbroker, it is wise to make two strategic decisions regarding your investment strategy.

This is because the pricing approach of different brokers will match up to different investment strategies.

  1. Will you take an active investing approach or a passive approach?
  2. Will you choose to buy in shares or will you use funds?

I generally advocate for the passive investing strategy and personally feel that funds or managed investment services are the simplest way to quickly build an investment portfolio.

Here are my top 3 picks for investment platforms that cater for fans of funds:

1

Nutmeg - managed investment service

Hands off portfolio creation, modest fees




The leader of the robo-adviser pack


Nutmeg offers access to hands free, socially responsible investment portfolios on its simple online platform.

I like choosing between the ready-made portfolios, and I love the instant diversification offered by a managed investment service.

Best for: Investment beginners or time-starved veterans

Referral offer*: 0% management fees for 6 months if you join through Financial Expert.


Visit & get offer
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Low trading fees

Account charges

Reputation

Investment range

Referral offer

Overall

2

Wealthify - managed investment service

Ethical portfolios delivered through a clean user interface




Effortless portfolio performance


Wealthify is my second favourite robo-adviser in the UK right now. Wealthify offers five core portfolios, ranging from 'cautious' to 'adventurous'. These portfolios contain different levels of risk and reward to suit a broad range of investors. 

Best for: First time stock market investors

Referral offer*: £25 welcome bonus for opening an account with just £500 if you join through Financial Expert.


Visit & get offer
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Low trading fees

Account charges

Reputation

Investment range

Referral offer

Overall

3

Hargreaves Lansdown - fund pioneer

Proud of its 15 second customer service response time




The industry titan


Hargreaves Lansdown is far and away the most popular stockbroker in the UK.

As a member of the FTSE 100, it has long-established reputation and with that scale comes additional peace of mind. HL charges no dealing fees on purchases of its range of 3,000 funds. However, its dealing fee for shares purchases is £11.95 which is higher than some competitors.

Best for: Long-term fund investors

Referral offer*: No current offers available


Visit stockbroker
Image

Low trading fees

Account charges

Reputation

Investment range

Referral offer

Overall

Which investment platforms offer the best sign-up bonuses?

The investment platforms below offer the juiciest sign-up offers. These often tempt me to open an account with a modest amount (£500+) and truly explore the platform.

1

Nutmeg - managed investment service

Hands off portfolio creation, modest fees




The leader of the robo-adviser pack


Nutmeg offers access to hands free, socially responsible investment portfolios on its simple online platform.

I like choosing between the ready-made portfolios, and I love the instant diversification offered by a managed investment service.

Best for: Investment beginners or time-starved veterans

Referral offer*: 0% management fees for 6 months if you join through Financial Expert.


Visit & get offer
Image

Low trading fees

Account charges

Reputation

Investment range

Referral offer

Overall

2

Wealthify - managed investment service

Ethical portfolios delivered through a clean user interface




Effortless portfolio performance


Wealthify is my second favourite robo-adviser in the UK right now. Wealthify offers five core portfolios, ranging from 'cautious' to 'adventurous'. These portfolios contain different levels of risk and reward to suit a broad range of investors. 

Best for: First time stock market investors

Referral offer*: £25 welcome bonus for opening an account with just £500 if you join through Financial Expert.


Visit & get offer
Image

Low trading fees

Account charges

Reputation

Investment range

Referral offer

Overall

Tax wrapper

Would you like your investments to be tax-free or taxable?


eToro is a new fintech trading platform which charges zero commission on stock trades. 


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Broker Overview:

Commission:

£ zero

Based:

USA

UK investors:

Yes

Useful for:

Active & passive 

Our View:

"eToro is our favourite of the new platforms. With a functional app and a low cost structure, it's a compelling platform."

Visit broker

Capital is at risk. 

This isn’t a trick question. All large providers offer these two options to their customers.

  • A tax-free account called a ‘Stocks and Shares ISA’.
  • A taxable account called ‘Investment account’ or ‘Share dealing service’.

Both types offer similar functionality. Technically, non-ISA accounts can hold a slightly wider range of investments, but the average investor would not notice this restriction. To the vast majority of investors, the only practical difference is that no tax will be paid on any gains or income made within an ISA. You don’t even need to declare these items on your tax return.

ISAs restrict how much can be deposited into the account per tax year (6 April – 5 April). Currently, the limit is £20,000 per year. However, if you are transferring in money from a different ISA account then the transfer ignores this limit.

The choice to set up a Stocks and Shares ISA should be a no-brainer for anyone with less than £20,000 to invest.

Anyone with over £20,000 at their disposal should put the maximum £20,000 in the ISA, and the rest in a non-ISA until future tax years when more money can be moved across into the ISA.

Trading frequency

The main source of income for stockbrokers is trading. Stockbrokers charge clients between £4.95 and £12.95 to execute a buy or sell order on your behalf. As fees are charged per trade, investing a pot of money into five companies will incur five fees.

Understanding how many trades you will place per month is crucial in understanding which broker will save you the most money when doing a stockbroker comparison.

For the sake of diversification, you will want to invest in a minimum of 20 companies to avoid being too exposed to any individual business. You will quickly appreciate that trading fees can get quite expensive for active traders who invest in individual company shares.

