Investing platform interactive investor introduces "Netflix-like" monthly fee model

8 April 2019
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Online investment platform interactive investor has announced the introduction of a new monthly fee structure.

Interactive investor (Moneywise's parent company) intends to replace its quarterly flat fee with three service plans involving a monthly fee, from which investors can choose the one that best suits their requirements. The changes will take effect from 1 June.

The first option, the 'Investor' plan, will charge investors a subscription of £9.99 per month plus £7.99 per trade (for UK shares, ETF, investment funds and trusts), with one free trade per month. Trades on ii currently cost £10 for all users.

The second option, the 'Funds Fan' plan, will cost £13.99 per month but offer investors the ability to trade investment funds and trusts for £3.99 plus two free fund or trust trades a month.

The third option, the 'Super Investor' plan, costs £19.99 per month and offers UK share, ETF, fund and trust trades for £3.99. It also offers US share trades for £4.99, in contrast to £7.99 for the other platforms.

International shares also cost £9.99, half the price of the £19.99 paid by investors in the other two plans.

Moira O’Neill, ii’s head of personal finance, says: “Most people’s regular payments tend to be monthly, so this new pricing structure fits in much better with customers’ personal finances.”

Here's a breakdown of the new fee plans and services and charges offered under each:

 Investor (£9.99 per month)Funds Fan (£13.99 per month)Super Investor (£19.99 per month)
 Core plan for investors looking to get the best choice and insight in the market.For investors looking to build a portfolio of funds or investment trustsPremium plan designed for more frequent investors, with market leading trade fees.
 One free trade per monthTwo free fund* trades per monthTwo free UK/ETF/fund* trades a month
 UK share and ETFs £7.99UK share and ETFs £7.99UK share and ETFs only  £3.99
 Funds and investment trusts** £7.99Funds and investment trusts* only £3.99Funds and investment trusts* only £3.99
 US Shares £7.99US Shares £7.99US shares only £4.99
 Other international shares £19.99Other international shares £19.99Other international shares only £9.99
 Dividend reinvestment £0.99Dividend reinvestment £0.99Dividend reinvestment £0.99
 Regular Investment £0.99Regular Investment £0.99Regular Investment £0.99
 *Funds trades covers OEICs, unit trusts and investment trusts. **List of investment trusts is based on that provided by Morningstar. Note: Exchange Traded Funds (ETFs) are treated as shares.
Source: interactive investor, April 2019

Will it cost investors more?

Whether or not it costs investors more depends on their investment behaviour.

According to Ms O’Neill: “It is investors who most actively engage with and manage their investments who will benefit the most. While the monthly fee effectively goes up by £2.50 in the Investor package, the trades cost goes down by £2.”

Ms O’Neill gives the example of a customer using the Investor service plan: “A customer who doesn’t trade at all over the year will pay £30 per year more for their new interactive investor flat fee.

"But if they traded once a month, they would be paying exactly the same as before. An investor trading twice a month on Investor versus the old pricing plan would save £24 a year.”

ii says the changes mean that the platform is still the most cost-effective for those with a pot of over £50,000.

Steve Nelson, consulting director of the lang cat, a firm that analyses the costs of major investment platforms, has scrutinised interactive investor’s new charging structure.

Mr Nelson comments: “Our research shows that there are potentially significant savings to be made should a customer adopt a platform with a fixed fee approach as opposed to uncapped percentage-based charges.

"Of course, this is simply basic arithmetic in action and it will depend on individual circumstances such as trading levels, contributions and investment types but such savings can add up to thousands of pounds over a medium to long term investment.

“There is tonnes of research out there that shows that customers struggle to engage and understand the charges that apply to their investments. What we like in particular about the new interactive investor structure is the fact that the customer will face a clear, easy to understand, fixed platform charge per month.”

This article first appeared on our sister website Money Observer

Comments

In reply to by anonymous_stub (not verified)

I was on the threshold of moving a large sum into ii to consolidate my platforms down however, now I am so pleased I did not decide to do so as this equates to a massive increase versus what it was whichever way you cut it. Despite the marketing models you have created to sell the increase.

In reply to by anonymous_stub (not verified)

Time to leave ii, much preferred when they were TD Waterhouse - Have used Digero and will look into transferring my Portfolio.

In reply to by anonymous_stub (not verified)

Agree with Bob - suspect a lot of us small fish will go and swim in warmer waters!

In reply to by anonymous_stub (not verified)

So people like me who only use Interactive Investor as a custodian will see a 33% increase in their charges, but this "fits in much better with my personal finances", does it? Pathetic

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