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Guide to Low cost ISAs

When you buy funds or shares within a shares individual savings account (ISA), a practical and often cost effective way of doing so is via an investment platform - either directly or via a 'discount' broker. We've compared a number of platforms and brokers to see who gives the best deals.

Last updated: 17 March 2017.

Action Points:

1. Decide whether buying direct is right for you

If you need investment advice then buying direct from a platform (or via a discount broker) is probably not for you, as you won't get any. Consider using a good independent financial adviser (IFA).

But if you’re comfortable making your own investment decisions then you’ll almost certainly reap benefits by buying direct from a platform. You'll save on advice fees and platforms normally offer cheaper versions of funds than those sold by fund managers directly.

2. Choose a level of service that suits

While you shouldn’t expect much in the way of service from platforms and discount brokers, some do offer guidance and research that you might find helpful. However, this usually comes at a cost via higher platforms fees - the very cheapest deals simply offer a ‘no-frills’ transaction service.

Whichever you choose you should be able to check your investments online.

3. Check whether you already hold investments via a platform

If you already hold investments via a platform it usually makes sense to buy new investments on the same platform if you are happy with it, keeping everything in one place. This could affect your choice of broker as most tie themselves to one platform.

4. Select the platform/broker providing the best deal for the service you desire

Overall platform/broker costs can vary widely - see our extensive comparison below. If you’re autonomous and not fussy about choice of platform then opting for the cheapest will probably be your best option, otherwise you might get better value paying a little more for added services and/or investment choice.

5. Choose the investment(s) you wish to buy

If the platform/broker you've chosen provides investment research you might find this helpful in making your choice. You may also find our guide to investing useful.

Platform/Broker Comparison

We have a dynamic comparison tool at www.comparefundplatforms.com, where you can compare costs and features based on your own crieria.

Questions

How do platform/broker ISAs work?

Platforms are the administration services that ultimately hold your funds/shares, the main benefits being access to lower cost 'clean' fund versions, holding everything in one place and viewing your portfolio online. You can buy direct from most platforms, although a few only sell via discount brokers. The latter will usually levy their own fee, but might provide research, guidance or platform discounts to help justify this.

Are all platforms/brokers the same?

No. Charges vary. And while some provide potentially useful research, others simply offer a ‘no-frills’ bargain basement transaction service.

Should I buy direct from a platform?

If you’re comfortable making your own investment decisions, then yes. You’ll normally get a cheaper deal compared to investing directly with a fund provider and save on advice charges you'd incur via a financial adviser.

However, if you need help then don’t underestimate the value of good independent financial advice. Granted, not all advisers are worth their salt, but there are some good ones out there.

What service can I expect?

Not much, you’re generally on your own. However, some platforms and discount brokers do publish guidance and research, which you might find helpful. At its most basic this might simply be a few suggested fund choices, although a handful of brokers do publish more extensive research including updates on whether a fund is worth continuing to hold following manager changes etc.

Can I move between platforms?

Yes, you need to transfer your investments, either as cash or 'as is' (called 'in-specie'). Fees may apply for either or both, so check with your existing platform.