Seeking a new ISA platform

Last year I had a bash at getting a second ISA platform to join iWeb. There’s nothing wrong with iWeb, indeed if I could find a broker with iWeb’s service that was unconnected with Halifax/Lloyds I would just do that.

I ended up with Vanguard, but although there’s nothing wrong with Vanguard either, I came to the conclusion that they aren’t the right fit for me. I should have spotted it really in Monevator’s broker table

Investors with larger portfolios — Look first at the flat-fee platform table if you’ve accumulated over £25,000 (ISA)

Yeah, I was already over that with Charles Stanley before I moved it, and I am now way over. This is not good because – fees.

Iweb are good enough to provide the FSCS regulatory info. I am already well over the FSCS limit, and would suffer a serious haircut if push came to shove. The aim of splitting is to get 1+1 protection, This means I have to avoid

  • Halifax Share Dealing,
  • Lloyds Bank Direct Investments,
  • Bank of Scotland Share Dealing,
  • IWeb Share Dealing, (because I already have this)

To get that protection. Taking a look at Monevator’s broker table, that’s the first three options ruled out right away.

Interactive Investor – just say no, once more, with feeling

I’m not that keen on Interactive Investor, because I have had bad experience with them not just once but twice, though I could jump over it. There’s a lot not to like about iii – the odious scumbag Tomas Carruthers who pissed me off last time is still in there having bought it out, and its owned by private equity associated with JC Flowers, according to Wikipedia. No, I’ve drunk from that well before, and private equity is never any good for anybody other than private equity, with it’s inherent lack of transparency and generally scummy behaviour. If you look at all the M&A activity they are to share brokerages what Endurance international Group are to web hosting and Interbrew are to craft beer. On a more positive note, Aberdeen Asset Management seem to be in the process of buying them out. That might remove some of the reservations.

That leaves me with Sharedeal Active who I have never heard of, apparently run by AIM-listed Jarvis Securities, or HSBC Invest Direct. I don’t have any bank accounts with HSBC (or Halifax of Lloyds) which is good stuff as these would be aggregated, though it looks like you have to open a bank account with HSBC first. Their dealing charges are nothing special, twice as high as iWeb, though this isn’t a huge dealbreaker.

Then there’s the crew that we all love to hate, Hargreaves Lansdown. Though nominally a percentage fee broker, they limit fees on shares but not funds to £45 p.a. I have generally preferred shares and ETFs to finds, so I could move the Vanguard fund to iWeb and shares/ETFs to HL – the yearly fees are £45 relative to HSBC’s £42.

I favour big fish for security, and detest private equity, which would point to HSBC or HL. I already have a residual SIPP with HL, so I am leaning slightly that way.

I don’t need a flexible ISA any more

I get to give up the flexible ISA option than nudged me towards Vanguard this time last year, but that’s not so important to me now. For two reasons – one was the concept was bigger than the living, but also I now hold a lot of gold in a GIA rather than the ISA, where I came to the conclusion it didn’t belong in the ISA. I will eat the issue of defusing capital gains should I be so lucky. Gold is easy to defuse capital gains, because you can sell CGT worth of SGLP and buy the same day, say Wisdom Tree PHAU to the same amount. Gold is gold, but it’s a different ETF with a different firm falls outwith the HMRC definition as I read it.

is it worth taking a commission-free flutter with fishy fintech?

Then there’s the commission-free crew. I’m not doing Freetrade, because it’s app only. I can see the point of an app-only platform for a bank account and Starling works well for me, but there’s no earthly reason for a mobile-first/only ISA platform in my book. You often need to pay for things on the move, and Starling’s rapid feedback means you don’t need a receipt often and you can turn the card on and off which can be a win for travelling. For share holdings – no. I don’t want to have to use a mobile phone in the house to make their IT development easier.

InvestEngine look interesting, because I could move all my Vanguard ETFs into them in specie, which would stop me paying fees to Vanguard’s ISA. If it were possible to part transfer ISAs to them, then I could move VWRL out of iWeb too, which would bring the balance between the ISA’s closer to parity, in which case I would then aim new money into iWeb, which so far seems pretty much the perfect balance of features and fees for me. InvestEngine also carry SGLP, so I could transfer some of that out of iWeb to get working capital into them without subscribing to them this year. They aren’t consistentent – either they offer this range of ETFs which is larger than this list of ETFs they carry.

