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Platforms I would avoid

By Antonia Medlicott

  • Published: May 14, 2024
  • Edited by: Clare West
  • Last Update: 2 weeks ago
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Don’t get stuck with a doozy!

High prices and poor-performing funds can be murderous on your investment gains. Given that the whole purpose of investing is to grow your wealth, this is something you need to avoid at all costs.

This list contains all the platforms that I believe do not represent your best option. I will explain why, and provide you with a better alternative.

My quick list

*This list is put together using data and analytics – if I think there is a better option available to investors, I will always place the platform on this list. Changes to the platform's offering, performance, or pricing can result in them being moved off this list.

3.0
Wealthify

Poor performing funds and lack of options

Capital at risk

3.5
Penfold

Expensive option and limited choice of plans

Capital at risk.

3.0
Nutmeg

Cheaper, better-performing platforms for this purpose are available

As with all investing, your capital is at risk. Tax treatments depend on your individual circumstances and may change in the future. The value of your portfolio with Nutmeg can go down as well as up and you may get back less than you invest.

My tip: If cost is an important factor for you, then beware of platforms that promote commission free trading as they will often make up their margins in other areas such as FX fees.

For a full breakdown of platform FX fees, go to our article: FX fees: What you need to know.


3.0

Wealthify

Poor performing funds and lack of options

Capital at risk

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Reasons to use

  • Really simple and easy
  • Good customer service
  • Backed by financial giant Aviva
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Reasons to avoid

  • Poor historical performance on ready-made portfolios
  • Interest rates are not the best
  • Higher than-average costs

Antonia says

I couldn’t find a single reason to recommend this platform. Sure, the app is super simple to use but I can’t help feeling that some of the reason behind that was the complete lack of options. There are 3 investment accounts, 1 savings account and a pension.

In terms of investment options, your money is passively invested into funds, and while I believe this can actually be a more lucrative strategy that’s simply not the case here as the portfolios have performed poorly over the past 5 years. In fact, Wealthify account holders would have seen the least growth out of any robo-advisor.

So what about the cost? Passive investment requires very little human intervention, which should also help to keep costs super low. However, in the robo-advisor space, the fees at Wealthify are at the top end of the scale. If you want the lowest fees available you need look no further than InvestEngine.

So there it is – high costs and low performance. The perfect recipe for a platform that you should definitely avoid. If you already have an account here or would like an alternative for opening a new account, then check out my best robo-advisor article here.

Fees

  • Management fee: 0.60%
  • Average standard fund charge: 0.16%
  • Average ethical plan: 0.7%

Investments

  • ETFs

Scores

Fees:

3.5

Trading platform:

4.0

Account opening:

5.0

Research:

3.0

Education:

3.0

Customer service:

5.0

For a detailed analysis of Wealthify, check out our review for 2024

Read full review >
3.5

Penfold

Expensive option and limited choice of plans

Capital at risk.

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Reasons to use

  • It's quick and easy
  • Contributions are flexible meaning you can start and stop them at any time
  • There are some nice pension tools
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Reasons to avoid

  • The fees are at the higher end of the scale
  • There is very little choice of pension plans
  • The funds have underperformed other platforms
  • The customer service is unreliable

Antonia says:

Penfold is a perfect solution for small business owners looking for a quick and painless way to fulfil their legal obligation to provide staff with a workplace pension.

However, for individuals looking for the best place to save for retirement, this is a less favourable option.

Firstly, let's take a look at their historical performance. Only the previous 3 years' data is available, presumably due to the new nature of the business. Penfold runs down the middle of the pack in terms of performance, with the past 3 years averaging returns of 10.8% just beating the industry average of 9.1%. This means they were beaten by the likes of Vanguard, AJ Bell, Moneybox, and Plum who all experienced better returns across the last 3 years.

Whilst returns are not awful, when you look at them alongside the higher-than-average fees charged at Penfold, they start to look a little gloomy. As an example, a £20,000 investment would attract an annual fee of £150.00 at Penfold, but the same investment would cost just £50 at AJ Bell or £100 at PensionBee where your average returns across the past 3 years would have amounted to 14%.

Fees

  • 0.75%

Investments

  • 5 Ready-made funds to choose from

Scores

Fees:

3.0

Trading platform:

5.0

Account opening:

5.0

Research:

3.5

Education:

4.0

Customer service:

3.5

For a detailed analysis of Penfold services, check out our review for 2024

Read full review >
3.0

Nutmeg

Cheaper, better-performing platforms for this purpose are available

As with all investing, your capital is at risk. Tax treatments depend on your individual circumstances and may change in the future. The value of your portfolio with Nutmeg can go down as well as up and you may get back less than you invest.

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Reasons to use

  • Lifetime ISA available
  • Access to wealth managers is free
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Reasons to avoid

  • High entry point of £500
  • Poor performance on pension funds
  • Not very cost-effective
  • Below-average historical performance on ready-made portfolios with no other options

Antonia Says

I have a few issues with this provider. They do have a Lifetime ISA, which is a great product for anyone saving for their first home. However, there are better Lifetime ISAs available, and I would definitely choose the Moneybox Lifetime ISA over this one simply because the returns have outperformed Nutmeg for the past 5 years, and it comes with a Cash Lifetime ISA on the side that has the best interest rate around.

When you look at the 5-year returns on their pension product, you get a similar story as Nutmeg was one of the poorest performing pension funds we analysed. Also, this platform is limited to ETFs, and if you're happy only investing in ETFs then InvestEngine is the lowest-cost way to do so.

In fact, Nutmeg comes in as more expensive than both Moneybox and InvestEngine, and they have a high starting amount of £500. This makes them very difficult to recommend over the other two platforms I’ve mentioned.

Fees

  • Management fee: 0.60%
  • Average standard fund charge: 0.16%
  • Average ethical plan: 0.7%

Investments

  • Fully managed
  • Fixed allocation
  • Socially responsible investing
  • Thematic investing

Scores

Fees:

4.0

Trading platform:

4.5

Account opening:

4.5

Research:

4.0

Education:

3.0

Customer service:

5.0

Click here to read a full review

Read full review >

Portfolio performance


Finding a platform that is low cost won't benefit you unless it is still a viable place to grow your wealth. In some instances, ready-made portfolios have woefully underperformed.

For a detailed breakdown of portfolio performance check out our independent ready-made portfolio performance tables.

Pension and SIPP performance


In addition to our work comparing the performance of ready-made portfolios, we have also conducted in depth research into the performance of pension starter funds.

Our Best SIPP provider article will provide you with all the platforms we recommend as well as a graph detailing the performance of the starter pension funds.

FAQs

This really depends on how you invest your money, however, in most instances Hargreaves Lansdown would be the most expensive option, however, if you intend to buy and sell a lot of global stocks, you should be aware of the FX fees at platforms like interactive investor.

Note from the insiders:


If you believe there is a platform that should be on this list, then please get in contact with us and we will investigate the platform.