Direct to consumer platform Interactive Investor has decided to keep its flat fee charging model following the acquisition of TD Direct Investing.
The broker, which now claims to be the second largest in the UK, will charge clients a £22.50 fixed quarterly payment which can be reinvested through dividends or regular investments. These will have a commission fee of £1.
Commission rates will be £10 and frequent traders will pay £6 per trade.
Interactive Investor chief executive Richard Wilson says: “We believe our pricing offers great value for self-directed investors. Customers who use their trading credits through reinvesting dividends, regular monthly saving or more active investing, in effect pay no trading account or Isa fees at all.
“Even for investors who don’t trade often, our new pricing is highly attractive to those who have a reasonable portfolio, or are looking to build or consolidate assets, relative to platforms which charge a percentage fee for custody.”
Following the acquisition of TDDI in June, former II chief executive Adam Seale told Money Marketing percentage-based charges “eat into investment returns and people don’t realise it’s happening”.
Recent research from consultancy Platforum found that for investors with a £50,000 portfolio, only one direct platform out of the largest 15 by assets under administration offers a cheaper deal than II.
The research found that over six typical customer profiles with half of their portfolio in funds, II was the cheapest platform for customers with an investment portfolio of £100,000 or more.
These will save on average £151 a year compared to other platforms, and £297 if they have a £250,000 portfolio.
Platforum head Jeremy Fawcett says the flat fee model is “a significant development” for direct clients who invest online.
He says: “Investors are becoming more cost-conscious and price is becoming a bigger factor in platform selection. Interactive Investor’s new pricing model makes it good value for its target market of engaged investors or those with average and larger portfolios. From a cost perspective, the pricing works well for investors looking to consolidate reasonably-sized pots in one place”.