- One in ten said that investment companies should not charge fees
- But 4% said they thought more than £100 a month was a fair price to pay for investing.
- Two-thirds of investors like the idea of firms charging flat fees.
The average investor considers £25 a month to be a fair price to pay for using DIY investment platforms – much higher than most companies actually charge, a new study has found.
Just over half consider fair costs to be their top priority when choosing who to invest with, but what is considered fair depends heavily on the age and amount of the investment.
According to a survey of 1,000 British adults who invested outside of their pension, commissioned by the platform’s interactive DIY investor, one in ten said investment firms should charge no fees, while 4% thought more than £100 a month was fair.
The £25 average also masks the fact that a combined 32 per cent consider a fee of £5 or less to £10 a fair fee.
DIY Investment Fees: Perceptions of fair pricing rise with the value of the investment held.
The perception of fair pricing increased along with the value of investments held, from £13.80 per month for those with less than £25,000 to £38 per month for those with £250,000 or more.
Experience, however, has the opposite effect. Beginning investors said they were willing to pay £30 a month, more than those who had invested for more than a decade.
Investors aged 55 and over with an average investment of £200,000 considered £17 a month to be fair, half of the £34 that those aged 35 to 54 with similar amounts of investment were willing to pay.
Paying £25 a month can be considered expensive considering flat fee investment platforms such as Interactive Investor and Freetrade charge £4.99 a month for their entry level plans.
The survey also showed that there is significant overlap between what investors think is fair and what they think they are paying their supplier.
On average, UK investors believe they are paying £26 a month, which is only a pound more than what they consider fair.
Around 13% said they didn’t believe they were paying anything at all, and 4% said they were paying over £100 a month.
Fair? The £25 average obscures the fact that a combined 32% consider a fee of £5 or less to £10 fair.
New investors generally find themselves paying £30 which is exactly what they think is fair, while for those who have been investing for more than ten years it drops to £22 per month.
The findings suggest a deeper understanding of actual fees is needed as reforms to stop financial firms cheating consumers are brewing, the interactive investor said.
Fair pricing rules are on the way
From July, under the FCA’s consumer duty reform, banks, insurance companies and other financial companies will be required to “act to deliver good results for retail customers,” for example by valuing their services fairly.
Financial firms fear the reforms could hurt the sector as City of London minister Andrew Griffith reportedly lashed out at the FCA at a recent dinner.
According to the Financial TimesGriffith said the reforms could lead to a flurry of lawsuits from opportunistic claims management companies.
But consumer groups have previously welcomed the rules, which are expected to end ripoffs and fees through more transparent promotions and make it easier to cancel or change investments.
Rocio Concha, director of policy and advocacy for consumer group Who?, said earlier: “The financial industry needs to adopt these new safeguards, and firms that are in a position to do so now should not wait for them to do so.” be formally introduced to ensure a positive change for consumers.
“If businesses do not comply with the new rules, the FCA should be prepared to impose tough sanctions.”
The survey also showed that two-thirds of investors agree with the idea that firms charge a fixed subscription fee rather than the variable interest rate favored by 15% of respondents.
About a quarter see fixed subscriptions as a fairer way to charge, easier or more attractive, and 16% also think it’s a more transparent way to charge.
Compare the best DIY investment platforms and Isa stocks and shares
Investing online is simple, cheap and can be done from your computer, tablet or phone at your convenience and anywhere.
When it comes to choosing a standalone investment platform, Isa stocks and shares, or a shared investment account, the range of options can be overwhelming.
Each provider has slightly different offerings, charging more or less for trading or holding shares, and providing access to a different range of stocks, funds, and mutual funds.
When choosing the option that is right for you, it is important to pay attention to the services it offers, as well as administration and trading fees, as well as any other additional costs.
To help you compare the best investment accounts, we’ve collected the facts and put together a comprehensive guide to choosing the best and cheapest investment account for you.
We highlight the top players in the table below, but we encourage you to do your own research and review the points in our full guide, linked here.
This is Money’s complete guide to the best investment platforms and IPs.
The platforms below are independently selected by This is Money’s specialist journalists. If you open an account using the links with an asterisk, This is Money will earn an affiliate commission. We do not allow this to affect our editorial independence.
|Administrative fee||Expense Notes||fund dealing||Standard stock, trust, ETF trade||Regular investment|
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