The downside is the latter says they carry only the VHYL version of VWRL. Downside because this. OTOH they HMWO, which is the same sort of thing, but with HSBC. So if I sell my VWRL with Vanguard and swap it for HMWO, but keep the main chunk with iWeb, I get some diversification against having my entire world trackers with one fund manager, as well as platform diversification from iWeb. What’s not to like?

I can live with selling up in VWRL in Vanguard because I only have about 10k of it, I am slightly cheered to have made a modest profit over the last year despite hating myself each time I bought it because it was always over my iWeb average price.

OTOH is this list is true then they cover all I have in Vanguard – I have VWRL but I have 50k in VFEM and VMID. It isn’t clear to me whether you can move ETFs in specie to InvestEngine, but if you can then I could just instruct them to move the lot in specie and the residual cash. In theory it doesn’t cost anything to sell in Vanguard or to buy in Investengine, zero commission and fees being IE’s selling point.

The obvious downside of Investengine is this

Many platforms are loss making.  Newer platforms especially.   They look to build market share as quickly as they can before they up their prices to becomes profitable or get bought out by one of the big guns.  The risk of unprofitable platforms is that they fail and you lose access to your funds whilst they are in administration.

A platform that is not charging does not get any other source of income from you as there are no commissions anymore (unless they use own-brand funds).   So, it is not a sustainable business model.  So, if you use them, you need to be prepared for potential outcomes.

dunstonh (who I believe is/was an IFA IRL, though it shouldn’t be held against him – he generally posts good stuff on MSE rather than Just Another Random Talking Head on t’internet like me)

Now there are some folk who have a passion for yomping their accounts with the latest best offers. These blessed punks brought us the likes of Bulb in the energy markets, and I deeply resent my standing charges going up to bail these whazzocks out. Conversely, I do not want to Be That Whazzock in a different market.

So HL may still get my business. Because with ETFs I get to pay their cap of £45 p.a. Which is significantly less than I am paying Vanguard, and I expect HL to still be around in five years time, though that £45 cap can of course be changed at any time. But I acknowledge I probably need to pay something to keep the wheels running. With iWeb I get to pay £5 per transaction, which probably keeps the hamster on his wheel. Whereas it would piss me off deeply to have to extricate myself from InvestEngine’s administrator, particularly as that ISA is also over the FSCS limit now. Saving money can cost you a fortune in aggravation and grey hair. Plus HL is a whole of market operation.

Swings and roundabouts. Probably worth not doing anything there in the next couple of weeks anyway, to let all the last-minute Johnny-come-lately’s opening their ISAs at 23:59 tonight rattle through the system. I am not one of them, the header pic is gratuitous – I used this year’s ISA allowance a fair while ago, and have 365 days to get my act together for the next one.

34 thoughts on “Seeking a new ISA platform”

  1. Hi Ermine,

    I escaped HSBC stockbrokers for X-O.co.uk. (HSBC’s list of supported funds is not accurate, do call them to confirm before opening. I made the mistake of not doing that – although it was hardly my mistake!) Cheaper dealing and no quarterly charge with X-O, plus a much cleaner interface and documents. Not sure how much I trust them, they are Jarvis too, so my holding with them are kept below the compensation limit. That said, they do seem fine and (apart from a huge fudge up by them on a transfer in) they have been good. They could be worth a look for you.

    I used the HSBC FTSE All World Fund in Halifax (Very low AMC there); VWRP (the accumulation version of VWRL) in Interactive Investor (fractionally more expensive) which also tracks the FTSE All World Index; and SWDA which tracks the MSCI World Index with X-O. I feel reasonably comfortable with this, despite holding well over the compensation limits with Halifax and II. I figure they are too big to fail. Also I have three different fund managers this way too, in case they go belly up.

    The new tax year for me will be relatively simple. Sell a fund outside my ISA with Halifax and buy inside the Halifax ISA, so no need for deep thought this coming tax year or a search for a new platform for me. I am just doing a little rebalancing at the same time, diffusing CGT too. I am not completely using just global trackers yet, since I have a few other trackers. (S&P500, Euro Tracker, FTSE UK All share tracker, etc.) But just having global trackers seems simpler and is where I am headed. (Every time I do anything active I seem to underperform.)

    Hope this helps a little.

    Liked by 1 person

    1. Jam,
      I recently did a similar (paper) exercise ro ermine – and concluded x-o were definitely worth a look. One thing I could not confirm was if x-o would accept just a transfer or they needed new isa contributions for that tax year too. Do you know yhe answer to this?

