Poll shows DIY investors rate Vanguard and AJ Bell best for value and service; mixed reviews for Hargreaves after Woodford scandal – writes Christian Leeming

 
Investing has surged during one of the worst economic declines in history, some people have been able to save more during lockdown – the Office for Budget Responsibility estimates households will have £180bn in extra savings by the middle of this year.

Savings interest rates remain low, even as inflation begins to rise, making the higher returns  associated with investing more tempting; experienced investors may have spotted potential bargains as share prices plummeted during the onset of the pandemic. More recently, controversies around GameStop, Bitcoin and Dogecoin have tempted younger people to invest their savings.

Now a new customer survey of top DIY investment platforms conducted by Which? rated Vanguard and AJ Bell Youinvest most highly, with the UK’s biggest player, Hargreaves Lansdown, only making sixth place.

Customers have signed up to brokers and investment platforms in record numbers during the pandemic; a poll of 2,000 members of the influential consumer group saw AJ Bell and Vanguard head the list of eleven major DIY investment platforms for value for money, online tools and customer service.

Hargreaves Lansdown remains the largest DIY investment platform, and has also written record levels of new business over the first four months of the year, but it is increasingly being challenged by Interactive Investor, which has been on the acquisition trail snapping up TD Waterhouse, Alliance Trust Savings, Share Centre and EQi, and the multi-faceted AJ Bell Group.

US giant Vanguard has been a rising force for some time now (DIY Investors say Vanguard offers the best value funds according to research) despite only offering 75 of its own funds; its success has been due in no small part to its low cost offer, but also as a result of a high profile and sustained multi-channel marketing campaign.
 

‘Vanguard was praised for being ‘straightforward’ and ‘efficient’ and was the only platform to receive five stars for value for money’

 
Vanguard reported a 130% increase in users in the year to March 2021, and AJ Bell Youinvest saw a 30% increase in registrations in 2020; overall the market for DIY investing is estimated to have grown by 60% since 2016.

This poll ranked brokers based on six key criteria – online tools, customer service, investment information, whether it met the customer’s needs, value for money and customer score.

Vanguard pipped AJ Bell Youinvest by receiving a customer score of 77% against  72%, but both were named a ‘Which? Recommended Provider’ for the third year running.

Which explains that this title can only be earned if a platform does not receive any below-average scores for any of the criteria or have a customer score of less than 70%.

Vanguard was praised for being ‘straightforward’ and ‘efficient’ and was the only platform to receive five stars for value for money.

As one of the world’s largest fund managers, its fees are among the lowest on the market at just 0.15%, capped at £375 a year for accounts over £250,000; the platform does not charge for trading funds, and ongoing costs on its funds are just 0.2% on average.

AJ Bell Youinvest offers a much wider range of investments, with more than 2,000 funds, shares across 24 stock markets, and more comprehensive investment information, including funds ranked by their Morningstar rating. Which? said customers liked its ‘easy to navigate website’ and ‘excellent range of investment opportunities’
 

‘customers liked its ‘easy to navigate website’ and ‘excellent range of investment opportunities’

 
AJ Bell is more expensive, charging 0.25% on the first £250,000 of funds, then 0.1% on amounts between £250,000 and £1million; trades in shares, investment trusts, ETFs or bonds are £9.95 with a custody fee of 0.25%, capped at £3.50 a month.

Interactive Investor scored 68% and represents a ‘cost effective option’, according to Which? It charges a fixed monthly fee ranging from £9.99 to £19.99, including one free trade worth £7.99 per month, making it an attractive proposition to wealthier investors with portfolios worth £50,000-plus.

Halifax Share Dealing achieved a customer score of 63% and Which? says it is another platform worth considering for investors with larger portfolios; it has a flat £36 annual platform fee for large portfolios, but Which? members complained about a lack of information on investment opportunities.

Hargreaves Lansdown was sixth in the survey with a customer score of 66%, commended for its ‘first class’ customer service and range of online tools; the group notes that its 0.45% annual fee makes it pricier than many competitors for funds.

Which? says some respondents said they had lost trust and were ‘disappointed’ with the platform because it continued to promote the Woodford Equity Income fund on its Wealth 50 best buy list right up until it was suspended in June 2019; Hargreaves declined to comment on the survey.

Barclays Smart Investor finished bottom of the list for the fourth consecutive year with a customer score of 48%; dissatisfaction stemmed from the provider switching its service from Barclays Stockbrokers to Barclays Smart Investor in 2017, while others cited high charges and a limited range of investments. One called its website ‘unbelievably complicated’.

A Barclays spokesperson told Which? that it has ‘invested a huge amount in the stability and operational strength of the platform’ since last year.

‘We are committed to listening to customer feedback and are always looking at ways to improve the investing experience we provide.

‘We are starting to see the impact of recent improvements, with our platform remaining stable throughout last year’s surge in market activity and customers welcoming the launch of mobile trading.

‘We are reviewing our pricing, to help more people start investing with smaller amounts, and are planning to launch international equities later this year.’
 
See the full results of the survey here >
 





Leave a Reply