Total fees may comprise of:
- Service / Annual fees
- Ongoing fund fees (for funds)
- Dealing fees
If you are buying stocks that are denominated in another currency from your own, you will also need to pay:
- Foreign exchange (FX) fees
There may be other costs, such as taxes and levies, that could also be applied, but we haven’t included these are they are applied universally, and don’t change between providers.
What fee structures work best for large portfolios?
Not every provider charges in the same way. Some providers use a flat-fee subscription model, while others charge fees as a percentage of the total value of your investments. Flat-fees tend to favour larger portfolio holders as they don’t increase, no matter how much your portfolio grows.
Not many providers use a fixed fee model, but the following do:
However, in recognition that large portfolio-holders will be paying a high price within percentage models, many percentage-based providers cap fees, which in effect turns those maximum fees into fixed fees. That can also make them good value for large portfolio-holders.
Providers that apply a cap include:
Other platforms offer reductions for large portfolios on their percentage fees.
Extra costs
It’s not just annual fees you need to factor in, however. Some providers offering low annual fees pile the costs on in other areas. As you’ll be able to see from the fee comparison charts, providers with the lowest annual fees often become high-cost providers when FX fees and/or dealing fees are taken into consideration.
So, it’s important to understand all charges that are levied by providers when making a decision on where to invest.
One other thing to bear in mind, is that dealing fees and FX fees are largely avoidable if you don’t trade often. A buy-and-hold strategy can keep those costs off your balance sheet, and has other advantages too. It avoids falling into the trap of trying to time the market, for example, something that has been consistently shown to be less effective than staying in the market over long periods.
If you do plan to trade regularly, it’s worth asking if your provider offers a Regular Investment Plan, where money is automatically drip-fed into your account every month. In return for this commitment, providers will often waive or discount trading charges. Fidelity and AJ Bell offer this, for example.
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