What are Investment Platforms?
Investment platforms are essentially online shops where you can buy, sell and manage all your investments in one place. Whether you are investing in funds, investment trust, ETFs or individual equities investment platforms are a quick and easy way to start your investment journey.
Who are investment platforms for?
Basically any individual who has the means and desire to invest their money could use an investment platform. They are simple to use and offer a wealth of information and excellent research to help you make the best investment decisions. A word of caution, however, this wealth of information can also cause confusion to the amateur investor resulting in decisions not in keeping with their risk profile or investment objectives. Individuals nervous about investing in this direct manner should seek financial advice to guide them towards their investment objectives.
So why not seek financial advice from the outset?
Well, you will need to understand a bit about the financial industry before we can answer that question.
Back in the day we were all bought our financial products through a financial adviser who was either independent or employed by an insurance company or bank. All these had a commission element built into them that was paid to the adviser thus making the products poor value in many cases. One of the features of this arrangement was that an individual could get financial advice for 'free' with the adviser only earning commission if they bought a product. This lead to, in some cases, poor advice with the adviser more concerned with earning commission than providing sound advice.
Then in 2012 the rules changed with the advent of the Retail Distribution Review (RDR). The idea of RDR was to rid the market of mis-selling and product bias which focused on commission earnings rather than sound financial advice for the consumer. In the new world advisers make their income by charging a fee for their advice which results in many individuals not seeking financial advice due to these perceived higher costs. Also, many banks decided to focus their efforts on high net worth individuals resulting in most of the population having to ‘go it alone” when it comes to their finances.
So what is the best investment platform to use?
There are number of fund platforms available for the individual investor and their ultimate choice will depend on a number of factors.
They include:
- what service you require
- what you want to invest in
- how much you want to invest
- costs involved
- what research ‘extras’ you require
- high much guidance you need
Here is some information on a few of the most popular investment platforms and what they are offering. This information is provided by the investment website the lang cat.
- Over 2,000 funds, equities, ETFs and Investment Trusts
- There is a range of multi-asset and risk-rated model portfolios available if you need some help
- Further help via its Investment Advisory Service comes at a premium (1.25% AMC)
- Best for investors up to £250,000 needing a bit of guidance
- Access to over 2,000 funds from more than 85 providers via FundsNetwork
- A range of risk based model portfolios
- Best for investors who want to dabble in funds and use up their NISA allowance
- Choice from over 2,200 funds
- Select List of 234 specially selected funds
- Guided investment options consisting of model portfolios and a range of goal and risk based funds
- Best for investors requiring some guidance in selecting their investments
- Over 2,500 funds, equities, ETFs and Investment Trusts
- Ready made risk rated portfolios
- Those seeking from the market leader who place value in customer service
- Large range of investment options including funds, shares, ETFs, Investment Trusts, bonds and gilts
- Range of ready made fund selections as well as portfolios
- A wealth of choice information and research tools
- Best for investment experts
- A ‘diversified portfolio’ is set on a Q&A in a ten minute set up process
- Your ‘diversified portfolio’ is then managed and reviewed on a regular basis
- Best for people who want an investment portfolio set up in ten minutes and a bit of hand holding
- A range of over 1,500 funds for DIY selection
- Risk-graded investment portfolios are also available
- Investors who value and use the insight and tools
- A recent addition to the direct market developed around simplicity and cost
- 1,497 funds available for investment
- LSE quoted equities and some overseas options
- Best for younger investors looking for something different but happy to be led through the process
- Access to over 2,000 funds as well as equities
- Model portfolios, risk based selections and a range of filtering options
- Best for those with real enthusiasm for investment selection and portfolio management
