Direct-to-consumer platform Interactive Investor (II) is removing its regular investment charges from 8 January 2020.
Clients used to have to pay a £0.99 regular monthly investing fee on the platform, which will now be available free of charge.
Instead, II customers will only be charged a monthly flat-fee according to their service plan.
They will be able to invest in funds, trusts, ETFs and individual stocks as long as they pay in a minimum of £25 ($32.8, €29.4) a month.
Trading charges still apply
But this will only happen if a customer opts for the automatic investment solution, a spokesperson for II confirmed to International Adviser.
If investors want to trade, there will be a cost attached, which varies according to the three plans offered by the platform.
The table below shows that, on top of the monthly flat-fee, if a client starts trading, they can incur charges ranging from £0.99 to £19.99 depending on the subscription and products of choice.
Source: Interactive Investor
‘Less confusion’
Richard Wilson, chief executive of II, said: “The removal of the regular investing fee means one less thing to get confused about, and one less platform fee to add up. It’s about building confidence and knowing that’s all there is to it. It’s just free. That’s the value.
“Having permanently scrapped exit fees over a year ago and moved from a quarterly to a far more intuitive monthly flat fee last year, we are constantly exploring ways to simplify and add value.
“We want to do as much as we can to make investing simple. With no percentage fees, just a flat fee that stays the same as investors’ wealth grows, investors can keep more of their hard-earned cash, and keep control of their financial future.”
Reducing costs
The removal of regular investment fees could save clients hundreds of pounds over two decades, said Moira O’Neill, head of personal finance at II.
That could grow to thousands if people are invested in multiple products or in collective costs if they are part of a ‘family of investors’.
She added: “Regular investing charges add complexity and add up – potentially to thousands of pounds over the long term. For those investing £25 per month into just one fund or trust, over 20 years, assuming an annual return of 5%, the removal of the 99p regular investing charge would make investors £400 better off.
“Customers investing into three funds or trusts a month, each at £25 per fund/trust, would be £1,200 better off over 20 years – and more than £3,200 if they had a basket of eight funds that they pay into a month.
“These figures all assume a 5% annual return, which is not guaranteed and is for illustrative purposes, but does show how costs can eat into returns over time.
“If you have a partner or children and you all have investment accounts, you will save even more.
“All too often investors look at their investment charges in isolation, but a family of investors may collectively be paying a small fortune in regular investing fees, adding up to thousands of pounds over the long term,” O’Neill added.