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      1. Hi @a
        I believe that would be OK. I am fairly certain you can open as many ISAs as you want, but can only subscribe new money to just one ISA in any given tax year. So, open an ISA with X-O, don’t subscribe i.e. pay any new money in, and you can transfer previous year(s) ISA(s) to them. You should be able to subscribe to a new ISA elsewhere too.

        I would check this with them first though to make sure. Treat it as a helpfulness test of them. I generally think if companies cannot be helpful before they get your business than you have little hope of them being so afterwards.

        But also please do your own research, I would hate to have given duff advice.

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    2. > Not sure how much I trust them, they are Jarvis too, so my holding with them are kept below the compensation limit.

      I think that’s my fundamental problem here. I CBA to balkanise my ISA holdings to keep all accounts below the FSCS limit, which means I am exposed to a greater risk on the accounts I do have. So I need to slap myself round the chops with a wet fish and get out of the minimise fees at all costs sort of mentality, which is good within FSCS but maybe not above it. I pay more in house insurance than fees on ISAs, though the ISAs are worth more, so maybe I need to stand back a bit here

      That said, I can’t remember the last UK big fish platform that actually went bust, even in the GFC. Nevertheless, 1+1 resilience looks like a no-brainer here, I need to stop thinking of the +1 as the little brother now and get it up to par with iWeb 😉

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      1. With regard to the FSCS limit my understanding is that the limit relates to the loss you might incur rather than the total amount invested. Otherwise I would be needing a lot of brokers… HSBC is ok, very dated software and reporting and limited range of ETFs. HL I have found to be fine, customer service is generally good. ii has been ok too.

        Liked by 1 person

      2. > With regard to the FSCS limit my understanding is that the limit relates to the loss you might incur rather than the total amount invested.

        I may be missing trick here, but in the limit case isn’t that the same thing? Usually the claims of customers in an insolvency end up being pennies in the pound. That’s usually after the insolvency administrators have made themselves rich on fat fees.

        I mean, yes, in theory the customers’ assets are ring-fenced etc etc, but with a bad platform the rigour of this is not necessarily assured. So the loss is pretty much 100% of holdings at the worst case.

        It’s a tail risk, and I can live with a haircut of over 3/4 but when it gets more than that I feel something needs to be done. I can’t live with the amount of accounts to divvy everything up. Having 1+1 is also protection against the other hazard, which is somehow getting identified as a AML sinner, which seems to take many many months to get out of. It’s never happened to me, but the horror stories are pretty rough, where the usual principles of habeas corus are suspended. The financial institution and the investigation part of the government both hide behind AML regs to say they can’t tell you what you are charged with or how you can clear your name, and they will get back to you in their own good time. Which if that’s part of one’s income stream is a bit rough!

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  2. People bash them but I’ve stuck with HL for my ISA for some time with no problems. The £45 platform fee compared to the £375 if I threw it all at Vanguard seems a no-brainer. Actually it troubles me a bit that VG would actually be more expensive for a straight up ETF tracker portfolio compared to the same on HL. For good or bad I do have some ITs and individual shares in addition to the tracker ETFs. HL customer service has been good when needed. Phoned them on a Friday afternoon last year when an online ISA transfer from L&G glitched and the computer said no. The lady on the phone helpfully sorted it out in minutes and my L&G tracker funds were transferred in the following Wednesday and after some messing around with HL converting fund flavours I sold them down to buy equivalent stuff in ETFs. HL did charge me the dreaded 0.45% on those transferred funds for that month but I didn’t begrudge them that given the service, hey ho. My one gripe has been that they shutdown their Bed and ISA service which would save fees selling stuff in their GIA account and rebuying in the ISA – they did it all for you and charged only one fee per investment. I’ve sold down most of my HL GIA now so it is a moot point, I have to sell on another platform and put the cash directly in the HL ISA to rebuy my VMID or whatever. I suppose I ought to open another ISA somewhere for safety sake so it is interesting to read your post and ideas. On the other hand, getting all the ISA dividends from ITs and ETFs etc in one place is convenient for reinvesting them at the moment. Good luck with it whatever you end up doing.

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  3. I use two unrelated platforms from the fixed fee table and a third one not in the table and tied to one fund manager. I think you could look again at ii after abrdn takes it over. I have HL In mind if I want or need to spread to another platform. Originally HL didn’t want to cap fees on IT’s but wanted to take an uncapped percentage as with UT’s so I’ve held that against them for many years.

