Okay, UK investors, after finally taking the pain of creating a mahoosive comparison guide to the UK’s leading online brokers, we’ve only gone and fully updated it, as of May 19 2013.
Sawing a leg off would have been more fun, but it would not have produced a quick and easy overview of 28 of the main execution-only investment services.
Fund supermarkets, platforms, discount brokers, call ‘em what you will – we’ve stripped ‘em down to their undies for you to eyeball over a cup of tea and your favourite tranquilizers.
So who’s the best broker?
It’s impossible to say. There are too many subtle differences in the offers. The UK’s brokers occupy more niches than the mammal family, and while I know which one is best for me, I can’t know which one is right for you.
What I have done is laser focus the comparison onto the most important factor in play: cost.
An execution-only broker is not on this Earth to hold anyone’s hand. Yes, we want their website to work, we’d prefer them to not screw us over, go bust or send us to the seventh circle of call centre hell… These things we take for granted.
So customer service metrics are not included in this table. It’s purely a bare-knuckle contest of brute cost for services rendered.
Why should investors flay costs as if they were the tattooed agents of darkness? Because if – as the FSA predicts – you will see an annual after-inflation return of 2.5% on your portfolio for the next decade, then the last thing you need is to leak another 1% in portfolio management charges.
This makes picking the best value broker a key battleground for all investors.
Using the table
The main UK brokers fall into four main camps, I’ve decided.
- Clean Class brokers – Platforms that stock cheaper clean class funds but are partially funded by increased management fees. This bloc runs from Alliance Trust to Clubfinance Frequent Trader in the table.
- Commission-funded brokers – Platforms that are funded by the pre-RDR commission model. You can avoid virtually all fees bar your fund’s Ongoing Charge Figures (OCF), if you choose wisely. Take a look at Hargreaves Lansdown to Halifax. Beware though, these platforms will have to switch to a Clean Class model within the next three years as the FCA have decided to ban commission payments.
- Fund supermarkets – These platforms are also characterised by commission payments and non-existent additional fees but restrict investments to OEIC / Unit Trust type funds. ETFs, shares and investment trusts are generally off the menu. See Cavendish Online to rplan. Supermarkets will also have to switch customers to Clean Class funds within the next three years.
- Share dealing platforms – Platforms that suit investors who want to deal solely in shares and ETFs. X-O and friends fill this brief.
The final point you need to know is that this table’s vitality will rely on crowd-sourcing. I will review the whole thing every three months, but it can remain permanently up to date if you contact us or leave a comment every time you find an inaccuracy, fresh information, or a platform you think should be added.
Between us this comparison table can become an invaluable resource for UK investors.
Take it steady,