Investing with our Service Plans could save you £30,000 in charges over the long term, according to independent research from The Lang Cat.
"Our analysis supports ii's marketing claims on price and knock out AJ Bell, Fidelity and Hargreaves on larger case sizes."
Don't just take it from us: several independent national news outlets have written about our new pricing and we recommend that you read the coverage.
Great value is at the core of everything we do.
- We remain one of the best value providers with our new prices, but you don't need to take our word for it.
- Research by The Lang Cat into the long-term benefits of interactive investor's Fair Flat Fees shows you could save more than £30,000 in charges when compared to our largest competitor.
- While your portfolio grows, our fees stay the same, meaning even better value as your investments increase.
To see how investing with our Fair Flat Fees over 30 years in a SIPP compares with other providers, The Lang Cat used:
- A £150,000 initial balance
- 40 trades per year
- 100% fund trades
- A 5% annual return in the portfolio
Save more than £25,000 in charges
Over 30 years, an ii customer investing in an SIPP with our Funds Fan Service Plan would save more than £25,000 in charges compared to the same investment with Hargreaves Lansdown.
The Lang Cat says:
“Our research shows that there are potentially significant savings to be made should a customer adopt a platform with a fixed fee approach as opposed to uncapped percentage-based charges. Of course, this is simply basic arithmetic in action and it will depend on individual circumstances such as trading levels, contributions and investment types but such savings can add up to thousands of pounds over a medium to long term investment.
There is tonnes of research out there that shows that customers struggle to engage and understand the charges that apply to their investments. What we like in particular about the new Interactive Investor structure is the fact that the customer will face a clear, easy to understand, fixed platform charge per month”
To see how investing with our Fair Flat Fees over 30 years in an ISA compares with other providers, The Lang Cat used:
- The average ISA balance and typical top-up amounts, according to figures from HMRC
- Investment trades: 7 per year
- A 50:50 split between shares and funds
- A 5% annual return in the portfolio
Save more than £30,000 in charges
Over 30 years, an ii customer investing in an ISA with our Investor Service Plan would save more than £30,000 in charges compared to the same investment with Hargreaves Lansdown.
Moira O'Neill, head of personal finance at Interactive Investor, says:
"Charges are a very important consideration for investors. Even small reductions in fees can add up to huge amounts over time because of compounding, the maths of how percentage-based fees can eat larger chunks out of your investments over time.Cutting your fees today or moving to a flat fee service can mean the difference between a frugal and comfortable retirement. It pays to do your research and choose the platform that is best value for your circumstances."
About the research
We asked The Lang Cat to compare the effect of Interactive Investor's pricing to competitors, over the course of a long-term investment. We chose 30 years because many people will be investing for longer than they think, whether they’re investing for retirement, or for income in retirement.
Here's how they worked it out.
The Lang Cat started with a stocks and shares ISA with a balance of £51,306 and annual top ups of £10,124 (the average figures according to HMRC), and a SIPP with an initial balance of £150,000 and 40 trades per year.
Their figures are based on the following assumptions:
- A 5% annual return in the portfolio after investment charges, with the return applied monthly
- Costs calculated over a 30-year period.
- Contributions wholly invested on the first day of the month, with additional funds used to cover costs, this is represented by the net investment value after the end of the period.
- Trades conducted on the first day of the month.
- Costs for percentage-based platform fees calculated on the value of the portfolio at the end of the previous month, after returns have been applied.
- Where multiple trading options exist, eg The Share Centre, the most cost-effective option was used in each scenario.
- Costs not to include any initial set-up fees or temporary offers, such as a lower charge in an initial period of being a customer or discounts because of transfers.
- Where yearly/quarterly maximum fees existed, i.e. for holding shares – if the charge per year/quarter exceeds the yearly/quarterly maximum fee, then the maximum fee to be spread out across the year and applied monthly.
About The Lang Cat
The Lang Cat is a financial services consultancy trusted by platforms, pension, investment and technology providers and advisers to deliver expert research.
Founded in 2010, The Lang Cat is an Edinburgh-based financial services expert which offers services including insight, marketing and communications advice. With a mission to ‘make the complex simple’, The Lang Cat has published more than 35 papers, including guides to ISA pricing and retirement income, and a platform directory. Clients of The Lang Cat include major companies such as Aviva, BlackRock and Scottish Widows.