    Liked by 1 person

    1. > I’ve held that against them for many years

      Haha – same mechanism as me with that piss-taking bastard Tomas Carruthers

      We believe that customers should be engaged with their investments and actively manage their portfolios. To support this, we are introducing a quarterly fee of £20. This fee is the only one we will charge you and you will not have to pay any other management, ISA or administration fee.

      Which sort of goes to prove the marketing adage that is you piss someone off they tell 10x the number of people about it compared to if you delight them with exemplary customer service. Indeed Tomas got my goat getting on for 10 years ago and I still hold it against iii, although having to escape them a second time cemented the resentment 😉

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  4. Interactive Investor is being bought by Standard Life Aberdeen (yes it’s called abrdn but that’s a daft name), which may ease your concerns about private equity.

    My approach is to just stick with the big players as long as their fees aren’t excessive, which I don’t think they are. So I use II and HL and AJ Bell (YouInvest), which isn’t very imaginative but it works for me.

    Liked by 1 person

  5. Interactive Brokers started offering an ISA this year at £3 a month I believe. Worth checking out, although they don’t offer ETFs for consumers, but a new option to add to the list.

    Liked by 1 person

    1. IB always struck me as playing in the man’s league not the boys, and I fear that with < £1M AUM I am still in the boys' league, though getting towards the under-18s rather the the primary schoolers. That's of course not a reason to hold against them, but when I read some of FvL's shenanigans I worry that I might balls up by simply not comprehending some of the lingo 😉

      I have every admiration for FvL and admire his ability to grok the live tracking spreadsheet where I had to resort to R to do that.

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  6. Sharedeal Active experience – The website is very basic and if you want to buy funds this can only be done via telephone dealing service (no extra cost). They can’t categorically state that they can deal in the fund you wish to purchase before you are ready to deal, having funding the account – ‘should be okay’,was the answer I got. Annoying if you open and fund an ISA and then find you can’t buy the fund you want. That said, they are really helpful on the phone and you don’t have wait ages for them to answer.

    Liked by 1 person

    1. > They can’t categorically state that they can deal in the fund you wish to purchase before you are ready to deal

      Blimey, that is definitely not for me, thank you for the heads-up! I have no desire to talk to brokers on the phone 😉

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  7. For £7.5k p.a. you could have your very own segregated account 😉
    https://www.hl.co.uk/security-centre/Central-Securities-Depository-Regulation
    … while the rest of us plebs wrangle with nominees…
    Seriously though, personally, so long as the establishment is subject to the English insolvency law and is regulated by the FCA, I don’t worry too much about the FSCS limit. The only time I know of when the client funds segregation failed was in the 80s, in the insurance booking sector, when the broker wasn’t following the client money rules iro their non-statutory trust by not keeping good records and not withdrawing their commissions and interest from the accounts regularly, thus inadvertently polluting the NST accounts with their own money. They went bust and the receivers argued that the client funds were commingled with the entity’s funds. They got their hands on the client money, and the clients went into the general queue with the other creditors. I believe the (then) FSA and later the FCA has strengthened the CASS rules significantly since that time. My concern would be more around those app-only operations to make sure it’s clear where they are based and who regulates them.
    And I don’t think either of us will ever be rich enough to have to worry about all those wonderful Cayman Islands partnerships that PE houses so love to use as the vehicle of choice for their investment funds. Those things come with FA protections. On the upside they also come with FA tax …😉

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    1. Oh dear. I googled the old boy and it appears it’s not just mustelids that he’s been getting on the wrong side of. The crown estate gave him the order of the boot a couple years back for failure to pay his rent, he’s been upsetting people in Scotland by not paying salaries but never fear. He’s turned over a new leaf and will be bullshitting punters at the AI conference in June this year

      Tomás Carruthers is Chief Executive Officer of the Social Stock Exchange (SSX). After two successful decades building and growing retail financial services companies – including ESI, which became E*Trade UK and Interactive Investor International plc – Tomás is now committed to delivering not only great returns for investors, but a positive social or environmental impact, too. Tomás is passionate about innovation in finance and is determined to bring impact investing into the mainstream.