When comparing stockbrokers, you will notice that some offer discounted rates to people who trade very frequently, e.g. 10+ trades per month.

How to choose  a stockbroker - share dealing charges are often tiered.

Don’t feel tempted to take up this frequency of trading. These discounts are little more than a reward for spending so much money with the broker. I could draw comparisons to the way casinos give discounts or freebies to customers who spend big at their tables.

To qualify for the £8.95 discounted rate with Hargreaves Landsdown (pictured above), you need to spend £89.50 per month – over £1,000 in trading fees per year. If this was saved and invested instead, £1,000 per year could grow to be worth £15,000 after ten years (growing at 5% per year.)

The only effective way to guarantee you reduce the cost of investing is by trading as little as possible across the year. This is one of the reasons why we encourage investors to build their basic investment portfolio using funds. Funds allow investors to own a variety of companies via a single trade, and better still – many stockbrokers process fund transactions for free!

Platform charges

Beyond trading fees, stockbrokers also charge an annual account fee, also known as a ‘platform charge’.

These charges were brought in recently when a change in UK regulations meant that investment platforms could no longer collect commission payments from the funds that they offered.

Platform charges usually take two forms:

Fixed platform fee – These are suited for large portfolios, as a fixed £ cost becomes tiny relative to the value of assets in a large portfolio. A £70 annual fee is very affordable for a £100,000 portfolio, for example.

% Based platform fee – These are very helpful for small investors. By charging only a percentage of your assets, such as 0.35%, the fees will be reasonable for small investment pots.

Comparing stockbrokers online

When comparing stockbrokers online, calculate the ‘total annual cost’ of each provider. I.e. the annual platform fee, plus the expected costs of trades.

How to choose a stock broker or online platform - The reputation of a broker is just as important as their execution times.

By using the ‘total cost of investing’ benchmark, you may discover that the cheapest broker for you is neither the one with the lowest trading fees nor the provider with the lowest platform fee.

Think ahead

Consider calculating the platform fee using the best guess of your expected portfolio value in five years time. It can be quite costly to switch between providers at a later date, therefore you will want to choose an investment platform that fits your long term investment goals. It can take as little as £30,000 in an account for the fixed fee options to look more attractive.

Other factors to consider

With so many fees and charges on the website of a stockbroker, it can be easy to forget that other factors matter.

The stockbroker you choose will be the steward over a significant portion of your wealth over the coming years. In this regard, the following factors are worth considering:

  • Size
  • Longevity
  • Reputation
  • Customer service

You will want to check that the company you are entrusting is a legitimate and regulated business. (Read our guide on How to spot investment scams before you commit any funds to an investment.)

When things go wrong in a stockbroking account, they can often go very wrong. I have personal experience of this. It’s in moments like these that these intangible ‘other factors’ can come into play.

Earlier this year, an administrative error in the back office led to my stockbroker inadvertently selling my entire investment portfolio.

When I rang them to explain what appeared to have happened, they quickly investigated the matter. ‘If the market rises whilst you are out of it’, they said, ‘we will add funds to your account to put you back in the exact position you should rightly be in’.

This assurance immediately put me at ease and I could relax over the remaining days whilst the trades were corrected!

Some other research suggestions

Because many investment platforms do not pay referral commissions, price comparison websites do not always compare the full range. This can bias their results towards a more expensive bunch of providers. It’s surprising how few websites have a genuine interest in helping you choose a stockbroker.

Therefore below we’ll list a few providers that you should certainly check out. They may not always be ‘best buys’, but they have reputations for being low cost over the long term.

Course Progress

Learning Summary


How to Choose a Stockbroker or Investing Platform

In the UK there are over 25 reputable banks, stockbrokers and share dealing services which provide competitive services. Choosing between them can be difficult.

Investing costs are a significant drag on returns, so it is natural to begin by hunting for the lowest cost provider.

Brokers may offer discounted trading fees for high volume traders - do not be lured into this bracket - as you will spend much more overall.

Consider what your portfolio might be worth in five years time before calculating the effect of platform fees, which sometimes are applied as a % to your account value.

Compare stockbrokers cost by considering the annual cost of their platform fee plus trading fees you will incur.

Do not rely exclusively on 'comparison' websites. Many brokers do not offer referral fees to such websites, and therefore may not be included in the results page.

Low cost is an excellent credential, but your broker should also have an excellent reputation for reliability and customer service.

Quiz

Take Action

  • Visit the Money Advice Service's comprehensive guide to Stocks and Shares ISAs to see the full terms and conditions attached to these accounts.
  • Estimate the number of trades you will make each year, and the value your portfolio will be worth in a few years time. Use these figures to estimate the total annual cost of each stockbroker you research.

Completion of the Foundation Course

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Kick back and relax, you have covered all the basic principles of successful investing!

Please leave me a comment below to let me know which topic you personally found was the most useful. 


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Progress to the Intermediate course


Continue onwards to the intermediate level course to begin mastering your investing skills!


Graduate to intermediate level
Risk warning

eToro is a multi-asset platform which offers both investing in stocks and crypto assets, as well as trading CFD assets. Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investors accounts lose money when trading CFDs with this provider.

You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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