Choosing a platform

The platform holding your investments is a decision that is made once and affects costs continuously, and the right answer changes as a portfolio grows.

The charging structures

Which determine everything.

Percentage of assets: cheaper for small portfolios, expensive as they grow, sometimes with tiered rates or caps.

Flat fee: the reverse, expensive for small portfolios and cheap for large ones.

Dealing charges per transaction, which matter for anyone trading or investing regularly, and which some platforms waive for regular investment schemes.

Additional charges for exit, transfer out, foreign exchange, dividend reinvestment and holding certain asset types.

Calculating the total annual cost for your own portfolio size and trading pattern takes a few minutes and frequently identifies a substantial difference.

The crossover point

Which is worth calculating.

For a percentage-charging platform, multiply the rate by your portfolio value.

For a flat-fee platform, take the annual fee plus expected dealing charges.

The point at which they cross is the portfolio size above which the flat fee is cheaper.

Which means the right platform changes as a portfolio grows, and reviewing it periodically is worthwhile — inertia here costs money continuously.

What else to check

Beyond cost.

Which account types are offered, including the tax-advantaged wrappers you need.

Which investments are available, since platforms differ in fund and market coverage.

Whether regular investing is supported and whether it is free.

Whether fractional investment is available, which determines whether contributions are fully invested.

Interest paid on cash held, which some platforms retain a substantial share of.

Foreign exchange rates and charges, which can be a significant hidden cost.

Transfer-out charges and how long transfers take.

And the quality of reporting, particularly for tax purposes.

Protection

Which matters and is frequently misunderstood.

Client assets are generally held separately from the platform's own assets, meaning they are not available to the platform's creditors if it fails.

Compensation schemes in many jurisdictions cover losses arising from a failed authorised firm up to a limit, which covers shortfalls in client assets and administration costs rather than investment losses.

Which means the compensation scheme does not protect against investments falling in value — that is the risk you are taking deliberately.

Checking that a platform is authorised by your national regulator is the essential step, and checking on the regulator's register rather than the platform's website.

Transferring between platforms

Which is possible and slower than expected.

In-specie transfers move the holdings themselves without selling, which avoids being out of the market and avoids realising gains in taxable accounts.

Cash transfers sell everything and move the proceeds, which means time out of the market and potential tax consequences.

In-specie is preferable where available, and requires the receiving platform to offer the same holdings.

Transfers can take weeks and occasionally longer, and exit charges apply on some platforms.

Several jurisdictions have introduced rules requiring transfers to be completed within reasonable periods following complaints about delays.

Consolidation

The related decision.

Holding accounts across several platforms produces multiple charges, fragmented reporting and a picture nobody has in full.

Consolidating simplifies and frequently reduces cost.

The cautions: check for exit charges; check that valuable features are not lost, particularly with older pension products which sometimes carry guarantees; and check the receiving platform offers what you hold.

For pensions specifically, some older schemes carry guaranteed annuity rates or other benefits that are extremely valuable and are lost on transfer, which makes advice worthwhile before consolidating.

The cash question

An under-examined charge.

Platforms hold cash within accounts and earn interest on it.

How much is passed to the client varies enormously, and during periods of higher interest rates the amount retained became substantial enough to attract regulatory attention in several markets.

Which means checking the interest paid on cash balances is worthwhile, particularly for anyone holding a meaningful cash allocation within an investment account.

What not to choose on

Where marketing operates.

Sign-up offers, which are one-off against ongoing costs.

App design, which is pleasant and is not a reason to pay more indefinitely.

Features you will not use, including research, screening and trading tools.

And gamified interfaces, which are designed to increase trading and which the evidence suggests reduces returns.

The practical process

To choose one.

List the account types you need.

List the investments you intend to hold.

Estimate your portfolio size now and in five years.

Calculate total annual cost on three or four candidates.

Check authorisation on the regulator's register.

Check transfer-out charges, since you may want to leave.

And review every few years, since both your portfolio and the market change.

General information only, not investment advice. Check any platform's authorisation on your national regulator's register. Consult a regulated financial adviser.