      I think some of those employees might take issue with the use of the present tense in that puff piece. Either than or he has moved Scottish Stock Exchange to Social stock Exchange, I guess it saves on reprinting the vinyl exhibition signs. Given that history I would say that I got away lightly with only being patronised heavily, both in managing to whip the black tip of my tail out of this clutches twice, and arguably three times since I was a user of ESI back in the dotcom days.

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    2. >As already noted, II is about to be merged into Abrdn, and will likely vanish therein since vwls hv bn bnshd.

      Thank you! It made me laugh!

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  8. I’m with HL, AJBell and Freetrade – all offer something different; HL – stability, good website and customer service; AJB – monthly purchases using cash in your account (rather than cash in your bank); Freetrade – free trading. Although I’m not so concerned about the FSCS limit, I feel more comfortable that the risk is spread across different providers so that if I had an issue logging into one website/app, I’d have choice of another.

    Liked by 1 person

  9. There’s always IG, who aren’t going bust any time soon. (Heh, I wonder if they let you short their own shares…)

    They charge £96 a year, but will reduce that if you trade by the cost of the trades each quarter. (i.e. do 3 and you don’t pay a platform fee.) If you do a few spread bets, that seems to prevent the quarterly fee too.

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  10. > as these would be aggregated

    My reading of the fscs site is that banking accounts and investment accounts would be treated separately – but I could be wrong

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  11. I did this dance of the several platforms a few years ago, mostly to cover myself better with the FSCS protection. Or so I thought. Later on a couple of wrinkles dawned on me. It seems to me now that there’s no point having say VWRL ETF with two different broker platforms as a) the holdings would be aggregated anyway if Vanguard went south for some reason and b) the VWRL ETF is based in Ireland, so you get the 20,000 Euro (I think) cover, not our princely £75k FSCS. It seems to me you only benefit if you happen to have cash lying in your broker account for some reason should they cark it. Maybe the way round this is to go e.g. for UK based Vanguard index funds, rather than their IE based ETFs. Then you wouild have the full FSCS protection, but again you’d have to split funds above £75k across brokers *and* products. But a lot of your free brokers, like Freetrade, don’t provide access to the relevant OEIC index and investment trust funds. Anyone know if I am right in this?

    Liked by 1 person

    1. OMG you seem to be quite right w.r.t. Vanguard

      Personally I can’t come with the myriad of ISAs I’d need to get my 85k protection (as I believed) , I’ve gone for 1+1 protection as far as platforms are concerned, because though I seem to be among the more paranoid android of commenters I still see this as a lowish risk.

      However, there certainly seems to be a case to do something about VWRL, which is probably to match it with HMWO from HSBC, on both platforms. And maybe someone else for a VFEM equivalent too. A Bernie Madoff in Vanguard would make a hell of a bang, and it’s a greater risk, because as Al Capone said about robbing banks, you go where the money is…

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  12. I have been using x-o & sharedealactive for many years & have been entirely happy with them. As you probably know, they are listed on AIM, and have had very good results for years, so I don’t think there’s anything to be concerned about them. If it’s straight up ETFs, then x-o is sufficient – it’s exceptionally good value.

    However IB are also v decent & you can set up with a small amount too.

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  13. I went with HL as my significant other after iWeb, only for ITs and ETFs in a GIA for me, but its still dirt cheap for those products in an ISA. It seems a bit of a no-brainer to me, you’re effectively being subsidised for great service by every other mug-punter holding funds.
    Freetrade are now lending out peoples shares whether they like it or not (certainly if you want to keep trading with them). I haven’t quite got to the bottom as to whether this is totally normal or decidedly dodgy. I’ll assume dodgy until proven otherwise.. I agree that Freetrade et al are too young and trendy to commit any quantity of money to. It sort of seems likely some will go bust almost as a process of trial and error – whats the point in being part of the experiment?
    I also have a SIPP and a couple of JISAs with YouInvest (AJBell), my hazy recollection is these were ad valorem and therefore good for small sums.

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  14. Interesting read Ermine, especially as I’ve chosen this year to add a second ISA to my portfolio. I was previously of the opinion Halifax were to big to fail and therefore burying my head in the sand regards the risks.
    For the such a small additional cost I think the resilience offered by operating a 1+1 approach in both platform and fund provider is a must. Especially when there are many variants of the essentially the same funds operating. VWRL vs HMWO for example. Why would you not cover that risk?

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  15. Hah. I can’t get HL website to work properly. Even the contact page doesn’t work. I’m really going to use them.

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